COMMISSION STAFF WORKING DOCUMENT Enhanced Surveillance Report - Greece, May 2020 Accompanying the document Communication from the Commission Enhanced Surveillance update- Greece, May 2020
Date: 2020-05-20
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Euro Group (euro area), Greece, economic recovery, gross domestic product, macroeconomics, multilateral surveillance, public debt, stability programme, structural adjustment, sustainable development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 20.5.2020  SWD(2020) 91 final  COMMISSION STAFF WORKING DOCUMENT Enhanced Surveillance Report - Greece, May 2020 Accompanying the document Communication from the Commission Enhanced Surveillance update- Greece, May 2020 {COM(2020) 529 final}  
 
 
ABBREVIATIONS 

AIA: Athens International Airport 
ANFA: Agreement on Net Financial Assets 
ASEP: Supreme Council for Civil Personnel Selection 
DEPA: Δημόσια επιχείρηση αερίου (Public Gas Corporation) 
ECB: European Central Bank 
EFKA: Ενιαίος φορέας κοινωνικής ασφάλισης (Single Social Security Fund)  
EFSF: European Financial Stability Facility 
ENFIA: Ενιαίος φόρος ιδιοκτησίας ακινήτων (unified property tax) 
ESI: Economic Sentiment Indicator 
ESM: European Stability Mechanism 
ETAD: Εταιρεία ακινήτων δημοσίου ΑΕ (Public Properties Company) 
ETEAEP: Supplementary Pension Fund  
EYATH  A.E.:  Εταιρεία  ύδρευσης  και  αποχέτευσης  Θεσσαλονίκης  Α.Ε.(Thessaloniki 
Water Supply and Sewerage Company) 
EYDAP A.E.: Εταιρεία ύδρευσης και αποχέτευσης Πρωτευούσης A.E. (Athens Water 
Supply and Sewerage Company) 
GDP: Gross Domestic Product 
GRECO: Group of States against Corruption 
HCAP: Hellenic Corporation of Assets and Participations 
IAPR: Independent Authority for Public Revenue 
ICT: Information and communication technologies 
IMF: International Monetary Fund 
KTEL: Joint-venture of regional transport 
LEPETE:  Λογαριασμος  επικουρισης  προσωπικού  εθνικής  τράπεζας  της  Ελλάδος 
(supplementary pension fund of the National Bank of Greece) 
NOME:  Nouvelle  organisation  du  marché  de  l’electricité  (new  organization  of  the 
electricity market) 
OASTH: Urban Transport of Thessaloniki 
OSDDY:  Ολοκληρωμένο  σύστημα  διαχείρισης  δικαστικών  υποθέσεων  (integrated 
management system for judicial cases) 
PMI: Purchasing Managers Index 
SMP: Securities Markets Programme 
SURE: Support to Mitigate Unemployment Risks in an Emergency 

i 

 
ACKNOWLEDGEMENTS 

This  report  is  prepared  as  accompanying  document  to  the  Commission's  assessment 
pursuant Article 3(5) of  Regulation  (EU) 472/3013  published as Communication  from 
the Commission – Enhanced Surveillance – Greece, May 2020. It was prepared in the 
Directorate  General  Economic  and  Financial  Affairs,  under  the  direction  of  Maarten 
Verwey,  Director  General,  Declan  Costello,  Deputy  Director  General,  and  the 
coordination of Paul Kutos, Head of Unit and Milan Lisicky, Deputy Head of Unit. 

Contributors: 

Chris  Allen,  Giuseppe  Carone,  Fotini  Dionyssopoulou,  Matteo  Duiella,  Sotirios 
Giannoulis,  Christos  Gofas,  Andras  Hudecz,  Alexander  Ioannidis,  Paul  Kutos,  Veli 
Laine,  Eloïse  Lecouturier,  Milan  Lisicky,  Vasileios  Maroulis,  Benedetta  Martinelli, 
Vasilis  Nikitas,  Zoltan  Petrov,  Eleni  Polemidiotou,  Marie-Luise  Rud,  Alexandros 
Tavoutsoglou, Andreas Trokkos, Vasiliki Vasilopoulou, Irene Vlachaki, Rainer Wichern, 
Alkistis Zavakou. Assistance was also provided by Fotini Louka. 

The  European  Central  Bank  (ECB)  staff  participated  in  the  drafting  of  this  report  in 
accordance with the ECB’s competences and thus provided expertise on financial sector 
policies and macro-critical issues, such as headline fiscal targets and sustainability and 
financing  needs.  Staff  of  the  European  Stability  Mechanism  (ESM)  contributed  to  the 
preparation  of  this  report  in  the  context  of  the  ESM’s  Early  Warning  System  and  in 
accordance  with  the  Memorandum  of  Understanding  of  27  April  2018  on  working 
relations  between  the  European  Commission  and  ESM.  International  Monetary  Fund 
(IMF) staff participated in the context of its Post Program Monitoring framework. 

Comments on the report would be gratefully received and should be sent, by mail or e-
mail to: 

Paul Kutos 

European Commission 

Unit ECFIN-F-2 

CHAR 14/103 

B-1049 Brussels 

e-mail: ECFIN-GREECE-REQUESTS@ec.europa.eu 

ii 

 
 
CONTENTS 

Commission Staff Working Document  

1. 

Introduction 

2.  Assessment of impacts of the coronavirus outbreak and macroeconomic 

developments 

2.1.  OUTBREAK OF THE CORONAVIRUS AND POLICY RESPONSE 
2.2.  MACROECONOMIC OUTLOOK 

3. 

Fiscal and fiscal-structural policies 

FISCAL DEVELOPMENTS AND OUTLOOK 

3.1. 
3.2.  PUBLIC INVESTMENT 
3.3. 
TAX POLICY 
3.4.  REVENUE ADMINISTRATION 
3.5.  PUBLIC FINANCE MANAGEMENT 

4. 

Sovereign financing 

4.1. 

SOVEREIGN FINANCING 

5. 

Social welfare 

5.1.  PENSIONS 
5.2.  HEALTHCARE 
5.3. 

SOCIAL SAFETY NETS 

6. 

Financial sector 

6.1. 
FINANCIAL SECTOR DEVELOPMENTS 
6.2. 
FINANCIAL SECTOR POLICIES 
6.3.  HELLENIC FINANCIAL STABILITY FUND 

7. 

Labour and product markets 

LABOUR MARKET 

7.1. 
7.2.  PRODUCT MARKETS AND COMPETITIVENESS 

8.  Hellenic Corporation of Assets and Participations (HCAP) and privatisation 

8.1.  HELLENIC CORPORATION OF ASSETS AND PARTICIPATIONS 
8.2. 
IMPLEMENTATION OF THE ASSET DEVELOPMENT PLAN 

9. 

Public administration and justice 

9.1.  PUBLIC ADMINISTRATION 
9.2. 
9.3.  ANTI-CORRUPTION 

JUSTICE 

Annex 

LIST OF TABLES 

2.1. 

Summary of the main economic variables (%) 

7 

7 

9 

9 
11 

15 

15 
20 
24 
24 
27 

31 

31 

33 

33 
33 
35 

37 

37 
43 
51 

53 

53 
55 

67 

67 
70 

75 

75 
83 
85 

87 

18 

iiii 

 
3.1.  Measures to tackle the Coronavirus outbreak included in the Commission 2020 spring 

forecast 

3.2.  Key performance indicators of the Independent Authority for Public Revenue (first quarter 

of 2020) 

6.1.  Main Financial stability indicators 
9.1.  Evolution of public sector staff and wage bill (2009-2019) 

LIST OF GRAPHS 

3.1.  General government investment execution 2014-2019 
6.1.  Bank deposits (left) and total borrowing from the Eurosystem (right) 
6.2.  Non-performing loans as a % of total customer loans (left) and changes in their stock in the 

fourth quarter of 2019 (right: million EUR) 

6.3.  Bank credit to non-financial corporations and households 
6.4.  Bank interest rates on new loans 

LIST OF BOXES 

Insolvency code reform 

6.1. 
9.1.  Digital transformation of the public sector and the Greek economy 

22 

29 
41 
86 

25 
44 

45 
46 
47 

50 
83 

iv 

 
 
 
 
 
1. 

INTRODUCTION 

Economic  developments  and  policies  in  Greece  are  monitored  under  the  regular 
economic  surveillance  framework  for  euro-area  Member  States  under  the 
European  Semester  for  economic  policy  co-ordination  and  under  the  enhanced 
surveillance  framework  according  to  Regulation  (EU)  No 472/2013 (1).  Following 
its  third  prolongation,  enhanced  surveillance  for  Greece  is  currently  in  place  for  six 
months as from 21 February 2020 (2). The implementation of enhanced surveillance for 
Greece acknowledges the fact that Greece needs to continue implementing measures to 
address  the  sources  or  potential  sources  of  economic  and  financial  difficulties,  while 
implementing structural reforms to support a robust and sustainable economic growth.  

Greece made a general commitment at the Eurogroup of 22 June 2018 to continue 
and  complete  reforms  adopted  under  the  European  Stability  Mechanism 
programme  and  to  ensure  that  the  objectives  of  the  important  reforms  adopted 
under  the  financial  assistance  programmes  are  safeguarded.  In  addition,  Greece 
made  specific  commitments  to  complete  key  structural  reforms  started  under  the 
programme in six key areas by agreed deadlines up to mid-2022, namely (i) fiscal and 
fiscal-structural  policies,  (ii)  social  welfare,  (iii)  financial  stability,  (iv)  labour  and 
the  modernisation  of  public 
product  markets, 
administration (3). In this context, ten specific commitments are assessed in this report 
alongside follow-up actions to previous commitments.  

(v)  privatisation  and 

(vi) 

This report is based on the findings of a mission held remotely on 8 and 23 April 
2020  and  regular  dialogue  with  the  authorities.  The  mission  was  conducted  by  the 
European Commission in liaison with the European Central Bank (4); the International 
Monetary Fund participated in the context of its Post Program Monitoring framework, 
while the European Stability Mechanism participated in the context of its Early Warning 
System  and  in  line  with  the  Memorandum  of  Understanding  of  27 April  2018  on 
working  relations  between 
the  European  Commission  and  European  Stability 
Mechanism.  

Enhanced  surveillance  provides  a  comprehensive  framework  for  monitoring 
economic developments and the pursuit of policies needed to ensure a sustainable 

(1)  Regulation (EU) No 472/2013 of the European Parliament and of the Council of 21 May 2013 on the 
strengthening of economic and budgetary surveillance of Member States in the euro area experiencing 
or  threatened  with  serious  difficulties  with  respect  to  their  financial  stability,  OJ  L  140,  27.5.2013, 
p. 1. 

(2)  Commission  Implementing  Decision  (EU)  2020,  C(2020)901,  of  19  February  2020  on  the 

prolongation of enhanced surveillance for Greece. 

(3)  https://www.consilium.europa.eu/media/35749/z-councils-council-configurations-ecofin-eurogroup-
2018-180621-specific-commitments-to-ensure-the-continuity-and-completion-of-reforms-adopted-
under-the-esm-programme_2.pdf. 

(4)  European  Central  Bank  staff  participated  in  the  review  mission  in  accordance  with  the  European 
Central  Bank’s  competences  and  thus  provided  expertise  on  financial  sector  policies  and  macro-
critical  issues,  such  as  headline  fiscal  targets  and  sustainability  and  financing  needs.  The  review 
mission was preceded by a technical mission, also held remotely, from 26 March to 7 April 2020. 

7 

                                                           
 
 
Commission Staff Working Document -  

Chapter 1 - Introduction 

economic  recovery.  To  this  end,  this  report  includes  an  assessment  of  economic 
conditions  in  Greece  (chapter  2);  an  assessment  of  implementation  of  reform 
commitments  given  by  Greece  to  the  European  partners  (chapters  3  and  5-9);  and  an 
update on sovereign financing conditions (chapter 4). This report is issued alongside the 
Commission assessment of the Stability Programme for Greece, prepared in the context 
of the European Semester of economic and social policy coordination. 

The  Eurogroup  on  22 June  2018  agreed  that  the  package  of  debt  relief  measures 
for  Greece  should  include  incentives  to  ensure  a  strong  and  continuous 
implementation of the reform measures agreed in the programme. To this end, the 
implementation  of  some  of  the  agreed  debt  measures  –  the  abolition  of  the  step-up 
interest  rate margin  related to  the debt  buy-back  instalment  of the European Financial 
Stability  Facility  (EFSF)  programme  as  of  2018  and  the  restoration  of  the  transfer  of 
equivalent amounts to the income earned by euro-area national central banks on Greek 
government bonds held under the Agreement on Net Financial Assets (ANFA) and the 
Securities  Market  Programme  (SMP)  –  will  be  made  available  to  Greece  subject  to 
compliance  with  its  commitments  on  reform  continuity  and  completion,  based  on 
positive  reports  under  enhanced  surveillance.  The  transfer  of  these  income  equivalent 
amounts would be made available to Greece in semi-annual tranches of €644 million up 
to  mid-2022.  The  waiver  of  the  step-up  interest  rate  margin,  for  part  of  the  loans 
extended by the European Financial Stability Facility, would reduce interest payments 
by about €104 million every half year. It would be waived on a semi-annual basis until 
2022  and  permanently  after  2022.  The  second  tranche  of  policy-contingent  debt 
measures was released following the Eurogroup on 4 December 2019, inter alia based 
on  the  assessment  of  the  implementation  of  Greece’s  commitments  for  mid-2019 
included  in  the  enhanced  surveillance  report  adopted  by  the  Commission  on  20 
November 2019 (5). The current report assesses the implementation of Greece’s specific 
reform  completion  commitments  for  end-2019,  the  continuous  commitments  and  its 
general reform continuity commitment. It thereby provides a basis for the Eurogroup to 
discuss the release of the next tranche of policy-contingent debt measures, amounting to 
€748 million. 

(5)  https://ec.europa.eu/info/sites/info/files/economy-finance/ip116_en.pdf. 

8 

                                                           
2.  ASSESSMENT OF IMPACTS OF THE CORONAVIRUS 

OUTBREAK AND MACROECONOMIC DEVELOPMENTS 

2.1.  OUTBREAK OF THE CORONAVIRUS AND POLICY RESPONSE 

The  outbreak  of  the  Coronavirus  has  fundamentally  altered  the  social  and 
economic reality in Greece, as in most other Member States. The Greek government 
started  implementing  measures  aimed  at  containing  the  spread  of  the  Coronavirus 
already at the end of February by increasing the intensity of the containment measures:  

Following  the  initial  localised  measures,  all  education  institutions  were  closed  on 

11 March.  

On  13 March,  the  operation  of  cafes,  bars,  museums,  shopping  malls,  sports  facilities 
and  restaurants  was  suspended  and  as  of  March  18,  all  retail  businesses  as  well  as 
church services have been closed, followed by the closure of hotels on 19 March.  

On 23 March, Greece went into the strictest phase of containment measures, banning all 
non-essential movement, with  only  business  deemed essential  remaining open such 
as supermarkets, bakeries pharmacies and private health services.  

These relatively swift and compared to other  euro area countries strict  measures 
seem  to  have  slowed  down  the  spread  of  the  Coronavirus  pandemic  in  Greece. 
Greece registered 2,744 cases and 152 deaths until 12 May 2020. This has also limited 
the strain on the Greek healthcare system so far, where  Intensive Care Unit capacities 
and  ventilators  have  been  increased  where  possible.  The  containment  measures  are 
being  slowly  lifted  since  early  May  according  to  a  stepwise  plan,  with  gatherings  of 
people and the operation of restaurants, cafes and bars remaining restricted for longer. 
Travel restrictions are expected to remain in place until the end of June or early July.  

The containment measures have severely affected economic activity with a third of 
private  sector  employment  directly  affected  in  March  and  April.  The  latest 
Economic  Sentiment  Indicator  (ESI),  registered  a  drop  from  113.2  index  points  in 
February  before  the  start  of  the  containment  measures  to  99.3  in  April  and  the 
Purchasing Managers Index (PMI) declined from 56.4 in February to 29.5 in April. New 
hiring  dropped  by  53%  in  March  compared  to  February  2020  and  83%  compared  to 
April  2019,  but  at  the  same  time  redundancies  also  decreased  by  71%  compared  to 
March and by 81% compared to April 2019 indicating a freeze in the labour market.  

The authorities promptly adopted a set of income support and liquidity measures 
of  a  large  scale.  To  mitigate  the  economic  and  social  impact,  a  broad  range  of 
budgetary  measures  were  undertaken  aiming  to  support  households  and  businesses 
while additional measures were  adopted to provide liquidity to  companies affected by 
the Coronavirus outbreak. According to the estimates of the European institutions, the 
overall size of the measures is 10.5% of GDP. These measures consist of 5% of GDP of 
budgetary measures and 1.9% of GDP of liquidity measures of which 0.6% of GDP are 
tax  deferrals  and  1.3%  of  GDP  are  other  measures  aiming  to  provide  households  and 
businesses  with  temporary  liquidity  support.  The  latter  set  of  measures  is  expected  to 

9 

Chapter 2 - Assessment of impacts of the coronavirus outbreak and macroeconomic developments 

Commission Staff Working Document -  

provide  up  to  3.6%  of  GDP  of  additional  loans.  These  amounts  correspond  to  the 
measures announced by the authorities until end of April and cover the period until end-
May. A detailed presentation of the measures follows in section 2.2 and section 3. 

Greece  will  also  benefit  from  the  recent  policy  measures  announced  by  the 
European  Central  Bank.  On  18 March,  the  European  Central  Bank  announced  the 
Pandemic  Emergency  Purchase  Programme,  with  an  overall  envelope  of  €750 billion. 
Purchases  will  be  conducted  until  the  end  of  2020  and  will  include  all  the  asset 
categories eligible under the existing asset purchase program as well as Greek sovereign 
bonds.  On  7 April,  the  European  Central  Bank  announced  a  temporary  easing  of  the 
collateral requirements for the Eurosystem credit operations, with the aim of facilitating 
participation in liquidity providing operations and supporting credit to the economy. It 
also  introduced  a  waiver  of  the  minimum  credit  quality  requirement  for  collateral 
consisting of Greek sovereign bonds. The European Central Bank banking supervision 
has further temporarily lowered capital requirements for banks to ensure the continuing 
financing of the real economy. 

Greece  is  benefitting  from  a  number  of  Commission  initiatives  to  counteract  the 
economic impact of the pandemic and the guarantee fund set up by the European 
Investment Bank. The Commission has started an initiative to frontload and make the 
best use of the European Structural and Investment Funds for addressing the pandemic. 
This initiative gives a maximum of flexibility in transferring funds between regions and 
funds,  while  lifting  limits  on  spending  per  policy  objectives  and  co-financing 
requirements. The Greek authorities have introduced a number of requests for funding 
through the Coronavirus Response Investment Initiative, with an indicative total cost of 
the  nominated  projects  of  €5.8  billion,  part  of  which  will  be  covered  by  European 
Structural and Investment Funds, part from the national Public Investment Budget and 
part from the regular budget. The exact distribution of these sources cannot be defined 
at  this  stage,  but  a  first  calculation  of  the  available  EU  funds  suggests  that  within  the 
2014-2020 European Structural and Investment Fund programmes an amount up to €2 
billion could be made available through reallocations. Support to mitigate the effect on 
employment  in  Greece  could  be  available  through  the  Commission  proposal  for  a 
temporary Support  to  mitigate Unemployment Risks in  an Emergency  (SURE), which 
once adopted by the Council, will make up to €100 billion in loans available across EU 
member states to finance unemployment support and short-term work schemes. Greece 
could  qualify  for  support  under  the  SURE  scheme  for  both  the  special  lump  sum 
allowance of €800 (already introduced and covering a period of 45 days) and the new, 
broader  short-time  work  scheme  to  be  introduced  (please  see  section  7).  Financial 
support to  Greek companies will also  be available via a pan-European  guarantee fund 
set up by the European Investment Bank that is a aiming at mobilising €200 billion in 
loans to small and medium sized enterprises in the EU. In addition to that, the European 
Investment  Bank  group  is  also  increasing  funding  under  the  already  existing  support 
schemes, aiming at supporting small and medium sized enterprises.  

2.2.  MACROECONOMIC OUTLOOK 

The  economic  impact  of  the  social  distancing  and  containment  measures  affects 
Greece  through  multiple  channels.  With  the  closure  of  all  non-essential  businesses, 
domestic demand is  strongly affected  as well as supply of  goods and services.  Due to 

10 

Chapter 2 - Assessment of impacts of the coronavirus outbreak and macroeconomic developments 

Commission Staff Working Document -  

the strong restrictions regarding travel and the severe disruption of global supply chains 
as  well  as  the  drop  in  demand  due  to  social  distancing  measures  in  other  countries 
affected by the Coronavirus outbreak, the external sector is also affected trough a strong 
decline  in  external  demand.  Increased  uncertainty  as  well  as  lower  liquidity  and 
provision  of  credit  has  a  negative  effect  on  investments.  The  projections  presented  in 
this  report  are  based  on  the  assumption  that  the  containment  measures  are  gradually 
lifted in May and phased out until end of June. The general economic shock is assumed 
to be of a relatively short transitory nature with a recovery starting towards the end of 
2020 and gaining momentum in 2021.  

incomes.  This, 

together  with  drastically 

Containment  measures  and  reduced  incomes  are  expected  to  compress  domestic 
consumption.  Rising  unemployment,  reduced  need  for  hiring  seasonal  workers  and 
lower wages due to involuntary part-time work and unpaid leave, will lead to a decline 
reduced  consumption 
in  disposable 
opportunities during the closure period of non-essential businesses will lead to a strong 
decline  in  domestic  consumption.  While  some  consumption  can  be  postponed  to  after 
the end of the containment measures, most consumption of services such as restaurants, 
hotels,  bars etc. will not  profit from  a significant increase in  demand compared to  the 
pre-pandemic levels, due to the nature of their services. This means that over the year, 
losses  in  consumption  can  only  partially  be  recovered.  Combined  with  the  lower 
disposable  incomes,  a  significant  drop  in  consumption  is  to  be  expected.  The  Greek 
government  has  implemented  a  support  scheme  targeted  at  workers  on  unpaid  leave, 
which supports incomes with a lump sum of €800 per month from mid-March to mid-
June.  This  income  support  is  expected  to  cushion  the  negative  impact  on  incomes  to 
some extent, but given that the average net monthly wage is around €1,300, the negative 
impact on incomes will still be sizeable.  

Tourism and shipping services – two very important sectors for Greece’s economy 
–  are  expected  to  be  hit  particularly  hard.  Tourism  will  inevitably  suffer  from  the 
travel  restrictions  and  social  distancing  measures  and  with  the  main  tourism  season 
concentrated  in  the  months  June  to  September  (73%  of  tourism  receipts  are  made  in 
these months) the effect of the pandemic is expected to be more persistent than in other 
sectors.  Depending  on  the  length  of  the  social  distancing  measures  and  travel 
restrictions  in  Greece  and  other  EU  countries  as  well  as  the  United  Kingdom,  Greece 
could lose most of its tourism receipts for 2020. Even in a very positive scenario, where 
normal tourism activity would be possible again starting from July, the impact could be 
large, due to income effects in the partner countries, disruptions in air traffic and lower 
booking  numbers  due  to  higher  uncertainty,  making  losses  of  well  above  50%  in 
tourism  receipts  likely.  In  recent  years,  Greece  has  also  established  a  sizable 
professional tourism sector mainly concentrated in Athens and Thessaloniki, which may 
suffer from longer lasting restrictions compared to the individual tourism and aggravate 
losses. The other important export industry is shipping, which will be strongly affected 
by containment measures and closure of ports globally as well as the decline in global 
trade that is expected in 2020 as a result of the pandemic.  

Heightened  uncertainty,  triggered  by  the  sudden  drop  in  demand  and  tightened 
financing constraints, is expected to weigh on investment. Due to the lower revenues 
and earnings during the containment measures as well as the high uncertainty regarding 
the  length  and  severity  of  the  pandemic,  the  counter  measures  and  their  economic 

11 

Chapter 2 - Assessment of impacts of the coronavirus outbreak and macroeconomic developments 

Commission Staff Working Document -  

impact, investment projects will likely be postponed or reconsidered; apart for a small 
subset of investment in IT infrastructure that enables companies to remain active during 
the phase of containment measures (web shops and remote working IT environments). 
Other determining factors will be the  availability of financing  and liquidity as  well as 
uncertainty, in particular about a recurrence of the pandemic and the economic recovery 
in general. Government guarantees and the support from the European Investment Bank 
target  the  availability  of  financing  and  liquidity  in  order  to  soften  the  impact  on 
investment.  These  measures  will  be  of  particular  importance  once  the  containment 
measures have been relaxed and can significantly speed up the recovery of investment 
activity  and  enhance  the  recovery.  Other  measures  such  as  the  possibility  to  put 
employees on unpaid leave and tax deferrals are important to help businesses to bridge 
the  gap  created  by  the  sudden  drop  in  demand  and  revenues  due  to  the  containment 
measures.  

The drop in external demand and the effects of the travel restrictions is expected to 
lead to a strong decline in goods and service exports, while lower domestic demand 
and  the  disruption  of  global  supply  chains  puts  downward  pressure  on  imports. 
The pandemic is spread across the world and is strongly affecting global supply chains. 
With the main export markets for Greek goods and services exports among the strongly 
affected countries, exports are expected to contract sharply. While the lower elasticity of 
Greek goods exports might cushion the effect somewhat, the size of the impact is still 
forecast to be substantial. In particular, the large share of service exports (55% of total 
exports in 2019) and the importance of tourism and transport for Greek service exports 
is leading to a strong negative impulse from service exports in 2020.  

Unemployment  is  expected  to  increase  in  2020.  Due  to  the  complete  lock  down  of 
entire industries during the containment measures against the Coronavirus outbreak, the 
unemployment rate is expected to increase to around 20% compared to 17.3% in 2019. 
Measures  incentivising  labour  hoarding  and  the  relaxation  of  employment  regulation 
allowing  companies  to  place  employees  on  unpaid  leave  for  the  duration  of  the 
containment  measures,  will  help  to  limit  the  employment  impact.  Nevertheless,  the 
impact in particular in the hospitality sector and in the tourism industry is expected to be 
significant,  as  a  large  share  of  the  seasonal  workers  employed  in  tourism-related 
industries may ultimately remain out of work. The effect on non-seasonal employment 
is expected to be moderate, as labour hoarding can be successful to bridge a relatively 
short-lived  gap  in  business  activity.  However,  longer  drops  in  economic  activity  may 
lead  to  a  permanent  destruction  of  economic  fabric,  leading  to  the  bankruptcy  of  less 
resilient firms and therefore leading to an increase in unemployment. With the gradual 
lifting  of  containment  measures  in  May  and  a  relatively  short  fading  out  of  social 
distancing  measures  until  mid-June,  the  impact  on  employment  is  estimated  to  be 
contained around 20% in 2020 compared to 17.3% in 2019.  

The economic downturn may reverse the recent improvements in poverty rates. At 
31%, the share of people at risk of poverty and social exclusion was already high before 
the start  of the pandemic compared to  the euro  area average of 21% in  2019, but  had 
been on a declining trend. While households can withstand a relatively short period of 
containment measures, especially when most employees are receiving income support, 
the effect of a prolonged phase of containment measures can potentially be devastating. 
The particularly large share of small and micro enterprises that have just recovered from 

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the  impact  of  the  global  financial  crisis,  and  the  share  of  seasonal  workers  in  tourism 
related fields  means that many households do not  have significant  savings to  bridge  a 
longer  impact.  The  high  share  of  non-performing  loans  and  the  still  ongoing 
deleveraging  means  that  households  in  general  have  only  limited  funds  to  sustain 
themselves  during  a  longer  period  of  no  or  reduced  incomes.  Large  job  losses  and 
declines in disposable incomes could significant increase the share of people at risk of 
poverty or social exclusion in 2020 and beyond.  

The  authorities  bolstered  of  liquidity  measures  in  the  private  sector  by  1.9%  of 
GDP which are expected to mobilize 3.6% of GDP additional loans. These measures 
include tax deferrals and other liquidity measures which are expected to have a sizable 
positive impact as well due to the mitigating effects regarding liquidity constraints for 
the corporate sector and the support for investment after the relaxation of containment 
measures. The announced liquidity measures are:  

A provision of €2 billion in cash collaterals from the Hellenic Development Bank (total 

expected leverage of up to €8 billion).  

A  reallocation  of  additional  €250 million  towards  the  disbursement  of  new  corporate 
loans,  with  full-interest  subsidy  coverage  for  2  years  under  the  existing  TEPIX  II 
scheme from the Hellenic Development Bank.  

A  number  of  deferrals  for  tax  and  value  added  tax  obligations  and  social  security 
contributions  (including  tax  settlement  schemes).  These  measures  offer  at  least 
3 months extension of the respective obligations. 

The  measures  taken  by  the  authorities  will  be  instrumental  in  safeguarding 
businesses  and  allowing  a  swift  ‘restart’  of  the  economy  after  the  phase  of 
containment measures. While the containment measures are necessary to mitigate and 
manage the spread of the Coronavirus, they will have a negative effect on the economy. 
While  the  speed  of  the  medical  recovery  from  the  pandemic  will  determine  how  long 
the  containment  measures  need  to  stay  in  place,  expansionary  fiscal  measures  can 
cushion  the  immediate  effects  of  losses  in  income  and  revenues.  However,  these 
measures will also be a key factor in determining the speed and shape of the economic 
recovery afterwards. By allowing and incentivising firms to keep their employees while 
suspending  their  pay  for  the  duration  of  the  containment  measures,  the  fiscal  package 
aims  at  preventing  a  large  increase  in  unemployment  and  at  enabling  firms  to  start 
production  at  full  capacity  swiftly  afterwards.  Measures  supporting  incomes  of 
employees  who  are on unpaid  leave ensure that they  are able to  stay available for the 
companies and support their consumption expenditure. This will also support domestic 
demand once non-essential business will be opened again. Measures providing liquidity 
to firms help to bridge paying fixed costs such as rent while revenues are very limited. 
They also aim to help firms to restart investment activity shortly after the containment 
measures have been lifted, adding further to domestic demand and supporting growth.  

Extremely  low  oil  prices  and  the  downward  pressure  on  wages  will  weigh  on 
inflation. The recent drop in oil prices and the low oil price developments expected for 
2020  and  2021  will  negatively  affect  producer  prices.  Further  downward  pressure  is 
expected from wages as the Coronavirus outbreak particularly affects the service sector. 

13 

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Lower  demand,  domestic  and  external  is  expected  to  put  downward  pressure  on  the 
industrial  component  of the  inflation  index.  Only  processed  and  unprocessed  food  are 
expected to put a limited upward pressure on prices due to the disruption international 
trade and food production. Depending on the length and gravity of the economic impact 
of  the  Coronavirus  pandemic,  consumer  price  growth  is  expected  to  reach  negative 
territory in 2020. With the economic recovery expected for 2021, inflation is expected 
to turn positive again. The decrease in price growth is expected to be lower than what 
could be expected from the contraction of economic activity and from the large output 
gap on the back of price rigidities in the Greek economy.  

The uncertainty regarding the economic impact as well as the development of the 
pandemic itself is large and downside risks prevail. Due to the containment measures 
necessary  to  fight  the  pandemic,  the  economy  is  currently  at  a  minimum  activity  and 
almost at a standstill in a large number of sectors. Since the length and severity of the 
pandemic  determines  to  a  large  extent  for  how  long  the  containment  measures  are 
necessary, it also determines to a large extent the impact on the economy. Regarding the 
economic impact,  a few  weeks of extended containment  measures, even if only in  the 
main trading partner countries can potentially mean a loss of several percentage points 
in  GDP growth.  Due to  the scientific and epidemiological  uncertainty surrounding the 
completely  new  pandemic,  any  economic  forecast  is  necessarily  based  on  a  large 
number of assumptions. With the containment measures being gradually lifted in May, 
as assumed in the current projection, the decline in GDP could likely be contained in the 
high  negative  single  digits.  Should  travel  restrictions  remain  in  place  well  into  the 
second half of the year the strong impact on the tourism is considered a strong downside 
risk. Any medical solution to the pandemic (treatment or cure) could be considered an 
upside risk if it can significantly shorten the containment measures, in particular travel 
restrictions.  The  speed  of  the  recovery  is  also  surrounded  by  large  uncertainties  and 
downside risks, as it is  a function of the length and severity  of the negative economic 
shock, of the effect of the shock on potential output, household savings and banks’ asset 
quality, and the effectiveness of the containment measures in Greece but also in its main 
trading partners.  

Table 2.1:  Summary of the main economic variables (%) 

Source: European Commission  

14 

2018201920202021Real GDP1.91.9-9.77.9Employment growth1.72.0-3.73.8Unemployment rate19.317.319.916.8GDP deflator0.5-0.4-0.10.6Harmonised index of consumer prices0.80.5-0.60.5 
   
 
 
3. 

FISCAL AND FISCAL-STRUCTURAL POLICIES 

3.1.  FISCAL DEVELOPMENTS AND OUTLOOK 

Greece  has  entered  this  crisis  in  a  relatively  favourable  fiscal  position,  with 
substantial  cash  reserves,  a  strong  primary  surplus,  and  low  medium-term  re-
financing  needs  on  its  high  public  debt.  The  extraordinary  fiscal  adjustment 
implemented during and following the programmes has made Greece better equipped to 
weather the Coronavirus outbreak compared to the situation a decade ago, ahead of the 
global  financial  crisis.  The  budget  has  been  delivering  high  structural  surpluses  for 
several years while meeting or outperforming the fiscal targets. Greece also enjoys cash 
reserves  close  to  €34 billion,  which  is  an  important  asset  in  view  of  the  fallout  of 
revenues  and  extraordinary  spending  to  tackle  the  pandemic.  These  efforts  were 
reflected  in  2019  and  early-2020  in  the  financial  markets  and  Greece’s  credit  ratings, 
which had been improving steadily. The yield spreads on Greece’s long term bonds had 
declined to historical lows earlier this year.  

Greece reached its primary surplus target of 3.5% in 2019. This is somewhat lower 
compared  with  the  projections  in  previous  reports,  given  that  a  large  share  of  the 
expected over-achievement  covered the  cost  of  a merger of the private  supplementary 
pension fund LEPETE with the public supplementary pension fund worth 0.3% of GDP 
in  accrual  terms.  The  headline  balance  reached  1.5%  of  GDP,  significantly  higher 
compared to the euro area average of -0.8% GDP. The outcome of 2019 was supported 
by  solid  economic  growth  and  contained  expenditure  growth  but  remained  below  the 
4.2% of GDP programme primary surplus reached in 2018 on account of a large amount 
of expansionary fiscal measures adopted in May 2019 by the previous government. The 
fiscal impact of that package reached around 0.8% GDP for 2019. 

The  authorities  have  reacted  swiftly  to  the  deteriorating  macroeconomic  outlook 
and, in line with the co-ordinated response agreed by the Eurogroup on 16 March 
to protect the euro area economy, allowed automatic stabilisers to function fully so 
as  to  avoid  a  pro-cyclical  tightening.  The  suspension  of  economic  activity  and  the 
subsequent  decline  in  aggregate  demand  will  take  its  toll  on  the  government’s  fiscal 
revenues.  Besides  the  deferred  tax  obligations,  the  fall-out  in  turnover  and  income  is 
expected  lead  to  a  fiscal  revenue  loss  of  about  3.3%  of  GDP.  The  expected  rise  in 
unemployment will also put more pressure on the expenditure side as spending on social 
benefits will automatically increase.  

In addition, the authorities have adopted an unprecedented amount of measures to 
support the economy. According to the estimates of the European institutions, the 
overall size of the measures is 10.5% of GDP, of which 5.0% of GDP are budgetary 
measures. The majority of the measures aim to support companies and their employees 
who are affected by the Coronavirus outbreak either through a direct suspension of the 
companies’  operation  or  the  general  deterioration  of  economic  activity.  The  adopted 
measures  will  provide  benefits  to  broadly  2 million persons  and  800,000  companies 
until  the  end  of  May.  According  to  the  estimates  of  the  European  institutions,  the  net 
impact on the budget balance of these measures is estimated at 3.7% of GDP in 2020, as 
part of the measures are fiscally neutral. The fiscally neutral measures will be financed 

15 

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by  the  Coronavirus  Response  Investment  Initiative  or  through  a  re-allocation  of 
expenditure of the public investment budget. The most important measures are: 

Temporary economic support of €800 to wage earners whose labour contracts have been 
suspended and to self-employed, freelancers and individual businesses (with up to 20 
employees)  who  are  affected  by  the  Coronavirus  outbreak.  The  benefit  of  €800  is 
expected  to  be  granted  to  broadly  1.8  million  persons  for  the  period  of  mid-March 
until  April  and  the  monthly  equivalent  for  May.  The  total  cost  is  estimated  at 
1.5% of GDP and part of it (0.3% of GDP) will be covered through the re-allocation 
of the public investment funds. This scheme would qualify for support under the EU 
temporary  Support  to  mitigate  Unemployment  Risks  in  an  Emergency  (SURE) 
scheme. 

Repayable  advance  payment  of  €2.0  billion  to  companies  which  is  planned  to  be 
financed  both  by  the  ordinary  budget  (€1.3  billion)  and  the  Corona  Response 
Investment  Initiative  (€0.7  billion).  The  affected  businesses  can  request  financial 
assistance with  a low interest  rate to be paid  back within a five  years period  and a 
grace period of eighteen months. However, in case the turnover does not recover to 
the  pre-crisis  levels,  the  companies  are  not  obliged  to  repay  this  advance.  The 
eligibility  criteria  will  take  into  account  among  other  things  the  deterioration  of 
turnover, the decrease in profits and the impact of net employment cost. 

Payment  by  the  state  of  social  security  contributions  of  employees  whose  labour 
contracts  have  been  suspended.  The  coverage  includes  both  employee’s  and 
employer’s contribution  until May and it is calculated based on the nominal salary. 
This  measure  is  estimated  to  benefit  1.2  million  persons  with  a  fiscal  cost  of 
0.8% of GDP. 

Interest subsidy on loans to small and medium-sized enterprises with an estimated cost 
of 0.5% of GDP. The state will cover the interest payments for performing loans for 
the months April until June. 

Suspension of social security contributions instalment schemes by three months with a 

fiscal impact of 0.2% of GDP in 2020. 

Additional  support  to  the  public  health  care  system  of  0.2%  of  GDP  to  account  for 
extraordinary  expenditures  with  respect  to  payroll  costs  both  of  existing  personnel 
and  2,000  new  recruitments,  equipment  of  Intensive  Care  Units,  pharmaceuticals, 
medical  equipment,  cleaning,  storage,  transport  and  analysis  of  samples  and  to  all 
other areas where extraordinary expenditures are required. 

Temporary 

support 

economic 

(i.e. 
economists/accountants,  engineers,  lawyers,  doctors,  teachers  and  researchers)  of 
€600  until  end-April  and  the  monthly  equivalent  of  the  €800  benefit  in  May.  The 
total  number  of  beneficiaries  is  around  180,000  and  the  fiscal  cost  is  estimated  to 
reach 0.1% of GDP and will be covered by the public investment budget.  

professions 

certain 

liberal 

to 

A partial payment by the government to the Easter bonus for private sector employees 
whose labour contract has been suspended. The Easter bonus constitutes a standard 

16 

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part of the salary of the private sector employees and amounts to broadly half of their 
monthly salary. It applies only to the private sector while in the public sector it was 
abolished  in  2013.  The  state  will  cover  the  fraction  of  the  Easter  bonus  that 
corresponds to the period of suspension and the cost is estimated at 0.1% of GDP.  

Additional  measures  with  a  fiscal  impact  of  0.5%  of  GDP  as  depicted  in  Table  3.1 
which  include  among  others:  (i)  25%  discount  on  tax  and  social  contributions 
obligations  paid  in  expected  deadlines,  (ii)  extension  of  the  regular  and  long-term 
unemployment  benefit  for  persons  whose  rights  would  expire  in  March  for  two 
additional  months,  (iii)  capital  transfers  to  support  specific  areas  of  the  primary 
sector of the economy affected by the Coronavirus outbreak, (iv) local governments 
were  granted  the  possibility  to  abolish  local  government  levies  until  June  for  the 
companies whose operation was suspended, (v) a temporary increase in the clawback 
ceiling for hospitals, (vi) additional support to ministries to cover expenditure related 
to  the  Coronavirus  outbreak,  (vii)  extraordinary  Easter  bonus  to  public  sector 
employees  working  in  hospitals,  National  Emergency  Aid  Centre,  National 
Organisation  of  Public  Health  and  Civil  Protection,  (viii)  temporary  economic 
support of €400 to long-term unemployed.  

The authorities have also adopted a number of measures to improve the liquidity 
of  the  private  sector,  worth  1.9%  of  GDP  which  is  expected  to  mobilize  up  to 
3.6% of GDP of additional loans (see section 2.2 and table 3.1). These measures aim 
to  support  the  sectors  of  the  economy  affected  by  the  Coronavirus  outbreak  by 
providing liquidity in the short run. Firstly, the government has postponed the payments 
of tax and social security obligations including the tax instalment schemes for at least 3 
months for all companies, self-employed and wage earners affected by the Coronavirus 
pandemic.  The  size  of  the  suspension  is  estimated  at  0.6%  of  GDP  without  however 
affecting  the  fiscal  balance  as  these  obligations  will  remain  due  within  the  year. 
Secondly,  medium-term  liquidity  will  be  provided  to  businesses  through  a  cash 
collateral  guarantee  mechanism  of  €2.0 billion  provided  by  the  Hellenic  Development 
Bank. The loans will be provided by the commercial banks to small and medium-sized 
enterprises,  as  well  as  large  companies.  A  further  extension  of  the  total  envelope  for 
TEPIX II scheme from the Hellenic Development Bank, with an additional 250 million 
is also envisaged. For a detailed analysis of these schemes please consult Section 6.1. 

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Table 3.1:  Measures to tackle the Coronavirus outbreak included in the Commission 2020 spring 

forecast 

(1) The funds to Hellenic Development Bank were disbursed already in 2019 from the Public 
Investment Budget. 
Source: European Commission 

Apart  from  the  Coronavirus  outbreak,  Greece  is  also  grappling  with  renewed 
migration pressures. Greece has recorded a 46% increase in migrant arrivals in 2019 
and  the  inflows  have  further  strengthened  in  the  first  quarter  of  2020.  The  steady 
increase  in  the  number  of  asylum  seekers  poses  challenges  to  Greece’s  migration 
management  capacities  and  makes  intensified  border  protection  and  patrol  activities 
necessary.  To  support  and  acknowledge  Greece’s  efforts,  the  EU  pledged  to  provide 
Greece €700 million emergency support. This, together with  a more prudent reporting 
and  forecast  of  the  migration-related  expenses  contribute  to  the  relaxation  of  the 
budgetary  constraints  Greece  might  face  in  addressing  the  migration  crisis.  The 
migration-related expenses that were not  financed through EU-funds and are therefore 
excluded  from  the  primary  balance  considered  under  enhanced  surveillance  reached 
0.1%  of  GDP  in  2019  and  are  expected  to  increase  to  0.2%  of  GDP  in  2020.  The 
authorities  have  taken  steps  to  record  these  expenses  across  the  public  administration 
and clarified that the range of eligible costs includes wages of police officers assigned to 
the management of the migration crisis.  

18 

in mil eurosas % of GDPin mil eurosas % of GDPBudgetary measures8,4035.06,2101,5006936,2103.7Temporary economic support  to wage earners and self-employed2,4811.51,9934891,9931.2Repayable advance payment2,0001.21,3007001,3000.8Social Security Contributions paid by the state1,3130.81,3131,3130.8Interest payment on performing loans of SMEs 8000.5080000.0Suspension  of  Social Security Contributions instalment schemes by 3 months2740.22742740.2Additional support to the healthcare system2730.22732730.2Easter bonus state contribution for employees under labour suspension2030.12032030.1Temporary Economic support  to certain liberal professions 1890.1018900.0Extension of the regular and long-term unemployment benefit 1540.11541540.1Support of the primary sector of the economy1500.11501500.1Abolishment of Local Government  levies1100.11101100.125% discount on tax and SSC obligations paid in expected deadlines1080.11081080.1COVID-19 expenditures of other ministries1000.11001000.1Clawback to hospitals850.185850.1Easter bonus to medical and other staff 620.062620.0Temporary economic support to long-term unemployed620.062620.0Special purpose leave for parents200.020200.0Compensation of passenger ships150.001500.0Other40.0440.0Liquidity measures3,2641.91,01402,25000.0Cash collaterals (bank guarantees) by Hellenic Development Bank to banks for loans to affected companies2,0001.202,00000.0Deferral of VAT payments 4250.342500.0Deferral of social security contributions payments 2860.228600.0Deferral of payments of tax debt instalments 3030.230300.0HDB co-financing loans to SMEs /12500.1025000.0Total measures11,6676.97,2241,5002,9436,2103.7Expected additional impact of liquidity measures8,0003.600.0Total impact 19,66710.57,2241,5002,9436,2103.7as % of GDP4.30.91.7SizeFinanced by:Fiscal impact2020Ordinary budgetCorona response investment initiativePIB reallocation2020 
  
 
Commission Staff Working Document -  

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The  authorities  have  postponed  the  adoption  of  a  Medium-Term  Fiscal  Strategy 
for 2020-2024. Due to the exceptionally high macroeconomic and fiscal uncertainty for 
the  short  term,  the  authorities  have  decided  to  postpone  the  adoption  of  a  more 
comprehensive fiscal strategy for the medium term.  

As  a  result  of  the  measures  adopted  to  tackle  the  Coronavirus  outbreak  and  the 
deteriorated  macroeconomic  environment,  the  updated  forecast  of  the  European 
institutions (6) expects the primary balance to turn to a deficit of 3.5% of GDP in 
2020  and  reaching  a  small  surplus  in  2021.  The  projection  reflects  the  cost  of 
functioning  of  automatic  stabilisers  with  an  estimated  impact  on  the  balance  of 
3.3% of GDP,  and  the  fiscal  impact  of  measures  taken  by  the  government  in  order  to 
tackle  the  Coronavirus  pandemic,  which  is  expected  to  deteriorate  the  balance  by 
another 3.7% of GDP. On top of these revisions, the macroeconomic outcome of 2019 
negatively  affects  the  2020  forecast  by  0.3%  of  GDP,  mainly  through  a  substantial 
decline of the gross operating surplus in 2019, implying a low tax base for this  year’s 
corporate income tax. The forecast also takes into account a prudent assessment of the 
carryover of value added tax revenues in view of the heightened uncertainty and lower 
balances  of  local  governments  which  can  be  attributed  to  the  decrease  in  expected 
revenues  due  to  the  amendment  made  in  municipality  levies  measure.  Finally,  the 
flexibility provided due to the Coronavirus outbreak as regards the frontloading of EU 
funds  in  combination  with  the  increase  in  EU  co-financing  rate  are  expected  to  affect 
positively  the  balance  by  0.4%  of  GDP.  On  the  back  of  a  projected  rebound  in  the 
economy,  the  primary  balance  is  expected  to  return  to  a  surplus  in  2021  and  reach 
0.7% of GDP. 

Greece benefits from the same flexibility arrangements as other Member States in 
the context of the Stability and Growth Pact. Faced with the emerging implications 
of the Coronavirus outbreak, the 16 March 2020 Eurogroup stated that the full use of the 
flexibility  will  be  made  available  under  the  Stability  and  Growth  Pact  to  all  Member 
States.  In  a  Communication  adopted  on  20  March  2020,  the  Commission  shared  with 
the Council its view that the severe economic downturn resulting from the Coronavirus 
outbreak  warranted  the  activation  of  the  general  escape  clause  of  the  Stability  and 
Growth Pact (7). On 23 March, EU Finance Ministers supported that view. The general 
escape  clause  allows  for  a  temporary  departure  from  the  budgetary  requirements, 
including Greece’s fiscal targets monitored under enhanced surveillance, provided that 
this does not endanger fiscal sustainability in the medium term. It does not suspend the 
procedures of the Stability and Growth Pact nor Greece’s commitments but it will allow 
the  Commission  and  the  Council  to  undertake  the  necessary  policy  coordination 
measures in order to tackle the economic consequences of the pandemic.  

The  inherent  uncertainty  in  the  current  forecast  and  assessment  is  much  larger 
than  in  normal  times.  At  the  time  of  drafting  this  report,  only  very  preliminary  data 
were  available  to  confirm  the  magnitude  and  the  severity  of  the  economic  and  fiscal 
fallout. The degree to which the economic downturn will take its toll on public revenues 
and  social  expenditure  is  subject  to  substantial  uncertainty  and  could  be  larger  than 

(6)  Published  as  the  Commission  2020  spring  forecast:  https://ec.europa.eu/info/business-economy-

euro/economic-performance-and-forecasts/economic-forecasts_en. 

(7)  https://ec.europa.eu/info/sites/info/files/economy-finance/2_en_act_part1_v3-adopted_text.pdf.  

19 

                                                           
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assumed  in  this  projection.  Furthermore,  there  is  considerable  uncertainty  about  the 
final  costs  of  the  emergency  budgetary  measures  adopted  by  the  authorities.  Notably, 
fiscal recording of the measure on tax deferrals is subject to uncertainty. In principle a 
(planned delay) in the actual cash receipts should not prevent the fiscal recording of the 
revenues  in  accrual  terms  for  2020.  However,  if  there  is  considerable  uncertainty 
whether  the  deferred  amounts  will  indeed  be  paid  in  full,  the  deferred  (and  not 
recovered)  amounts  might  be  considered  lost  for  the  year.  This  is  a  considerable 
downside  risk  for  2020  and  a  moderate  upside  for  2021.  Further  risks  relate  to  an 
eventual  extension  of  the  currently  assumed  measures.  An  extension  of  the  currently 
adopted measures beyond May could have a negative impact on the fiscal balance. Such 
extensions  are  however  not  considered  at  this  stage.  In  view  of  the  uncertainty,  the 
assessment will be updated in the autumn.  

Public  finances  face  further  risks  with  respect  to  ongoing  court  cases  and  public 
service obligations. As analysed in the previous report, the Council of State is expected 
to  issue a milestone ruling on retroactive payments  to  pensioners. An additional fiscal 
risk  stems  from  the  litigation  cases  against  the  Public  Real  Estate  Company  (ETAD). 
Although  some  small  amounts  have  already  been  awarded  in  favour  of  the  plaintiff, 
which  are  enforceable,  the  question  of  the  validity  of  the  most  important  (in  terms  of 
adjudicated amounts) recent arbitral awards is still pending before the Athens Court of 
Appeal,  following the filing of petitions for their annulment by the Public Real  Estate 
Company. The remaining fiscal risks with an estimated total cost of 0.2% of GDP relate 
to  the  Hellenic  Post’s  restructuring  and  more  specifically  to  the  payment  of  the 
remaining  public service obligation claimed by the Hellenic Post  for the  period 2013-
2020 and the financing of the planned voluntary exit scheme. 

3.2.  PUBLIC INVESTMENT 

Public investment continued to be under-executed in 2019. Compared to  the initial 
plans, general government investment was lower by 1.2% of GDP while the total impact 
on the general government balance was broadly neutral due to the lower drawing of EU 
funds.  Public  investment  has  been  continuously  under-executed  in  recent  years  with 
only 62% of the investment appropriations allocated to ministries being actually spent 
on  general  government  investment  in  2017-2019,  compared  to  an  average  of  88%  in 
2014-2016.  The  recurrent  undershooting  of  investment  expenditure  in  recent  years 
raises concerns in view of the country’s large investment needs, making the best use of 
EU funds and, ultimately, economic growth. 

As  shown  in  Graph  3.1,  the  outturn  for  public  investment  in  recent  years  was 
considerably  lower  that  envisaged  in  the  budget.  The  under-execution  concerned 
investment by both the general government as a whole and the state budget in particular 
(net  of  grants  to  general  government  entities).  In  the  past  three  years,  the  under-
execution  at  the  level  of  general  government  exceeded  1.2%  of  GDP  or  €2.3 billion. 
The biggest part of the undershooting stems from the investment projects managed by 
the central government/ministries (0.9% of GDP).  

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Graph 3.1:  General government investment execution 2014-2019 

Source: European Commission 

The reasons for the continued undershooting of public investments are numerous 
and  the  authorities  have  taken  some  measures  to  address  them,  while  there 
remains  substantial  scope  for  additional  action.  Making  the  best  use  of  available 
resources in the public investment budget will be key also to preparing the ground for a 
speedy recovery after the Coronavirus outbreak.  While the immediate priorities of the 
government are justifiably focused on initiating emergency measures to tackle to current 
crisis,  addressing  the  issues  which  hinder  the  efficient  management  and  execution  of 
public  investments  will  support  the  country’s  large  investment  needs  and  economic 
growth. 

The  on-going  and  foreseen  actions  to  improve  the  management  of  public 
investments are the following: 

In October 2019, the authorities adopted a law (Law 4635/2019) to establish a National 
Development  Programme  for  the  programming  and  implementation  of  the  national 
component of the Public Investment Budget. Based on the experience of the planning 
and  implementation  procedures  of  the  EU  funds  and  the  existing  institutional 
framework governing the national part of the investment budget, this law aims to set 
the foundations of an integrated system for the preparation, management, monitoring 
and control of a National Development Programme. The Plan, having a programming 
period of five years, aims to set-up a programme of investments, including strategic 
goals  and  medium-term  policy  targets  for  government  entities.  The  National 
Development  Programme  will  start 
in  2021.  Its  swift 
implementation  is  considered  key  for  improving  the  management  of  the  public 
investment  budget.  To  this  aim,  the  Greek  authorities  have  prepared  a  road  map, 
which  includes  all  the  specific  actions  for  the  successful  implementation  of  the 
National Development Programme.  

to  be  operational 

The  authorities  have  decided  to  create  a  Strategic  Projects  Pipeline  to  support  the 
development of large infrastructure projects of national importance. The lack of new 
mature projects is an important reason for the low execution of public investments. 

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0.00.50.1-1.4-1.2-1.2-2.0-1.00.01.02.03.04.0201420152016201720182019PlanOutcomeDifference% of GDP  
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The project pipeline will support the delivery of National Growth Strategy priorities, 
ensure  the  timely  preparation  of  projects,  plan  future  public  expenditures  and 
maximize  complementarities  between  private,  public  and  EU  funded  projects,  by 
optimising the blending of funds. It will demonstrate the feasibility and value-added 
of  potential  projects,  describe  the  level  of  their  maturation,  costing  and  multi-year 
budgeting, and clarify the sources of funding. The pipeline will be coordinated by the 
Presidency of the Government. The establishment of the Strategic Projects Pipeline 
will  considerably  improve  the  coordination  of  investments  and  the  efficient 
management  of  the  public  investment  budget  and  contribute  to  its  increased 
execution. The authorities committed to define and agree on the scope and role of the 
pipeline  by  July  2020,  establish  it  by  September  2020  and  ensure  staffing  and 
operationalization by October 2020. The pipeline is  expected to  be fully  developed 
by January 2021. 

The  authorities  have  decided  to  establish  a  Project  Preparation  Facility  to  help  to 
support  the  preparation  and  implementation  of  priority  infrastructure  investment 
projects  included  in  the  Strategic  Projects  Pipeline.  The  slow  preparation  and 
implementation  of  projects  is  another  reason  for  the  continued  undershooting  on 
public  investments.  The  Facility  will  support  projects  in  a  number  of  sectors, 
including energy, environment, social,  transport and digital  economy infrastructure. 
Support  will  be  provided  through  a  core  team  of  experts  who  will  support  the  key 
stages  of  project  development:  preparation  of  feasibility  studies,  cost/benefit 
analyses, preliminary and detail designs, spatial planning procedures, support for the 
tendering  process,  supervision  of  works,  other  preparatory  sectoral  studies, 
preparation  of 
terms  of  references,  capacity  building  of  beneficiaries  and 
administrative support for monitoring the progress of the projects. The Facility will 
also enhance Public Private Partnerships. The Facility will be hosted in the Hellenic 
Development  Bank.  It  is  expected  to  attract  additional  human  resources  from 
international financial institutions and relevant Greek authorities. The scope and role 
of  the  Facility  will  be  defined  by  July  2020  and  a  roadmap  will  be  designed  by 
September  2020.  The  initial  staffing  will  be  placed  by  October  2020  including  by 
secondments  from  international  financial  institutions,  with  a  view  to  making  the 
Facility fully operational by March 2021. 

Other  factors  that  slow  down  the  implementation  of  projects,  weaken  their  cost 
management and contribute to the under-execution of public investment relate to 
insufficient  predictability  and  coordination  of  archaeological  and  environmental 
permits  and  expropriation  procedures,  in  addition  to  complexities  of  associated 
judicial procedures. Legislative measures were taken in previous years in a number of 
areas.  Regarding  archaeology, 
include  a  Handbook  of  Procedures  for 
Archaeological Works for co-financed projects, a registry for the recruitment of experts 
(archaeologists)  and  the  mapping  of  the  archaeological  procedures  implemented  with 
own  means.  Regarding  expropriations,  they  include  the  reduction  of  the  number  of 
responsible  bodies  and  the  standardisation  of  the  process  for  the  expropriation  of 
agricultural  land.  A transparent  methodology to  assess the value of expropriations has 
been established and no public procurement is possible, unless expropriations are in an 
advanced stage (Law 4412/2016). The measures include as well the certification of 120 
independent experts, the opinion of whom would be mandatory for the Courts in cases 

these 

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of co-financed projects. Once these measures are fully in place, it is estimated that the 
project implementation stage could be shortened by 4-6 months.  

The  authorities  have  recognised  the  need  to  improve  the  flow  of  information 
between the ordinary (non-investment) and the investment budget. The investment 
budget  is  prepared  and  executed  independently  from  the  non-investment  state  budget, 
which  is  a  practice  followed  by  some  Member  States  and  one  that  requires  high 
standards  of  transparency  and  flows  of  information  between  the  authorities  managing 
the  two  budgets  in  order  to  avoid  inefficiencies.  Greece  has  adopted  a  detailed  action 
plan  to  remedy  the  situation  in  November  2019,  with  an  implementation  timeline 
reaching to 2021.  

The implementation of the November 2019 action plan to enhance the monitoring 
and forecasting of the Public Investment Budget is on track.  Based on the progress 
report shared with the European institutions in March 2020, some of the actions such as 
the  exchange  of  data  between  the  responsible  ministries  and  monthly  updates  of  the 
total allocation of investment expenditure so as to detect emerging underspending early 
on  are  already  in  place,  while  some  others  are  in  progress,  including  those  related  to 
technical  adjustments  of the  IT systems  and improvements of the  revenue forecast.  In 
the context of the action plan, technical support by the European Commission is being 
provided  on  automating  and  streamlining  implementation  procedures,  while  an 
additional project is under preparation to support the collection, handling and reporting 
of the data related to monitoring, budgeting and forecasting of expenses and revenue of 
the Public Investment Budget. The authorities are encouraged further efforts towards a 
timely implementation of the action plan, which also deals with the implementation of a 
single  accounting  framework  for  the  whole  public  administration  (see  the  Chart  of 
Account reform in section 3.5).  

The authorities have further engaged with the European institutions regarding the 
possible  use  of  SMP-ANFA  income  equivalent  amounts  for  reducing  gross 
financing  needs  or  financing  other  agreed  investments (8).  The  Greek  authorities 
intend  to  use  the  next  tranche  of  SMP-ANFA  income  equivalent  amounts  to  reduce 
gross financing needs. Following the mandate given at the December 2019 Eurogroup, 
technical  work  to  operationalise  the  Eurogroup  statement  of  June  2018  has  been 
undertaken  by  the  European  institutions  and  the  authorities.  The  workstream  will  be 
taken  up  again  in  autumn  2020,  in  the  context  of  progress  made  on  improving  the 
planning and execution of public investment referenced above. 

3.3.  TAX POLICY 

In  the face  of  the  quickly  developing  Coronavirus  situation,  the  Authorities  were 
unable to finalise the on-going nationwide property tax valuation exercise (a mid-
2020 specific commitment) in time for the current year’s tax assessment cycle. The 
original commitment had been to revalue property tax values in line with market prices 
and  broaden  the  base  of  the  property  tax  by  end-March  2020.  Unfortunately  it  was 

(8)  The June 2018 Eurogroup statement mentioned that the available income equivalent amounts will be 
transferred to Greece in equal amounts on a semi-annual basis in December and June, starting in 2018 
until June 2022, via the European Stability Mechanism segregated account and will be used to reduce 
gross financing needs or to finance other agreed investments. 

23 

                                                           
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impossible  to  finalise  the  revaluation  exercise  in  the  face  of  the  social  distancing 
measures introduced against the Coronavirus. This will postpone the implementation of 
the  wider  property  tax  reform  to  2021  and  have  a  small  approximately  €150 million 
fiscal  effect  on  2020  revenues.  The  authorities  have  committed  to  reschedule  the 
exercise  to  autumn  with  the  objective  of  aligning  the  property  tax  values  to  market 
prices by January 2021. 

3.4.  REVENUE ADMINISTRATION 

The  Independent  Authority  for  Public  Revenue  has  been  at  the  centre  of  the 
authorities’ efforts to combat the economic impact of the Coronavirus pandemic. 
The  Independent  Authority  has  under  strict  time  pressure  been  able  to  administer  the 
deferrals  of  taxes  and  instalments  for  legal  for  companies  and  persons.  Further,  the 
‘myBusinessSupport’ portal hosted by the Independent Authority provided the platform 
for businesses to submit applications to the refundable advance payments scheme with 
more  than  139,000  companies  taking  part.  The  Independent  Authority  also  issued 
electronic  resident  certificates  for  permanent  residents  at  the  islands,  in  order  to 
facilitate  their  movement  in  accordance  with  the  containment  measures  imposed  to 
tackle the pandemic. 

The  Independent  Authority  is  on  track  in  meeting  the  majority  of  its  key 
performance  indicators  for  the  first  quarter  of  2020  and  its  staffing  numbers 
increased at a modest pace during this period, although remaining well below the 
targets (an end-2019 specific commitment). Debt collection has continued at a similar 
pace for the first quarter of 2020 as for the same period of the previous year, while the 
proportion  of  fresh  audit  cases  has  increased  (see  Table  3.2).  It  is  noted  that  whereas 
end-2020 targets have been set for the key performance indicators, quarterly sub-targets 
are  yet to be defined. Staffing levels continued to increase during the first quarter and 
currently stands at 11,916, compared to 12,500 that was set as the target by end of 2019. 

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Table 3.2:  Key performance indicators of the Independent Authority for Public Revenue (first 

quarter of 2020) 

Note: Preliminary figures. Targets for the key performance indicators were set for end-2020 but 
quarterly sub-targets are yet to be set. 
Source: European Commission  

The  complementary  measures  in  the  areas  of  human  resources,  IT  and  housing 
needs, agreed in 2019 have seen limited progress. First, the primary legislation on the 
human resources reform (the wage grid) remains pending and is  a requirement for the 
reform  to  become  operational.  The  authorities  are  yet  to  submit  a  revised  timeline  by 
when  the  new  system  will  be  launched,  instead  of  July  2020.  Second,  on  the  IT 
framework,  no  progress  has  been  made  to  clarify  key  competency  areas  and  the 
updating of the existing service-level agreement between the Independent Authority and 
the Ministry of Digital Governance (General Secretariat for Information Services for the 
Public  Sector).  The  efforts  to  clarify  the  competency  areas  and  strengthen  the 
interoperability of various databases are expected to be stepped up with greater urgency 
during  the  next  reporting  period  with  an  updated  Service  Level  Agreement  to  be  in 
place  by  end  of  2020.  Concrete  results  in  this  area  will  strengthen  the  capacity  to 
combat  tax  evasion  and  facilitate  the  timely  collection  of  taxes.  Third,  as  concerns 
relocation of the headquarters of the Independent Authority into one single location, the 
previously  identified  building  is  no  longer  available  as  the  government  prioritised  the 
housing  needs  of  the  General  Secretariat  of  Civil  Protection.  However,  the  authorities 
has  presented  plans  for  a  new  building  to  be  erected  next  to  a  building  to  host  the 
Ministry  of  Finance  in  a  location  at  the  outskirts  of  Athens.  The  tender  for  the 
construction  is  expected  to  be  launched  by  the  first  quarter  of  2021,  while  the 
Independent Authority should be able to access the building by April 2024. 

The  authorities  are  taking  steps  to  strengthen  the  operational  capacity  of  the 
Operational Coordination Centre that coordinates anti-smuggling efforts. The draft 
legal provisions aiming to strengthen the Centre’s capacity and governance are expected 
to be adopted by end of May 2020. The draft provisions will, for example, upgrade the 

25 

End-2020Q1 2020Q1 2019TargetResultResultsKPI 1Collection of tax debts as of the end of the previous year (EUR millions)2,900867924KPI 2Collection of new debts in the current year (percent of new debt in the year)30%15%15%KPI 3Collection of debts by Large Debtor Unit (EUR millions)675N/A200Audits of fresh tax cases by the whole IAPRKPI 4Percent of fresh tax audit cases in total completed audits70%63%55%Tax audits and collection of large tax payersKPI 5Collection after audits in the year (percent of assessed tax and penalties)40%94%104%Tax audits and collection of high wealth individualsKPI 6Collection after audits in the year (percent of assessed tax and penalties)40%63%1097%Tax refundsKPI 7Percent of VAT tax refund claims processed within 90 days95%93%94%Compliance and enforcementKPI 8Percentage of total tax paid on time for VAT, Income and Property taxes84%N/A82%Percentage of total tax paid on time for VAT, Income and Property taxesKPI 9Percentage of debtors under enforcement measures68%72%66%Pre litigation phaseKPI 10Percentage of cases closed by explicit decision of the DRU87%96%96%Prosecution audits by Mobile UnitsKPI 11Prosecution audits by Mobile Units  (Customs Administration)35,0003 2467,622Debt collection 
   
 
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steering  committee  to  the  Ministerial  level  and  allow  for  secondments  of  operational 
staff  for  up  to  six  year.  In  terms  of  the  selection  process  for  the  up  to  20  operational 
posts, the criteria included are welcome, but the actual appointment decision should be 
consistent  with  the  provisions  of  the  Executive  State  Law (9)  that  delegates  such 
decisions to the administrative level. The authorities remain committed to also proceed 
with  an  overall  revision  of  the  customs  law,  including  strengthening  intelligence 
methods for anti-smuggling operations, which has been delayed due to the Coronavirus 
pandemic. 

While  the  redirecting  of  the  Independent  Authority’s  resources  to  deal  with  the 
initiatives launched to mitigate the economic impact of the Coronavirus pandemic 
has affected some work streams, progress has still been made on a number of other 
projects  improving  tax  collection  and  compliance.  The  preparations  to  launch  an 
electronic  invoicing  system  through  ‘myDATA’  (Digital  Accounting  and  Tax 
Application) continues as planned and the certification of the first electronic invoicing 
service  providers  is  expected  by  June  2020.  Another  component  concerns  electronic 
bookkeeping  that  is  expected  to  start  in  July  for  the  businesses  who  will  opt  for  e-
invoicing.  The  Model  Collection  Office  project,  which  has  received  technical  support 
provided  through  the  European  Commission,  approaches  completion  and  appropriate 
premises have been secured. However, the needed personnel is yet to be identified and 
transferred.  Further,  as  concerns  the  end-to-end  collection  system  project  (a  specific 
commitment for mid-2021), is progressing with the implementation study now finalised, 
but  it  is  expected  that  the  whole  project  will  need  a  time  extension  of  eight  months. 
Finally,  as  concerns  audit,  secondary  legislation  has  been  adopted (10),  which  sets  out 
the  substance  and  the  process  of  applying  indirect  audit  methods  to  determine  the 
taxable base. With regard to the general audit procedures, additional initiatives from the 
authorities  in  improving  the  audit  process  would  be  conducive  to  enhancing  the 
efficiency  and  quality  of  audits,  such  as  establishing  a  model  audit  office  that  is 
currently being considered by the Independent Authority. 

to  also  cover 

the  European  Commission 

It  is  welcome  that  the  authorities  decided  to  request  further  technical  support 
the  public  revenue 
through 
administration.  The  continuation  of  the  technical  support  is  particularly  important  as 
the  ongoing  support  provided  to  the  Independent  Authority  by  the  International 
Monetary Fund is phasing out. The specific areas where technical support will continue 
to be provided by long-term advisors with extensive experience in other Member State’s 
revenue  administrations  include  indirect  audit  methods,  anti-smuggling  capacity, 
taxpayer services and the human resources reform. In addition, a project for developing 
a  comprehensive  compliance  risk  management  framework  and  capacity  within  the 
Independent Authority has been approved and is currently under preparation. 

The  Joint  Centre  for  the  Collection  of  Social  Security  Debt  continues  to  meet  its 
targets. Similarly to previous years, specific quarterly targets have been set for the debt 
collection  expected  by  the  Joint  Centre.  These  targets  are  also  incorporated  in  the 
revenue  estimates  for  this  year’s  budget.  For  the  first  quarter,  the  target  was  for 
€333 million  to  be  collected,  which  was  exceeded  as  €346 million  were  collected  and 

(9)  OJ A 133/2019.08.07, Articles 37 and 109. 
(10) Governor Decision, A.1008/2020. 

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also  exceeded  the  collection  for  the  same  period  in  2018  (€312 million).  Further,  a 
positive development is that the secondary legislation concerning the definition of what 
constitutes  uncollectable  debt  and  that  have  been  pending  for  a  long  time  has  been 
adopted (11). This will allow the Joint Centre to apply the classification of uncollectable 
debt as already used by the Independent Authority, which strengthens the coherence and 
transparency. 

3.5.  PUBLIC FINANCE MANAGEMENT 

Arrears 

According to latest data, arrears stand above targets also due to the Coronavirus 
outbreak that has affected the collection of data on arrears as well as progress on 
the  clearance  plan  agreed  in  October  2019;  nevertheless,  some  measures  should 
help  to  decrease  the  stock  of  arrears.  January  2020  stock  of  arrears  amounted  to 
€1.3 billion, about  €340 million  above the clearance target (12). Higher absenteeism in 
the public sector due to the measures taken in relation with the Coronavirus pandemic 
created delays in labour-intensive processes such as clearing and reporting on the stock 
of arrears. The authorities were not in a position to deliver complete aggregate data after 
January and reported that some subsectors may witness a temporary rise of their arrears. 
Nevertheless,  two  measures  related  to  arrears  clearance  were  designed,  and  should 
allow for clearing 15% of the January stock of arrears. The first one uses an e-platform 
that  should  be  launched  shortly  and  that  would  allow  for  new  payment  modalities  of 
arrears  toward  health  providers (13).  According  to  the  authorities,  this  new  process 
would  allow  for  clearing  €186 million  stock  of  health  arrears.  The  second  measure 
allows for an immediate clearance of tax refunds related to income tax of legal entities 
and  value  added  tax  that  are  currently  under  audit  and  do  not  exceed  €30,000.  The 
authorities  expect  that  the  amount  of  arrears  related  to  tax  refunds  of  approximately 
€8 million as a result of the measure.  

The  authorities  remain  committed  to  their  October  2019  clearance  plan  and 
designed  some  actions  that  are  ongoing  in  a number  of  subsectors.  In  spite  of  the 
Coronavirus  pandemic,  the  authorities  maintained  their  clearance  plan,  which  aims  to 
fully clear arrears by end-2020, with the exception of €140 million for pension claims 
that would be cleared by June 2021. More specifically, the authorities are still planning 
to implement a new IT system in the Single Social Security Fund (EFKA) with a view 
to  substantially  accelerating  the  pace  of  clearing  the  backlog  of  pension  claims. 
Moreover,  new  managerial  incentives  and  methods  have  been  designed  to  offset  the 
accumulated  delays  and  achieve  the  clearance  targets.  In  view  of  the  fact  that  local 
governments seem to have been reporting amounts that should not be counted in their 
stock  of  arrears,  the  Ministry  of  Interior  is  currently  taking  measures  to  clarify  the 
statistical  reporting  of  arrears.  Moreover,  whereas  weaknesses  in  the  hospitals 
procurement  process  had previously been identified as  a key factor for the creation of 
arrears,  substantial  progress  has  been  made  on  the  centralising  procurement  for  the 
healthcare sector since the beginning of the Coronavirus outbreak (see section 5.2).  

(11) OJ B 502/19.02.2020. 
(12) January  stock  of  arrears  is  €69 million  above  the  December  2019  stock.  The  deviation  from  the 
clearance plan target is mainly due to social security funds, pension claims and local governments.  

(13) These arrears pertain to the Single Social Security Fund (EFKA).  

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The vast majority of the recommendations of the Hellenic Court of Auditors were 
implemented  (a  mid-2019  specific  commitment  rescheduled  to  mid-2021)  and 
further  complementary  measures  including  a  plan  on  implementing  a  proper 
framework for internal control, are being designed also with a view to avoiding the 
accumulation of new arrears. The Hellenic Court of Auditors has set up a plan with a 
view  to  increasing  the  awareness  of  the  general  government  entities  of  their  legal 
obligations  in  terms  of  internal  control (14).  The  National  Authority  for  Transparency 
cooperates with the Court to strengthen the internal control process in both central and 
local government (see section 9.3). The first set of guidelines for the implementation of 
an integrated internal control system in the public sector has been issued and circulated 
while  training  activities  are  planned  to  be  delivered.  The  National  Authority  for 
Transparency  also  target  to  establish  and  operationalize  internal  audit  units  in  the 
organigrams  of  ministries.  The  International  Monetary  Funds  has  finalised  in 
February 2020 its technical support report for streamlining the payment processes in the 
central  government.  Some  recommendations  are  related  to  accelerating  the  payment 
process  for  the  central  government,  which  can  help  prevent  the  emergence  of  new 
arrears. When designing and shifting to their new accounting IT framework (15), which 
provides  for  an  opportunity  to  improve  payment  processes,  the  authorities  intend  to 
implement many of these recommendations.  

Treasury Single Account 

All significant entities have joined the Treasury of Single Account system, which is 
operational  and  provides  a  useful  overview  of  the  cash  situation  of  the  state  (an 
end-2019  specific  commitment  rescheduled  to  mid-2020).  Out  of  the  1,700  general 
government entities officially listed, 650 do not yet maintain an account at the Bank of 
Greece. The Public Debt Management Agency as well as the Ministry of Finance and 
the Bank of Greece are therefore able to monitor, nearly in the real time, a great part of 
the  cash  flows  and  cash  balances  of  the  general  government.  Deposits  of  general 
government  entities  and  liquidity  of  the  Public  Debt  Management  Agency  within  the 
commercial banking system will remain outside of the Treasury of Single Account. The 
Ministry of  Finance monitors the requirement  according to  which  general  government 
entities should not hold more than a fifteen days liquidity buffer in commercial banks. 
The  developments  regarding  the  substitution  of  paper  orders  by  electronic  ones  are 
encouraging,  especially  after  entities  with  high  visibility  and  substantial  transactions 
have joined the e-payment portal of the Bank of Greece. The remaining challenges are 
minor.  They  concern  the  rationalization  of  the  number  of  cash  accounts  with  law 
balances and the extension of the Treasury of Single Account to eventually cover all the 
entities that should be part of the scheme.  

The  pilot  project  on  cash  forecasting  that  covers  the  majority  of  state’s  cash 
reserves will be rolled out according to the March 2020 draft strategy. According to 
the  interim  report  on  the  matter,  a  substantial  share  of  the  pilot  entities  did  not  report 

(14) The implementation of the recommendations of the Hellenic Court of Auditors made in March 2018 is 
a specific commitment. The need to enhance internal control mechanisms across general government 
has been recommended by the Hellenic Court of Auditors in their follow-up audit on arrears. 

(15) The  project  is  referred  as  Government  Enterprise  Resource  Management  (Gov-ERP).  It  will  be 
co-financed by European funds and will be executed by the Ministry of Finance and the Ministry of 
Digital Governance. 

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their  cash  needs  in  the  first  months  of  the  project  and  data  submission  in  March  has 
been  significantly  delayed  in  light  of  the  measures  that  were  taken  to  respond  to  the 
Coronavirus outbreak. On the other hand, despite the complexity of the cash forecasting 
exercise,  the  authorities  reported  that  among  entities  that  reported  data,  only  a  few 
submitted incomplete forecasts and that some entities submitted data files of excellent 
quality. The pilot project will be gradually fine-tuned in the course of 2020. In March, 
the authorities drafted a strategy for extending this project to the entities that are not yet 
part of the pilot as of January 2021, under the condition their budgeted expenses exceed 
€50 million. Given that the entities that are part of the pilot project account for at least 
70% of the total  state cash balance, the €50 million threshold allows for capturing the 
majority  of  the  cash  reserves  of  the  remaining  general  government  entities  and  is 
therefore deemed appropriate. 

Chart of Accounts 

The  implementation  of  the  Chart  of  Account  reform  is  broadly  on  track  (a 
mid-2021  and  mid-2022  commitment).  Although  the  Coronavirus  pandemic  caused 
further delays in the procurement of the new IT system supporting the Chart of Account 
reform, the call for tender is expected to be launched as soon as the major providers will 
be  in  a  position  to  respond,  and  the  overall  timeline  of  the  project  is  likely  to  remain 
unchanged. Further steps in  the right  direction have been taken in  a number of fields. 
Among  others,  the  General  Government  Accounting  Directorate,  which  is  to  be 
reinforced,  is  finalizing  an  accounting  policy  for  the  first  time  implementation  of  the 
new  General  Government  Accounting  Framework,  which  is  a  precondition  for  the 
compilation and the closure of the pending 2019 financial statements of the state and for 
transitioning  towards  accrual  accounting  in  an  orderly  manner (16).  In  addition,  some 
amendments  of  the  legal  framework  have  been  drafted,  in  order  to  ensure  a  smoother 
transition  and  facilitate  the  adoption  of  the  necessary  Accounting  Policies.  The 
integration of the invoices into the IT accounting system of the state, in order to ensure 
that they are recognized fully and in a timely manner, is pursued under the e-invoicing 
project in the public sector. The strategic decision was made to place the project under 
the  control  of  the  Steering  Committee  for  the  Accounting  Reform,  in  order  to  ensure 
that it also delivers on true and fair financial reporting. The functional classification of 
the Chart of Account is being designed in accordance with the performance budgeting 
framework. The five ministries that have not joined the pilot yet are expected to do so in 
2021.  Technical  support  is  provided  through  a  project  on  the  implementation  of  the 
Chart of Accounts, while another project is under preparation and is aimed to ensure the 
continuation  of  the  technical  support  and  capacity  building  actions  for  the  General 
Accounting Office of the State. 

The  implementation  of  the  Chart  of  Account  in  the  Public  Investment  Budget 
remains  a  challenge.  The  single  accounting  framework  participate  to  improve  the 
required  transparency  and  information  flows  between  the  authorities  managing  the 
non-investment  budget  and  the  Public  Investment  Budget  (see  section  3.2).  The 
situation  differs  in  the  execution  and  preparation  stages  of  the  Public  Investment 
Budget.  Regarding the  execution stage, the 2019  action plan will allow  for presenting 

(16) In accordance with PD 54/2018 the whole of the general government is to adopt accrual accounting by 

2023.  

29 

                                                           
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Chapter 3 - Fiscal and fiscal-structural policies 

the  execution  of  the  budget  in  accordance  with  the  Chart  of  Account  classifications. 
Nevertheless,  given  that  the  action  plan  is  not  designed  to  deliver  on  accrual 
accounting (17), the authorities were encouraged to envisage avenues for addressing this 
issue  in  the  medium  term.  Regarding  the  budget  preparation  stage,  the  authorities 
consider that the Public Investment Budget can only abide by the less detailed level of 
administrative  and  functional  classifications  of  the  Chart  of  Account.  However,  they 
committed  to  consider  potential  avenues  for  improving  the  situation  with  the  help  of 
technical support that will be provided by the European Commission (18).  

Public Procurement  

The  authorities  committed  to  adopt  a  new  public  procurement  strategy  for 
2021-2025  by  end  2020 that  would  contribute  to  a  more  sustainable  and  efficient 
use  of  public  resources.  A  well-functioning  public  procurement  process  is  a  key 
element  in  the  investments  process  that  will  be  crucial  for  the  recovery  after  the 
Coronavirus  outbreak.  However,  Greece’s  procurement  market  still  has  a  number  of 
deficiencies (19).  An  efficient  public  procurement  would  help  to  rationalise  public 
spending,  boost  growth  and  guarantee  a  competitive  business  environment  (see 
section 7.2).  In  addition,  such  a  strategy  could  have  spillovers  on  the  digital  reform 
agenda (see section 7.2) and on the green policy. The authorities agreed to take stock of 
the  various  issues  in  the  public  procurement  legal  framework  and  its  implementation 
before taking actions on issues that need to be addressed by priority in light of relevant 
EU  legislation.  They  will  also  adopt  a  new  5-years  national  strategy  on  public 
procurement and a road map. The authorities foresee to agree on a public procurement 
strategic  partnership  with  the  Commission  with  a  view  to  be  supported  in  their 
endeavour.  

(17) Accrual  accounting  requirements  are  distinct  to  the  double-entry  bookkeeping  requirements  of  the 

general government accounting framework. 

(18) In addition to the technical support project provided through the European Commission, the Ministry 
of  Development  has  requested  assistance  from  the  International  Monetary  Fund,  in  the  form  of  a 
Public Investment Management Assessment (PIMA), with a view to improving budgetary practices.  

(19) See section 4.1.4 of the Country Report published in February 2020. 

30 

                                                           
4. 

SOVEREIGN FINANCING 

4.1.  SOVEREIGN FINANCING 

Greece’s  debt  servicing  needs  are  low  in  the  coming  years.  Since  the  onset  of  the 
crisis,  Greece  has  successfully  issued  both  treasury  bills  and  long-term  bonds  with 
seven-year maturity, indicating sustained access to short and medium/long-term market 
financing. Greece’s debt  servicing costs in  2020  and 2021 are  low, and  mostly  reflect 
the  refinancing  of  short-term  bonds.  Greece  has  only  about  €3 billion  of  long-term 
bonds  that mature in  2020 and of around €5.1 billion of interest  expenditure to  cover. 
Debt  servicing  cost  will  remain  modest  in  2021  too,  with  only  about  €10 billion  of 
medium and long-term loan repayment and interest expenditure.  

The volatility of the yield spreads has increased. Greece enjoyed a long and almost 
uninterrupted decline of the spreads on its bond yields until mid-February 2020, when 
they reached their lowest levels since 2009. As the signs of the coming crisis began to 
appear, spreads  have started to  increase with  some high volatility until  18 March with 
spreads  reaching  a  high  of  around  400  basis  points  on  a  10-year  maturity,  when  the 
European Central Bank announced its Pandemic Emergency Purchase Programme. Due 
to  a waiver of the eligibility requirements, the Greek  government bonds  have become 
eligible for purchases under this program. After a decrease in the days after the start of 
the  programme  of  around  200  basis  points,  the  Greek  yield  spreads  over  the  German 
bonds  have  increased  again,  and  have  settled  close  to  270  basis  points  by  the  end  of 
April for the ten year tenure, which is around 130 basis points higher than the February 
lows but still around 130 basis points points lower than the highest value in March. 

The  considerable  cash reserves  provide  a  cushion  to  absorb  liquidity  shocks.  The 
cash  buffers  of  the  general  government  reached  around  €34 billion  at  the  end  of 
March 2020. This includes  €15.7 billion in  the cash buffer  account  (built also  through 
disbursements  under  the  European  Stability  Mechanism  programme  and  dedicated  to 
debt  service  –  Greece  may  use  this  amount  for  other  purposes  as  well,  following  an 
approval of the European Stability Mechanism’s governing bodies. ), €10 billion of state 
deposits  in  the  Bank  of  Greece  and  commercial  banks,  €1.9 billion  of  general 
government entities’ deposits in the Bank of Greece (20). Given the limited debt service 
needs  discussed  above,  the  cash  buffer  is  available  to  absorb  liquidity  shocks  in  the 
coming months. Greece signalled that it plans to keep its presence in the bond markets 
and raise further cash to cater for downside financing risks.  

A further intensification of the crisis may lead to non-trivial increases in financing 
needs. The main risk for the Greek state financing would be if the economic standstill 
and the related containment lasted well beyond May. This could lead to a substantially 
higher  deficit  than  currently  assumed  and  may  require  additional  use  of  the  cash 
reserves in the early summer months.  

(20) The remaining amount refers to deposits of general government entities’ in commercial banks, which 

may be more difficult to mobilise. 

31 

                                                           
5. 

SOCIAL WELFARE 

5.1.  PENSIONS 

The  implementation  of  the  2020  pension  law,  adopted  in  February  2020  with  a 
view to addressing an earlier Council of State ruling, is  ongoing.  As mentioned in 
the 5th enhanced surveillance report, the authorities have also created a new system of 
social  security  contributions  for  the  self-employed.  The  implementation  of  the  2020 
pension  law  is  ongoing:  the  relevant  circulars  have  already  been  issued  while  other 
secondary legislation is being drafted. 

The  authorities  have  updated  their  action  plan  to  finalise  the  setup  of  the  Single 
Social Security Fund (EFKA), a mid-2020 specific commitment. The aim of the plan 
is  a  comprehensive  digital  transformation  by  the  end  of  2020  leading  to  a  new 
operational  and  institutional  setup  to  be  called  ‘e-EFKA’.  The  plan  consists  of 
40 specific  actions.  These  are  organised  under  the  following  seven  pillars:  i)  the 
modernisation of infrastructure, ii) investment in IT systems, iii) administrative reforms, 
iv)  improving  existing  and  creating  new  IT  services,  v)  ensuring  interoperability  with 
other public  IT systems  (e.g. with  the  Independent  Authority  for Public  Revenue), vi) 
developing the digital skill of the personnel and vii) concrete steps to safeguard personal 
data protection. The major organisational measures to be completed by end-June 2020 
concern  the  merging  of  the  Supplementary  Pension  Fund  (ETEAEP)  into  the  Single 
Social  Security  Fund  and  the  creation  and  operationalisation  of  the  department  for 
Public Sector Pensions within it. The remaining organisational reforms are the creation 
of  local  subsidiaries  for  farmers  and  self-employed.  The  reforms  concerning  the 
subsidiaries have been suspended due to the Coronavirus crisis. The authorities expect 
that the reforms will be fully completed within four months after operations resume.  

The 2019 legislation related to the transfer of the supplementary pension fund of 
the  National  Bank  of  Greece  (a  commercial  bank)  to  the  state  was  revised  in 
March 2020. The revision followed an agreement between the state and the bank. The 
purpose of the reform was to avoid further litigation and to harmonise pension benefits. 
According  to  the  amended  law,  the  bank  will  contribute  some  €40 million  per  year 
until 2032  and  the  benefit  rules  for  retirees  are  harmonised  with  the  general 
supplementary pension rules.  

5.2.  HEALTHCARE 

Greece demonstrated strong responsiveness to the health emergency, by putting in 
place strict social distancing measures shortly after the detection of the first cases. 
By  closing  down  all  non-essential  shops  just  a  few  days  after  the  first  recorded  death 
and  by  putting  a  ban  on  non-essential  movement  in  the  country  early  on,  Greece 
prioritised public health and patients’ safety, despite the unavoidable and known impact 
on economic activity. Penalties for non-compliance were set up to support the effective 
implementation of the national containment measures. Measures to contain the spread of 
the Coronavirus among vulnerable groups, who are not only exposed to higher risks in 
terms  of  physical  health  but  also  of  livelihood  and  living  conditions,  require  careful 
monitoring by the authorities. 

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Chapter 5 - Social welfare 

Structural  reforms  already  implemented  and  additional  funding  of  €200 million 
are  supporting  the  health  system  response  to  Coronavirus  but  more  financial 
resources  may  be  needed  in  the  short  term.  Measures  agreed  during  the  European 
Stability Mechanism stability support programme were designed to deliver an effective, 
accessible and resilient healthcare system and some of these in particular are supporting 
the  response  to  the  Coronavirus  pandemic.  Measures  aimed  at  enhancing  the  social 
dimension,  such  as  introducing  universal  healthcare  coverage  and  a  comprehensive 
primary healthcare system, alongside others focusing on efficiency and quality such as 
centralised  procurement,  are  proving  key,  as  they  ensure  unhindered  access  to  health 
care  services  and  appropriate  supply  and  stocks  of  resources.  The  authorities  are 
currently making use of an extra €200 million to acquire elements to build up the health 
care  system’s  preparedness  for  future  needs,  i.e.  intensive  care  units,  ventilators, 
protective equipment and, crucially, staff. 

Clawback collection, a continuous commitment, is progressing with delays, not all 
imputable to the current emergency situation. Progress in this area continues thanks 
to  the  authorities’  efforts  to  meet  the  originally  agreed  targets.  Given  the  current 
extreme circumstances, progress is indicative of the strong commitment and generalised 
delays are to be expected due to present constraints and priorities. However, some of the 
existing  delays  largely  stem  from  before  the  current  emergency.  Although  significant 
progress is not possible, based on the latest updates by the authorities, it seems that even 
prospective  measures  may  be  too  soft  to  correct  the  trend  of  the  ever  increasing 
clawbacks,  the  size  of  which  challenges  a  regular  and  timely  collection.  The  recently 
implemented  extension  of  the  repayment  periods  supports  providers  in  managing 
otherwise very large repayments, but more forceful measures could pre-empt the need 
of  any  extension  by  limiting  the  size  of  due  amounts.  To  address  the  situation,  the 
authorities  are  planning  some  measures  to  strengthen  therapeutic  protocols  by 
automatically  linking  them  to  laboratory  results,  which  would  limit  inappropriate 
prescribing  and  expanding  registries,  such  as  those  for  cancer  patients.  Introducing 
means-tested exemptions for co-payments would strengthen patient protection but is not 
considered at present. 

The  roll-out  of  primary  health  care,  a  mid-2020  specific  commitment,  had  to  be 
suspended  given  the  pandemic.  The  planned  roll-out  of  the  reform  has  been 
temporarily  suspended  and  all  the  available  primary  health  care  units  have  been 
deployed to respond to the pandemic and de-burden hospitals. Units solely focused on 
dealing with Coronavirus cases were set-up to support the population, both providing a 
clear  reference  point  and  limiting  unnecessary  contact  between  patients  who  have 
contracted  the  virus  and  those  who  may  have  not.  To  this  effect,  the  authorities  are 
working  on  tools  such  as  telemedicine,  whereby  patients  can  have  remote  access  to  a 
family doctor that would decide the most appropriate course of action, be it a follow-up 
home visit or a referral. This would protect both patients and medical staff and promotes 
rational  use  of  a  system  that  is  already  under  pressure.  For  instance,  it  could  limit 
unnecessary  visits  to  emergency  departments,  which  need  to  be  available  to  treat  the 
most  serious  cases.  The  authorities  have  also  expanded  the  bed  capacity  through 
agreements  with  the  private  sector.  The  availability  of  intensive  care  units  has  almost 
doubled, moving from an initial stock of 560 to more than 900 units. In parallel, efforts 
to attract medical staff, especially doctors, are ongoing and the authorities are working 

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Chapter 5 - Social welfare 

on new incentives.  When the primary health care network roll-out  can resume largely 
depends on the duration of the pandemic. Some progress may nonetheless take place on 
the  side  of  staffing,  which  is  not  only  needed  for  the  longer-term  reform  goals  but  to 
tackle the current emergency. 

Centralised procurement, a mid-2020 specific commitment, is ongoing with a focus 
on  the  urgent  needs  of  the  health  system.  The  ongoing  centralised  procurement 
reform  is  being  trial  tested  under  the  current  emergency,  supported  by  the  additional 
flexibility provided by the availability of EU level joint procurement tools. Results are 
satisfactory  both  for  the  present  situation  and  with  a  view  to  developing  a  more 
systematic  approach  to  procurement.  Central  governance  of  regional  procurement  is 
delivering  more  efficiency  allowing  to  compare  prices,  which  could  be  further 
supported  by  the  re-activation  of  the  Price  Observatory,  and  contributing  to  achieving 
certain and defined delivery times, which is vital given the current circumstances. The 
authorities  also  developed  a  tool  that  builds  upon  the  existing  business  intelligence 
system to create a live warehouse for all hospitals to allow for better management of all 
Coronavirus supplies with daily updates matching stocks with needs by hospital. Draft 
legislation to  convert the new central  body  for health procurement into a private legal 
entity is still under development and could benefit from lessons learned from the current 
emergency. Similarly to the case of primary health care, progress is expected to resume 
with a timeline subject to the duration of the pandemic. 

5.3.  SOCIAL SAFETY NETS 

The Authorities have agreed with the European Institutions upon a new design for 
the reform of the Disabilities benefit framework (a mid-2019 specific commitment). 
The evaluation of an earlier pilot project gave rise to concerns about weaknesses in the 
questionnaire  methodology  adopted  for  the  pilot.  Following  a  discussion  on  EU  best 
practices,  a  new  reform  approach  will  be  adopted  based  on  assessments  of  functional 
disability based upon physical examinations by qualified experts. Such assessments are 
widely  used  by  other  Member  states  with  the  dual  role  of  assessing  benefit  eligibility 
and  making  specific  proposals  for  disability  mitigation  and  rehabilitation.  The 
Authorities have provided a Roadmap for the implementation of the new design of the 
commitment.  After  an  internal  review  to  report  by  October 2020,  they  propose  to 
undertake  a  further  pilot  project  for  the  functional  assessment  that  could  focus  on 
specific cases, like injury disability applicants from early 2021. 

As part of the commitment to complete the rollout of all three pillars of the Social 
Solidarity Income scheme, the authorities have completed the evaluation the of the 
pilot  of  the  new  delivery  system  for  active  labour  market  policies,  an  end-2019 
commitment, and have set up initial plans to run further pilots for the expansion of 
the  new  model.  The  pilot  covering  three  municipalities  in  the  region  of  West  Attica 
(Elefsina, Asporpyrgos, Mandra), has been evaluated by the World Bank with the help 
of  technical  support  provided  through  the  European  Commission,  in  terms  of  service 
delivery and program design. The pilot was designed to provide integrated services as 
well  as  targeted  and  individualised  support  (profiling/counselling,  vocational  training, 
entrepreneurship, public works and wage subsidies) to those aged 45 and over who have 
been  registered  as  unemployed  for  at  least  six  months.  Despite  some  significant 
drawbacks  identified  in  the  evaluation  report,  including  among  others  the  low  human 

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Chapter 5 - Social welfare 

resources capacity, especially among employment counsellors; the lower than expected 
target group participation; the red-tape and implementation delays as well as the lack of 
primary data to be used for monitoring and evaluation purposes; the pilot is considered 
to represent the pathway for future reforms based on the open-framework model.  

the 

local  economy 

The  authorities  will  now  proceed  to  the  scale-up  of  the  pilot  in  additional 
geographical areas with different labour market characteristics. The characteristics 
will  concern 
transition,  consistently  high  comparative 
unemployment  rates  over  time  or  cyclical  seasonal  unemployment,  and  single-sector 
dominance  e.g.  tourism,  agriculture.  Furthermore,  given  that  the  target  group  did  not 
meet the expectations in terms of participation, the scale-up will expand participation to 
a broader age spectrum (30-50), comprising all education levels except degree-holders, 
and short-term unemployed beyond the 12+ month group. Data will be collected at an 
early stage to enable evidence-based and data driven analysis and policy. 

in 

Regarding the review of the system of subsidies for local public transport, an end-
2019 specific commitment, the reform process was interrupted by the coronavirus. 
Based on data collected for 2019, draft legislation is under preparation to allow a timely 
objectively-based  reimbursement  of  subsidised  public  transport  tickets  to  operators  in 
Athens and Thessaloniki. Legislation is expected by September 2020.  

36 

6. 

FINANCIAL SECTOR 

6.1.  FINANCIAL SECTOR DEVELOPMENTS 

The Greek banking sector has become more stable and resilient to shocks since the 
end  of  the  programme  but  legacy  risks  and  significant  underlying  vulnerabilities 
remain,  reinforced  by  the  likely  significant  negative  impact  of  the  Coronavirus 
outbreak.  Liquidity  continued  to  improve  throughout  2019,  as  evidenced  by  the 
continuing  upward  trend  in  deposits  since  the  abolition  of  capital  controls.  However, 
access  to  long-term  unsecured  funding  was  only  slowly  being  re-established  ahead  of 
the  Coronavirus  pandemic  and  still  at  a  relatively  high  cost.  Other  positive  trends 
observed  before  the  Coronavirus  outbreak  are  now  being  challenged:  for  example  a 
pick-up  in  economic  sentiment,  which  led  to  an  increase  in  credit  provision  to  large 
businesses or the start of the real estate prices rebound, a first positive sign for collateral 
valuations.  Greek  banks  had  regained  access  to  long  term  unsecured  funding  in  2019, 
and sealed their return to the markets by tapping it again in two occasions in early 2020 
at  a  lower  cost.  Nonetheless,  asset  quality  is,  even  without  the  impact  of  the 
Coronavirus pandemic, still a major challenge, despite the progress made in 2019. The 
capital position of Greek banks is in line with capital requirements but remains exposed 
to  increased capital  demand in  the near future and largely dependent  on the sovereign 
through the high share of deferred tax credits in banks’ capital. By end 2019, the banks 
have returned to profitability but it remains low and fragile. It is dependent on lending 
growth,  exposed  to  a  renewed  deterioration  of  asset  quality  and,  to  some  extent, 
sovereign spread volatility. 

The authorities are taking steps to sustain access to finance for affected businesses, 
which  complement  initiatives  at  the  level  of  private  banks  and  servicers.  The 
government is setting up a series of initiatives. Public guarantees will be offered by the 
Hellenic  Development  Bank  via  the  commercial  bank  network  (total  envelope  for 
guarantees  of  €2 billion  in  the  form  of  cash  collateral  together  with  an  additional 
€250 million  of  guarantees  and  loans  towards  the  small  and  medium-sized  enterprises 
through  the  current  ‘ΤΕPΙΧ  II’  scheme).  Secondly,  direct  grants  are  offered  by  the 
government  (with  a  total  envelope  of  maximum  €0.8 billion  in  the  form  of  interest 
subsidies  to  existing  performing  loans)  for  the  provision  of  credit,  and  particularly 

Table 6.1:  Main Financial stability indicators 

(1) As % of total loans 
(2) Annualised data 
Source: European Central Bank - Consolidated Banking data; own calculations 

37 

2014q42015q42016q42017q42018q12018q22018q32018q42019q12019q22019q3Non-performing loans(1)39.746.846.345.045.444.943.541.641.639.637.8o/w foreign entities-----------o/w NFC & HH sectors41.849.550.449.449.248.447.346.345.643.842.3o/w NFC sector44.752.553.951.451.149.447.946.144.542.840.5o/w HH sector38.545.946.347.147.047.346.646.546.845.144.4Coverage ratio43.548.548.246.749.549.047.848.047.746.745.0Return on equity(2)-10.6-24.2-7.5-1.30.7-2.4-0.8-0.41.62.62.9Return on assets(2)-1.0-2.8-0.9-0.20.1-0.3-0.1-0.10.20.30.4Total capital ratio14.116.517.017.116.416.416.316.015.616.516.9CET 1 ratio13.816.316.917.015.815.815.715.314.915.615.9Tier 1 ratio13.816.316.917.015.815.815.715.314.915.615.9Loan to deposit ratio79.172.375.983.578.878.476.074.775.874.376.8 
    
 
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Chapter 6 - Financial sector 

working  capital,  to  viable,  primarily  small  and  medium  sized  enterprises.  These 
schemes  will  complement  initiatives  backed  by  the  European  Investment  Bank,  in  an 
effort to maintain liquidity in the real economy and support businesses and employment. 
They  will  also  support  asset  quality  in  the  banking  sector  in  the  follow-up  of  the 
voluntary debt moratoria applied by banks and servicers: the Hellenic Bank Association 
announced  a  moratorium,  following  an  assessment  on  a  case  by  case  basis,  until 
30 September  2020  on  the  capital  instalments  paid  by  companies  directly  affected  by 
the  public  health  crisis,  on  their  performing  loans  as  of  31 December  2019.  A 
moratorium  for  a  period  of  three  months  was  also  extended  to  loan  instalments  of 
targeted affected natural persons, with Servicers of non-performing loans announcing a 
similar three-month suspension of any loan instalments.  

As a result of the Coronavirus pandemic, the profitability outlook of Greek banks 
is exposed to the risk of a renewed deterioration in asset quality and reduction in 
new lending activity. Greek banks entered this crisis with one of the lowest return-on-
equity in the EU (2.9% annualised compared to an EU average of 6.2%), despite a cost-
income ratio well below the EU average (51.4% against 64.2% in the EU in September 
2019). This reflects the still high amount of new impairments, the low contribution of 
commission income (21) and the high dependence on net interest income, including large 
amounts of accrued interest from non-performing loans which may not be collected. In 
addition, large parts of the banks’ performing loan book are heavily exposed to some of 
the most vulnerable sectors affected by the current containment measures: e.g. tourism 
and  hospitality,  shipping,  transport  and  storage  and  commercial  real  estate.  Some  of 
these sectors were registering the highest rates of credit growth until recently and were 
expected to be the main drivers for new corporate lending in 2020.  

A resurgence in the volatility of Greek sovereign debt yields may have an impact 
on  the  profitability  of  Greek  banks  if  it  is  persistent.  Outright  holdings  of  Greek 
sovereign  bonds  by  banks  have  been  subject  to  a  supervisory  ceiling  imposed  by  the 
Single  Supervisory  Mechanism  since 2015,  which  was  lifted  at  the  beginning  of 
March 2020.  At  the  end  of  2019,  Greek  sovereign  bond  holdings  of  Greek  banks 
represented €22.7 billion, i.e. 7.1% of their total assets, being the main driver behind the 
banks’  trading  income  and  a  source  of  exposure  to  any  increase  in  sovereign  spread 
volatility, to the extent they are held in the banks’ trading books. The inclusion of Greek 
the  recent  €750 billion  Pandemic  Emergency  Purchase 
government  bonds 
Programme  of  the  European  Central  Bank  is  expected  to  somewhat  mitigate  such 
adverse impact during the current crisis. 

in 

The banks are compliant with their capital requirements but the capital structure 
is  largely  contingent  on  state-related  assets  and  exposed  to  increased  capital 
demand  in  the  near-term.  Banks’  average  common  equity  tier  1  ratio  on  a 
consolidated basis stood at 15.9% at the end of September 2019. The capital position of 
Greek  banks  is  exposed  in  the  near  future  to  a  series  of  factors:  These  include  the 
implementation  of  new  rules  on  the  treatment  of  own  funds  held  under  Pillar II 
Guidance,  which  will  no  longer  be  eligible  to  meet  any  other  capital  requirement,  the 
cost of strategies aimed at scaling down non-performing loans and the necessary gradual 

(21) Net fee and commission income represented approx. 15.2% of total income of Greek banks as of end 

September 2019, the lowest in the EU, compared to an EU average of 28.8%. 

38 

                                                           
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Chapter 6 - Financial sector 

phasing out  of transitional prudential  arrangements (22). These factors will  still burden 
the  banks’  capital  position  going  forward,  even  if  Greek  banks  will  benefit  this  year 
from the flexibility provided by the Coronavirus outbreak related measures temporarily 
offered  by  the  regulators  for  all  Eurozone  banks.  This  is  all  the  more  relevant,  as  the 
quality of banks’ capital remains poor and the sovereign-bank nexus strong, particularly 
due to the high amount of deferred tax credits. Deferred tax credits of Greek banks at 
end-2019 continue to represent a substantial part (55.4%) of the banks’ Common Equity 
Tier 1 capital, amounting to €15.7 billion (23). 

The  flexibility  announced  by  the  supervisory  authority  will  contribute  to  bank 
lending and mitigate the direct effect of the crisis on the quality of the banks’ loan 
book. The 2020 EU-wide stress test exercise will be postponed to 2021, while planned 
supervisory activities, including on-site inspections, may be rescheduled or, in the case 
of remediation actions, their implementation deadline extended. Furthermore, the Single 
Supervision  Mechanism  will  allow  banks  to  operate  temporarily  below  the  level  of 
capital defined by the Pillar 2 Guidance, the capital conservation buffer and the liquidity 
coverage  ratio,  freeing  up  capital  and  liquidity  to  finance  the  economy.  Moreover,  in 
order to avoid a spike in non-performing loans, the supervisory authority will exercise 
flexibility  regarding  the  classification  of  loans  in  default  and  the  treatment  of  state 
guaranteed  loans  granted  in  the  context  of  the  Coronavirus  pandemic.  In  addition, 
criteria  published  by  the  European  Banking  Authority,  allow  public  and  private 
moratoria not to be automatically classified as forbearance measures, for the purposes of 
the International Financial Reporting Standard 9 and the definition of default.  

Liquidity,  after  improving  throughout  2019,  has  proven  resilient  so  far,  further 
supported by recent policy measures as announced by the European Central Bank. 
Bank deposits continued to moderately increase despite the challenges brought about by 
the  Coronavirus  pandemic,  with  normal  seasonal  fluctuations.  Any  strains  across  the 
repo market for all participants can be alleviated by Greek banks’ access to Eurosystem 
monetary  policy  operations  aimed  to  provide  additional  liquidity  where  needed.  The 
temporary  collateral  easing  measures  taken  by  the  European  Central  Bank  on  7 April, 
and in particular the waiver to accept Greek sovereign debt instruments as collateral in 
Eurosystem  credit  operations,  will  allow  Greek  banks  to  increase  liquidity  from 
Eurosystem’s  refinancing  operations  to  replace  potentially  increasingly  expensive 
secured funding.  

(22) These transitional arrangements refer to the  phasing in of  the new International  Financial Reporting 
Standard 9 on impairments of financial assets and the implementation of new rules leading banks to 
more  quickly  write  down  non-performing  exposures,  according  to  Regulation  (EU)  2019/630 
amending  Regulation  (EU)  No  575/2013,  as  complemented  by  further  supervisory  guidance  by  the 
Single Supervisory Mechanism. In the medium-term, banks will also need to issue bail-inable debt in 
order  to  meet  the  minimum  requirement  for  own  funds  and  eligible  liabilities  set  by  the  resolution 
authorities. 

23
(

) Deferred tax credits may be converted into tax credits, i.e. irrevocable claims towards the Greek state, 

while in exchange banks would need to issue equity in favour of the state. 

39 

                                                           
Commission Staff Working Document -  

Chapter 6 - Financial sector 

Graph 6.1:  Bank deposits (left) and total borrowing from the Eurosystem (right) 

Source: European Central Bank, International Monetary Fund 

The pace of reduction of non-performing loans accelerated in 2019 but their share 
remains  high.  The  stock  of  non-performing  loans  at  end-2019  reached  €68.5 billion, 
down  by  €13.3 billion  relative  to  one  year  before  and  €38.7 billion  below  the 
March 2016  peak.  The  main  drivers  of  its  decrease  in  2019  were  sales  of  non-
performing loans worth €8.1 billion and €4.3 billion of write-offs (24). In particular, the 
total  value  of  loans  serviced  by  credit  servicing  firms  increased  by  €3.4 billion  in  the 
fourth quarter of 2019 and stood at €23.5 billion (25). Despite this positive performance, 
the  level  of  non-performing  loans  represented  40.6%  of  customer  loans  as  of 
December 2019,  the  highest  in  the  euro  zone.  Moreover,  given  the  expected  adverse 
impact of the Coronavirus outbreak on the secondary market for non-performing loans, 
there is  even more pressure on banks to successfully restructure non-performing loans 
through internal procedures in order to maintain an improving trend in asset quality. A 
boost in the banks’ internal capacity to viably restructure loans will also be crucial after 
the  expiry  of  the  current  private  moratoria  announced  for  affected  borrowers,  as  the 
crisis may gradually impact their currently performing loan book. This is an area where 
the banks’ performance has been lacklustre so far, as evidenced by the fact that 37.3% 
of  long-term  restructurings  and  66.5%  of  short-term  restructurings  become  non-
performing  again  only  one  quarter  after  the  implementation  of  the  arrangement. 
Nonetheless, it is encouraging that in the fourth quarter of 2019 the amounts of newly 
created  non-performing  loans  fell  again  below  the  amount  of  ‘cured’  non-performing 
loans, i.e. the rate of non-performing loans for which repayments have re-started. 

(24) Source: Bank of Greece, Governor’s Annual Report 2019. 
(25) Source: Bank of Greece “Statistics on loans serviced by Credit Servicing Firms (CSFs): Q4 2019”. 

40 

05010015020025030035040020102011201220132014201520162017201820192020MFIsHHNFCCentral Governmentbn EUR05101520253035404502040608010012014016018020072008200920102011201220132014201520162017201820192020Borrowing from the ECBECB liquidity as % of liabilities (rhs)bn EUR%   
                                                           
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Chapter 6 - Financial sector 

Graph 6.2:  Non-performing loans as a % of total customer loans (left) and changes in their stock 

in the fourth quarter of 2019 (right: million EUR) 

Source: Bank of Greece 

i.e. 

later, 

loans  six  months 

to  reduce  non-performing 

The  current  economic  shock  is  affecting  banks’  non-performing  loans  reduction 
strategies, which will need to be revised. Greek systemic banks have made use of the 
flexibility  awarded  to  them  by  the  supervisory  authority  and  will  submit  their  2020 
in 
revised  strategies 
September 2020, in order to reflect the new status quo, once uncertainty related to the 
duration of the Coronavirus pandemic and its impact dissipates. Furthermore, the pace 
of implementation of the Hercules scheme will be impacted, as the risk profile of Greek 
non-performing  loans  has  likely  changed  with  the  Coronavirus  outbreak  leading  to 
reduced  investor  appetite  and  potentially  increased  costs  for  the  participating  banks. 
Notably,  in  case  the  Greek  sovereign  yields  become  more  volatile  this  will  affect  the 
pricing of the guarantee provided under the scheme since it is linked to Greek sovereign 
credit default swaps. With the exception of Eurobank that is in the process of finalising 
the  relevant  securitisation  transactions,  the  other  three  Greek  systemic  banks  have 
indicated  their  intention  to  postpone  temporarily  their  securitisation  plans  due  to  the 
current  uncertainty.  A  reduced  investor  appetite  is  impacting  also  other  important  bad 
loan  portfolio  sales  that  had  already  been  launched  and  have  now  been  temporarily 
paused. Moreover, there is a concern that the already weakened payment culture will be 
further  eroded  by  support  measures  introduced,  such  as  loan  moratoria,  adversely 
affecting  the  willingness  of  non-performing  borrowers  to  proceed  to  viable  loan 
restructurings with the banks.  

Net bank lending to non-financial corporations grew consistently in 2019, reaching 
in March 2020 the highest growth rate since September 2009, while credit growth 
to households remained negative. The rise in lending to non-financial enterprises that 
started  in  December 2018  (after  seven  years  of  contraction)  moderated  between 
December 2019  and  February 2020.  However,  it  accelerated  markedly  in  March 2020, 
reflecting (i) firms’ high liquidity needs in the context of the Coronavirus outbreak and 
(ii) the positive impact of the forceful public policies by both the Greek government and 
the  European  Central  Bank  to  support  the  provision  of  emergency  liquidity  by  banks. 
Taking a longer-time perspective, the positive credit growth to companies over the last 
one  and  a  half  years  has  been  supported  by  declining  credit  risk  and  a  generally 
declining  average  cost  of  funding  and  improved  liquidity  on  the  part  of  commercial 
banks.  Loans  to  large  corporates  have  been  the  driver  behind  this  increase,  bringing 
their share to total lending to non-financial corporation by 1.1%, to 46.8% in 2019. On 
the  contrary,  the  aggregate  net  flow  of  credit  financing  to  small  and  medium  sized 

41 

35.040.045.050.055.060.065.0Dec 2014Mar 2015Jun 2015Sep 2015Dec 2015Mar 2016Jun 2016Sep 2016Dec 2016Mar 2017Jun 2017Sep 2017Dec 2017Mar 2018Jun 2018Sep 2018Dec 2018Mar 2019Jun 2019Sep 2019Dec 2019% NPL ratioConsumer LoansResidential LoansBusiness Loans71,2411,5751,63254024504739281,21615368,506010,00020,00030,00040,00050,00060,00070,00080,000  
Commission Staff Working Document -  

Chapter 6 - Financial sector 

enterprises was still negative in 2019 (26), despite an increase in the availability of bank 
loans  to  small  and  medium  sized  enterprises  signalled  between  October 2018  and 
September 2019 by the Survey on the Access to Finance of Enterprises. The growth rate 
of loans to households continued to remain negative in the same period, particularly for 
mortgage lending, without any sign of reversal of this negative trend (Graph 6.3). 

Graph 6.3:  Bank credit to non-financial corporations and households 

Source: Bank of Greece 

Nominal  lending  rates  to  non-financial  corporations  have  continued  their 
downward  trend,  reaching  a  historical  low  in  March 2020;  those  of  households 
have  also  declined  since  the  summer  but  remain  somewhat  above  the  minimum 
reached in 2015 (Graph 6.4). Like in other euro area countries, the decline in lending 
rates  to  non-financial  corporations  in  March  largely  reflects  the  very  accommodative 
monetary policy, as well as the various targeted measures geared to support the flow of 
credit  to  households  and  firms  across  the  euro  area.  It  is  noteworthy  that  the  most 
pronounced  reduction  in  2019  has  been  registered  in  the  lending  rates  for  small  and 
medium  sized  companies,  which  fell  by  0.29  compared  to  2018,  reaching  4.0%  on 
average. This  is  largely  thanks to  the positive impact  of ongoing initiatives funded by 
the European Investment Bank, as well as other similar public schemes supporting the 
financing of small and medium sized enterprises, which accounted for €2.2 billion, i.e. 
two thirds of the gross flow of new loans to these enterprises in 2019 (27). 

Graph 6.4:  Bank interest rates on new loans 

Source: Bank of Greece 

(26) Source: Bank of Greece, Governor’s Annual Report 2019, p.199. 
(27) Source: Bank of Greece, Governor’s Annual Report 2019, p.194-195. 

42 

Jan.2014: -5.3%Mar. 2020: 3.4%Mar. 2020: -2.9%-7-6-5-4-3-2-101232011201220132014201520162017201820192020Νοn-financial corporationsHouseholdsMar. 2020:-3.4%Mar. 2020:-1.7%-7-6-5-4-3-2-10123%Housing loansConsumer loansMar.2020:3.10%Mar.2020:4.82%012345678%Loans to non-financial corporationsLoans to households   
   
                                                           
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Chapter 6 - Financial sector 

Nonetheless, when examined in real  terms, the average real lending rate for non-
financial corporations slightly went up to 3.4% in 2019, compared to 3.3% in 2018, 
although it was still substantially lower than the average real rate of 5.3% of the 
period 2011-2017. On the contrary, lending rates for households continue to be higher, 
with  the  average  lending  rate  for  households  in  March 2020  being  1.72  percentage 
points  above  the  corresponding  rate  for  corporations.  More  specifically,  despite  a 
smaller decline, lending rates for loans to households for house purchase remain lower 
than  those  applied  on  corporate  loans,  while  lending  rates  applied  on  consumer  credit 
remain  at  elevated  levels.  This  divergence  mainly  reflects  differences  in  credit  risk 
developments.  Rates  on  loans  to  households  for  house  purchase  declined  less  on 
account of persistently higher ratios of non-performing loans for these type of loans, and 
the adverse effect on cost of credit by the large amount of loans under legal protection 
(29.7% of all mortgage loans and 19.2% of all consumer loans).  

6.2.  FINANCIAL SECTOR POLICIES 

The Coronavirus pandemic and the resulting containment  measures  will  have an 
impact on the pace of ongoing and past reform initiatives. To alleviate the impact of 
the crisis on affected businesses and individuals, the authorities have initially extended 
the  procedural  and  payment  deadlines  of  existing  debt  settlement  schemes  for  already 
submitted  applications  under  the  Household  Insolvency  law,  the  Primary  Residence 
Protection  law  and  the  Out  of  Court  Workout  law,  while  they  have  also  proceeded  to 
extend  the  existing  deadlines  for  the  submission  of  new  applications  for  the  Primary 
Residence Protection law until end of July 2020. They are also contemplating extending 
the deadline for submission for new applications under the Out of Court Workout law. 
Moreover,  trials  before  all  jurisdictions  (civil,  penal  and  administrative)  were 
temporarily suspended, from 13 March to 27 April 2020 due to the lockdown measures; 
as a result, all enforcement proceedings have been halted, including e-auctions (which 
would in any event have been cancelled as notaries have closed offices). Similarly, the 
operations of debt-collecting and debt-servicing agencies were suspended for as long as 
the  confinement  measures  shall  remain  in  force.  All  these  measures  hamper  bank’s 
efforts  to  reduce  non-performing  loans.  At  the  same  time,  the  lockdown  measures 
currently applied may cause a delay in outsourcing procedures or other labour-intensive 
processes  in  the  context  of  the  action  plan,  related  to  the  processing  and  payment  of 
called state guarantees.  

The  Coronavirus  pandemic  has  diverted  resources  at  all  levels  of  the  public 
administration,  limiting  progress  and  resulting  in  delays  in  the  advancement  of 
financial  sector  reforms.  Nevertheless,  the  authorities  remain  committed  to 
harmonising the insolvency framework and to improving the existing tools for the 
resolution  of  non-performing  loans.  This  is  welcome  as  with  the  Coronavirus 
pandemic unfolding, an efficient insolvency framework is increasingly important. Given 
the delays accumulated in a number of areas, also on account of the current crisis, it will 
be important that the pace of reforms accelerates as soon as possible, in order to fully 
support the normalisation of the banking sector and the financing of the economy during 
the  recovery.  The  actions  outlined  below  are  monitored  and  assessed  under  the 
enhanced  surveillance  framework,  as  part  of  the  continuous  specific  commitment  to 
“continue  to  implement  reforms  aimed  at  restoring  the  health  of  the  banking  system, 
including resolution efforts for the non-performing loans”.  

43 

Commission Staff Working Document -  

Chapter 6 - Financial sector 

Insolvency Law Reform 

The authorities have advanced with the preparation of a new Insolvency Code. The 
new insolvency framework, integrating the corporate and personal  insolvency regimes 
and transposing the provisions of Directive 1023/2019 (28), is currently at the stages of 
finalisation  of  the  drafting,  in  consultation  with  stakeholders  and  the  relevant  law  is 
expected  to  be  adopted  at  the  end  of  June  and  enter  into  force  on  1 January  2021, 
whereupon  the  majority  of  the  existing  mechanisms  for  facilitating  debt  restructuring 
schemes will be repealed. In parallel, work on the necessary secondary legislation and 
the  IT  infrastructure  envisaged  by  the  draft  law  is  being  conducted  so  that  the  new 
framework will be fully operational upon the entry into force of the Code. During the 
time between adoption and entry into effect of the new law, the authorities also intend to 
provide training sessions to the stakeholders involved, most importantly to judges, who 
will  be  called  to  use  the  new  electronic  bankruptcy  registry.  Training  sessions  and 
awareness-raising  initiatives  will  also  be  addressed  to  legal  professionals,  insolvency 
administrators and the public at large, as appropriate. 

The  main  features  of  the  new  Insolvency  Code  are  the  following  (for  a  more 
detailed description see Box 6.1):  

Insolvency resolution proceedings are designed to address the debtor categories on the 
basis  of  the  size  of  the  bankruptcy  estate,  covering  all  kinds  of  business  ventures 
(incorporated or not) as well as personal insolvency. 

Pre-bankruptcy  proceedings  will  be  available  (including  an  automated  out  of  court 
process  and  a  pre-insolvency  business  recovery  process  contingent  to  court 
ratification). 

A special regime for the protection of the primary residence of eligible debtor is being 
examined,  including  additional  protection  for  the  vulnerable  ones.  This  would 
purportedly entail the intervention of the state in order to acquire primary residences 
before  the  conclusion  of  the  liquidation  process  and  to  lease  them  back  to  the 
debtors,  as  well  as  extending  a  housing  allowance  to  those  of  them  that  will  be 
defined  as  vulnerable.  While  similar  schemes  exist  in  other  countries  (such  as 
Ireland), the proposal risks creating a significant involvement of the public sector in 
the real estate market as well as fiscal risks, calling for great prudence in advancing 
along these lines. The scheme as currently proposed would also raise issues around 
enforceability,  targeting  of  scope/beneficiaries,  and  potential  overlaps  with  other 
instruments. 

(28) Directive  (EU)  2019/1023  of  the  European  Parliament  and  of  the  Council  of  20  June  2019  on 
preventive restructuring  frameworks, on discharge of debt and disqualifications, and on measures to 
increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and 
amending Directive (EU) 2017/1132 (OJ L 172). 

44 

 
                                                           
 
 
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Chapter 6 - Financial sector 

(Continued on the next page) 

45 

Box 6.1: Insolvency code reform The new insolvency code will comprise three parts on the following matters:   Business bankruptcy proceedings, with separate processes customized for the needs of different categories of debtors based on the size of the property under bankruptcy rather than the legal form of the debtor.  Pre-insolvency proceedings, including an automated Out-of-Court Workout process and a pre-insolvency business recovery process.  Protection of the primary residence of eligible individual debtors through a sale and leaseback scheme; vulnerable eligible debtors will receive a state subsidy covering part of the monthly rent. The code will also include ancillary provisions on the regulation of the insolvency administrator profession, the creation and operation of the electronic bankruptcy registry and transitional provisions in view of its entry into force. Main features of the Code  Bigger bankruptcies will be conducted according to the ordinary bankruptcy process, involving either the sale of the business or parts of it as a functional entity or a piecemeal liquidation of the debtor’s assets through the use of an e-auction mechanism combined with an automated reserve price revision mechanism. The ordinary process will terminate following the lapse of five years after the declaration of bankruptcy.  Smaller bankruptcies involving smaller enterprises and consumers will be subjected to a simplified process involving immediate liquidation of all assets. Its duration will be capped at 12 months.  Regarding interim protection, the general rule will be that that the submission of a bankruptcy petition does not suspend enforcement by secured creditors. Two exceptions to this rule are foreseen: in the context of business bankruptcy, the exception concerns cases when the petition anticipates a sale of the business as a functional entity, supported by creditors; in the context of consumer bankruptcy, the exception applies in case of an option to protect an eligible prime residence under the sale and leaseback scheme.  Discharge (i.e. liberation of the debtor vis-à-vis creditors with respect to any residual claims following liquidation) of physical persons or representatives of legal entities will ensue automatically upon completion of a fixed term absent the filing of objections by any creditor within said term.  Preventive proceedings Out-of-Court Workout mechanism: Individuals or legal entities may apply for an out-of-court settlement with financial institutions, the state and social security institutions. It will not include other creditors. Creditors may also initiate the process inviting the debtor to submit an application within 30 days. Following its filing, creditors will abstain from enforcement actions for a limited duration but no stay or court intervention will be provided. Rescheduling offers will mainly be elaborated on the basis of an formula that will take into account available data from financial institutions and the state and will be approved by a majority (in terms of value of claims) of creditors, and will be binding for all of them. Should the offer provide for a write-down of debt owed to the government and procedural safeguards are observed, the public creditors will be deemed to have accepted the offer.    
   
 
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Chapter 6 - Financial sector 

Box (continued) 

The authorities legislated a 3-month extension of the Primary Residence Protection 
scheme, which was due to expire in April, to the end of July. The decision to extend 
until 31 July 2020 was taken despite the limited appeal of the scheme, which was due to 
expire by end-April 2020, and reflected the difficulties faced by the applicants to timely 
apply due to the outbreak of the pandemic. No modification was introduced with respect 
to the loans admitted to the platform or to the eligibility criteria.  

The  authorities  have  also  announced  their  intention  to  extend  the  application 
deadline for  the  Out-of-Court  Workout  until  the  end  of  July 2020.  This  extension 
has  also  been  contemplated  in  the  expectation  of  the  authorities  that  more  loan 
restructurings  will  be  achieved,  by  accommodating  applicants  facing  temporary 
difficulties in the application process due to the Coronavirus outbreak.  

In  order  to  alleviate  the  impact  on  social  groups  financially  affected  by  the 
Coronavirus pandemic, the authorities announced a temporary instalment subsidy 
for  mortgage,  consumer  and  business  loans  secured  by  a  primary  residence (29). 
The  mechanism,  which  will  be  distinct  from  the  above-described  sale-and-leaseback 
scheme  under  the  insolvency  code  and  will  cover  loans  secured  by  a  lien  on  their 

(29) The cost of the mortgage subsidy is not included in the Commission 2020 spring forecast because it 

was announced after its cut-off date of 23 April.  

46 

Pre-insolvency Business Recovery: The business recovery process (pre-insolvency rehabilitation process) has been adjusted to take into account the requirements of Directive (EU) 1023/2019. It permits, in the event of a likely pending insolvency of the debtor, the restructuring of its assets, liabilities and business on the basis of an agreement with a qualified majority of its creditors, which will need to be ratified by the court. Mandatory restructuring of unsecured non-privileged creditors will be allowed under certain conditions. The process will allow for debt restructuring but also for the transfer of business and will provide for a mechanism to avoid resistance by shareholders.  Infrastructural considerations The conduct of all bankruptcy proceedings will be based on an electronic registry that will ensure publicity of all actions, transparency and ease of communication between creditors, debtor, administrator, supervisory judge and the court and will be the single point of reference for all aspects of the proceedings. Out-of-court settlement applications will be filed digitally through the electronic platform. Procedural simplifications  Bankruptcies of an ordinary size will be referred to district courts, in tripartite bench formation; small scale bankruptcies will be referred to magistrate’s courts.  The conduct of the proceedings will be either expedited or based on written submissions.  Creditors will be called to announce their claims through the electronic platform concurrently (rather than prior) to the liquidation process; contesting of announced claims process will be streamlined into one stage.  A number of court functions will be taken over by the supervisory judge, who will issue orders without the need of a scheduled hearing; opportunities to raise objections with the court have been significantly reduced.                                                            
 
   
 
 
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Chapter 6 - Financial sector 

primary  residence  and  will  function  for  a  limited  period.  The  mechanism  will  be 
available  to  eligible  physical  persons  (consumers,  professionals  and  small  business 
owners) and will cover performing loans, forborne non-performing exposures and non-
performing exposures on the basis of a specific cut-off date. It will be available only to 
debtors  affected  by  the  pandemic.  Eligibility  will  be  determined  through  quantitative 
criteria relating to the family income of the recipient, the value of the property and the 
outstanding balance of the loan. The scheme will be open for applications for one month 
from  1 July  2020.  A  pre-requisite  to  the  participation  in  the  scheme  will  be  that  the 
concerned  loans  are  restructured  in  agreement  between  the  banks  and  debtors.  The 
restructuring  offer  will  be  extended  by  the  banks  on  a  discretionary  basis.  Given  the 
extended  perimeter  of  the  loans  eligible  for  the  scheme,  it  will  be  essential  to  include 
strong  safeguards,  including  a  subsidy  clawback  and  a  differentiated  subsidy  level,  to 
ensure  that  only  viable  loans  are  restructured  and  to  mitigate  the  negative  impact  on 
payment discipline.  

Clearing the Backlog of Household Insolvency Cases 

The authorities submitted an action plan and a corresponding legislative proposal 
for  accelerating  the  clearance  of  the  household  insolvency  backlog,  which  has 
increased further as a result of the suspension of court proceedings. The authorities 
committed to adopting the measures required for its implementation by end-May 2020, 
while asserting that an electronic platform for the replacement of distant hearing dates 
by  ones  closer  to  the  present  can  be  operational  within  45  days  from  the  adoption  of 
legislation. 

The main features of the action plan are the following: 

The mandatory rescheduling to near dates, by electronic means, of cases with a hearing 
date  beyond  1 January  2021.  This  is  a  necessary  measure  towards  achieving  the 
timely  elimination  of  the  backlog,  given  that  a  significant  number  of  cases  are 
scheduled  to  be  heard  on  dates  extending  to  several  years  ahead.  To  avoid 
procrastination as part of strategic default tactics, failure on the part of the petitioner 
to ask for a rescheduling within the term to be set by the law will be considered as a 
withdrawal of the petition.  

The  electronic  service  of  documents  to  institutional  creditors,  the  state  and  social 

security entities.  

The replacement of live hearings in favour of trial in chambers, based on documentary 

evidence and notarized witness statements. 

In cases where more than 50% of the creditors agree on a rescheduling plan, the judge 

will be empowered to ratify the agreement instead of issuing a decision.  

Judges will be enabled to publish the operational part of the judgment prior to the full-
text version, in order to facilitate credit institutions with the elaboration of instalment 
schedules.  

The use of mediation as a tool for resolving cases. 

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The  development  of  an  e-platform  for  the  rescheduling  of  distant  hearings.  The 
authorities  are  contemplating  enhancing  the  functionality  of  the  electronic  platform 
by  adding  modules  for  e-notification  to  all  parties  to  the  proceedings  who  have 
electronic  addresses,  so  as  to  minimize  time  and  expense;  also  for  uploading  and 
distribution of the operative part of court decisions. 

No data on the evolution of the backlog in the first quarter of 2020 were submitted 
by  the  authorities  due  to  the  Coronavirus  outbreak.  Once  normality  is  restored,  it 
will  be  important  to  secure  the  availability  of  reliable  and  granular  data,  covering  the 
entire territory, as well as on the use by institutional creditors of the electronic platform 
for eligibility control. 

Clearing the Backlog of Called State Guarantees 

The  authorities  are  taking  steps  that  are  considered  feasible  at  the  current 
juncture to implement the four-year action plan for the clearance of the backlog of 
called guarantees, which remains considerable. Examination and expected payments 
of claims for the first quarter of 2020 is proceeding according to the targets set under the 
action  plan,  while  an  amendment  of  the  existing  ministerial  decision  on  the  e-file 
repository,  addressing  previous  shortcomings,  has  been  adopted  in  early  May. 
Additional  six  members  of  staff  have  been  reallocated  ahead  of  schedule,  while  the 
system ensuring interoperability with local tax offices is planned to become operational 
in  June.  However,  the  current  lockdown  measures  already  lead  to  holdups  in  the 
processing of claims, mainly due to reduced staff working on site, as well as a setback 
in the recruitment process of external personnel, while they may also affect the timing 
of relocation of the relevant Directorate to new building facilities. 

The authorities intend to speed up to the extent possible the processing of claims in 
the second half of 2020 compared to targets set, while examining ways to frontload 
the  payment  schedule  until  2023.  The  authorities  agreed  to  prepare  a  revised 
processing and payment plan in June, taking stock of actions needed to counter delays 
that may have taken place due to the recent crisis as well as upgrading the targets set for 
the second half of 2020. Moreover, the authorities agreed to explore ways to frontload 
further the payment schedule for the next years, in order to increase the overall amount 
paid  out  until  end-2023.  An  acceleration  of  the  processing  of  claims  already  this  year 
would be particularly beneficial as it would support the liquidity of the banking sector in 
the crisis period. 

E-auctions 

The  conduct  of  e-auctions  has  halted  as  a  result  of  the  closure  of  the  courts  and 
notarial offices but work is ongoing on improving the process going forward. The 
conduct of auctions was already declining prior to the epidemic disruption. According 
to  the  data  for  the  first  quarter  of  2020,  5,968  e-auctions  had  been  uploaded  to  the  e-
platform up to mid-March 2020, against 6,416 in the first quarter of 2019, representing 
a  7%  decrease.  The  number  of  e-auctions  which  were  actually  implemented  (i.e.  the 
notary conducted the auction) declined by 27.7% to 3,296. Regarding suspensions and 
unsuccessful auctions, i.e. auctions that did not lead to a sale, the available data for 2019 
indicate  that  in  28%  of  the  cases  the  auction  is  suspended  due  to  repayment  or  an 
agreement  on  restructuring  of  the  loan.  In  further  37%  of  the  cases  the  auction  is 

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suspended  due  to  other  legal  issues,  and  in  22% of  the  cases  the  suspension  is  due  to 
pending applications under the Household Insolvency law. As for unsuccessful auctions, 
approximately 10% is  due to  a dispute on the initial reserve price between debtor and 
creditor.  In  conclusion,  the  conduct  of  an  appreciable  portion  of  auctions  is  being 
hindered by procedural impediments and inefficiencies.  

To address this problem, the authorities presented an outline of amendments to the 
Code of Civil Procedure and proposals for enhancing the user-friendliness of the e-
auctions  platform.  Following  the  completion  of  an  ongoing  investigation  of 
international best practices in the relevant respects, the necessary legal amendments will 
be  elaborated  by  the  law-drafting  committee  for  the  revision  of  the  Code  of  Civil 
Procedure which is due to conclude its work, accompanied by an explanatory report, by 
end-September 2020, rather than by end-March as originally foreseen.  

Other initiatives 

Following  the  submission  of  the  inter-ministerial  working  group’s  conclusions 
regarding  the  implementation  review  of  the  Code  of  Civil  Procedure,  the 
authorities  are  working  towards  the  adoption  of  the  requisite  targeted 
amendments.  A  ministerial  decision  for  the  appointment  of  a  law-drafting  committee 
has  been  issued (30)  stipulating  that  the  committee  is  due  to  conclude  its  work, 
accompanied by an explanatory report, by end-September 2020. 

The  authorities  created  a  special  department  for  magistrate’s  court  judges,  and 
are  proceeding  with  work  on  the  syllabus  of  the  school  for  the  provision  of 
financial training to judges. The provisions on the creation of a special department for 
magistrate’s  court  judges  at  the  national  school  of  judges  are  included  in  a  bill  of  the 
Ministry  of  Justice  due  to  be  tabled  in  Parliament  by  end-May  2020.  Regarding  the 
inclusion of courses on  financial subjects  in  the  syllabus of  the school,  the authorities 
specified that such a decision is of the remit of the Director of Training of the National 
School for Judges, who has indicated her willingness to implement this measure, as of 
the beginning of the new academic year.  

An  adjustment  of  the  legislative  framework  on  deferred  tax  credits  to  ensure 
operational  effectiveness  is  planned  by  the  end  of  June.  The  aim  is  to  clarify 
technical  aspects  related  to  the  process  of  deferred  tax  credits’  use,  particularly  in 
resolution,  either  via  amendments  of  the  primary  legislation  or  via  secondary 
legislation, as appropriate. Completing and implementing the relevant legislation is very 
important to help safeguard the loss-absorbing capacity of the banks’ capital and can set 
out  clearly  other  related  procedural  aspects,  including  on  the  possibility  of  sale  of  the 
State’s right to acquire a credit institution’s shares upon conversion to existing or new 
private shareholders.  

6.3.  HELLENIC FINANCIAL STABILITY FUND 

In order  to better assess  and monitor the effects of the Coronavirus  outbreak on 
the  financial  situation  of  the  systemic  banks,  the  Fund  has  engaged  in  additional 
initiatives on top of its ordinary tasks. The activity in the regular workstreams of the 

(30) Minister οf Justice Decision 18229/Φ341 of 8 April 2020; publication in the OJ pending. 

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Fund  has  been  overshadowed  by  the  outbreak  of  the  pandemic  that  necessitated  it  to 
strengthen  its  monitoring  –  and  potentially  other  –  roles  within  the  current  legal 
framework.  These  steps  aim  in  particular  that  the  Fund  could  (i)  assess  in  depth  the 
effects  of  the  pandemic  on  the  liquidity,  asset  quality  (including  non-performing 
exposures),  profitability  and  capital  of  the  systemic  banks  and  (ii)  effectively  support 
these  banks  in  their  efforts  to  cope  with  the  numerous  operational  and  business 
challenges they are facing. The potential involvement of the authorities in the final stage 
of the divestment and the legal protection for the Fund’s governing bodies and staff still 
remains  to  be  finalized.  Preserving  the  Fund’s  independence  remains  a  cornerstone  in 
the process toward restoring the health of the banking sector. 

50 

7. 

LABOUR AND PRODUCT MARKETS 

7.1.  LABOUR MARKET 

In  response  to  the  Coronavirus  outbreak  the  authorities  undertook  a  set  of 
measures to mitigate the impact on the labour market. These measures consist of the 
following: 

increased  legislated  flexibility  in  terms  of  working  time:  employers  are  allowed  to 
modify the working schedule of their personnel by decreasing their working hours up 
to  50%.  In  addition,  following  the  closure  of  schools,  a  special  parental  leave  is 
provided for working parents with children below 15  years of age, funded partially 
by the state (25%);  

the  temporary  prohibition  for  employers  to  carry  out  dismissals,  combined  with  a 
special  lump-sum  wage  allowance  of  €800  and  full  coverage  of  social  security 
contributions (for the period 1 March – 30 April) for employees of companies closed 
by  public  order,  employees  subject  to  a  temporary  contract  suspension  from  their 
employers,  and  self-employed  and  individual  enterprises  (which  employ  up  to  5 
persons) affected from the outbreak. This measure concerns up to 1.7 million private 
sector employees and 500,000 self-employed. 

the  prolongation  of  unemployment  benefits,  initially  by  two  months  for  those 
beneficiaries whose benefits expired during the first three months of the year 2020.  

In  total,  in  March  2020  there  have  been  42,000  net  dismissals/job  losses.  This  is 
much higher compared to March 2019 were there were 43,373 net hirings recorded and 
it is mainly due to 50% lower hirings compared to March 2019 (103,002 vs 202,157). 
Furthermore,  25.4%  of  dependent  employment  (i.e.  more  than  1  million  employees) 
have  been  suspended.  The  percentages  of  suspended  workers  are  the  highest  in  the 
sectors  of  accommodation  (94.2%),  sports  (90.2%),  education  (89.9%),  catering 
(89.6%), gambling (87%) and provision of personal services (75.2%). 

To  mitigate  this  trend,  in  addition  to  the  measures  already  taken  and  the  special 
wage  allowance,  the  authorities  are  considering  to  implement  a  new  temporary 
short-time  work  scheme,  covering  manufacturing,  transport,  tourism  and  food 
services,  and  providing  considerable  flexibility  to  companies  for  adjusting  working 
hours whilst workers receive partial compensation for the hours not worked. The details 
have  yet  to  be  finalised  but  the  compensation  rate  will  be  on  the  basis  of  a  pro-rated 
percentage of wages paid directly to the workers involved. There will be a requirement 
for  firms  benefiting  from  this  scheme  to  maintain  employment  post-crisis.  The 
authorities will consider whether this scheme can be continued further in the year. The 
decision will be based on fiscal costs. The scheme can benefit from the disbursement of 
funds  through  the  new  European  instrument  for  temporary  Support  to  mitigate 
Unemployment  Risks  in  an  Emergency  (SURE),  once  the  latter  will  be  adopted  (the 
same applies to the special wage allowance). 

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The authorities have completed the implementation of the 2017-2019 action plan to 
fight undeclared work, an end-2019 specific commitment, and will now implement 
a  follow-up  plan.  The  2017-2019  action  plan  promoted  an  integrated  approach  to 
undeclared  work,  including  measures  to  reinforce  the  cooperation  among  different 
institutions  and  improve  the  capacity  to  detect  undeclared  work.  A  road  map  for  the 
follow-up action plan is expected to be adopted shortly.  

In light of the Coronavirus outbreak and the extraordinary challenges it poses, the 
authorities  have  decided  in  agreement  with  the  social  partners  to  postpone  the 
update  of  the  minimum  wage  from  June 2020  to  January 2021.  Currently,  around 
14%  of  workers  in  Greece  earn  the  minimum  wage.  Younger  workers  are  over  twice 
more likely to earn the minimum wage and this share increased by 33 percentage points 
after the 2019 update, which abolished the sub-minimum wage for the youth. According 
to  the findings  of the preliminary impact  assessment conducted in  2019 by  the World 
Bank, there is no evidence that employment and unemployment in sectors with a high 
share of minimum wage workers has changed relative to sectors employing higher wage 
workers. Nevertheless, these preliminary findings of the analysis are limited due to the 
short time frame, the lack of micro data and the information gap regarding a potential 
shift to undeclared work and the shadow economy.  

Greece has made a continuous commitment to safeguard competitiveness through 
an  annual  update  of  the  minimum  wage  in  line  with  the  provisions  of  Law 
4172/2012.  According  to  the  timeline  established  therein,  the  government  should 
determine  the  new  level  of  the  minimum  wage  in  June 2020  following  consultations 
with  social  partners  and  recommendations  by  an  independent  expert  committee. 
However,  the  unprecedented  Coronavirus  outbreak  is  impeding  social  partners  and 
scientific bodies from convening and proceeding with the consultation process. All the 
actors involved in the process have therefore requested the Government to postpone the 
minimum wage update and according to new legislation passed on 1 May 2020, this has 
been postponed to January 2021. Given the way the Coronavirus outbreak is unfolding, 
this  postponement  is  reasonable.  The  procedure  that  started  in  February 2020  and  has 
been  suspended  will  remain  the  same,  but  it  will  only  resume  at  the  end  of 
September 2020. All social partners and scientific bodies have to submit their analyses 
and  contributions  by  31 October  2020.  The  Committee  of  experts  has  to  issue  a 
recommendation  by  31 December  and  the  procedure  will  be  completed  the  second 
fortnight  of  January 2021,  when  the  Minister  of  Labour  will  issue  the  new  minimum 
wage  level,  based  on  the  aforementioned  recommendation.  For  the  same  reason,  the 
pending secondary legislation on collective labour agreements (due in April 2020) will 
be postponed by one month (expected to be adopted shortly).  

Education  

The Greek authorities have embarked on an ambitious agenda for comprehensive 
education  reform.  The  government’s  programme  regarding  education  focuses  on 
enhancing  the  quality  of  public  schools,  upgrading  vocational  education,  training,  and 
improving  the  quality  of  higher  education  institutions  to  address  the  skills  gap. 
However, the Coronavirus outbreak has delayed the adoption of major bills. 

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Chapter 7 - Labour and product markets 

The Ministry of Education has responded quickly and effectively to the crisis. The 
schools closed on 10 March and remote education was rapidly set-up. Together with 
the Ministry of Digital Governance an agreement was reached with telecommunication 
providers  for  cost  free  internet  access  from  mobile  phones  to  official  digital  learning 
platforms used for distance learning.  This  measure was  crucial  for widening access  to 
distance  learning  and  providing  equal  access  to  IT  infrastructure  and  internet,  to 
students  and  teachers  alike  including  for  disadvantaged  learners.  While  younger 
students  receive  education  material  primarily  through  email  or  websites  and  follow 
education sessions on TV, secondary students follow real-time lessons provided through 
private and public sources. Capacity problems of the online school network due to the 
sudden large demand are being addressed and schools have been asked to identify and 
report  to  the  Ministry  additional  needs  for  IT  equipment.  In  higher  education,  the 
percentage of courses that switched to digital has reached 96.5%. The remaining 3.5% 
are  laboratories  that  cannot  not  be  delivered  remotely.  For  digital  learning  to  be 
effective  also  beyond  the  crisis,  it  will  be  important  to  invest  in  developing  teachers’ 
and trainers’ competences in using IT tools.  

A  major  education  bill  was  submitted  to  public  consultation  on  22 April.  The 
proposed  reforms  in  line  with  the  authorities’  reform  programme,  include  for  primary 
and secondary education an increase in teaching of foreign languages, IT and physical 
exercise  as  well  as  the  development  of  soft  skills;  the  expansion  of  model  schools; 
teacher  training  and  internal  and  external  evaluation  of  school  units.  The  bill  has  also 
some provisions related to tertiary education which include a more transparent system 
for the election of rectors, and most importantly, the possibility for Greek universities to 
introduce  bachelor  level  degrees  in  foreign  languages,  joint  and  dual  degrees  between 
Greek  and  foreign  universities,  summer  courses  and  measures  to  attract  foreign 
students. The bill is expected to be brought to Parliament shortly. 

7.2.  PRODUCT MARKETS AND COMPETITIVENESS 

The  authorities  continue  working  towards  improving  economic  framework 
conditions  and  boosting  competitiveness,  despite  the  shifting  priorities  and 
difficulties  faced  due  to  the  Coronavirus  outbreak.  This  will  be  crucial  in  order  to 
ensure that the Greek economy exits from the current situation on a strong footing and 
will  be  able  to  generate  a  strong  and  sustainable  recovery,  inter  alia,  by  reducing  the 
reliance  on  tourism  and  finding  new  sources  of  growth.  Inevitably  and  appropriately, 
significant  resources  have  been  diverted  towards  addressing  the  pandemic.  On  the 
digital  front,  priority  was  attached  to  the  setting  up  of  remote  working  systems  and 
electronic  transaction  applications.  The  immediate  attention  of  economic  diplomacy 
actors focused on ensuring adequacy of imports of medical supplies and medicine, and 
providing  information  to  affected  businesses.  Further,  staffing  constraints  and  the 
reduced parliamentary activity implied slowed-down progress on areas dependent on the 
outputs  of  inter-ministerial  working  groups  or  the  adoption  of  legislation,  such  as  the 
simplification  of  licensing  legislation.  Nonetheless,  the  authorities  remain  poised  to 
advance  improvements  in  these  areas,  and  committed  to  undertake  a  number  of 
complementary actions. Moreover, they committed to adopt a new public procurement 
strategy for 2021-2025 by end-2020. A well-functioning public procurement framework 
would  help  guarantee  a  competitive  business  environment,  with  positive  spillovers  on 
the digital reform agenda, and will thus be crucial for the recovery (see section 3.5). 

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Digital Governance 

The  authorities  have  progressed  with  the  implementation  of  an  impressive  set  of 
digital initiatives in a limited amount of time, enabling, among others, continuity in 
certain business-state transactions. Key initiatives included the early launch of a pilot 
for more than 500 electronic services offered through the gov.gr unified platform, and 
the provision of remote  access  to  critical  government services. Further, the authorities 
swiftly set up a digital platform to manage the submission of applications for financial 
assistance  to  businesses  to  combat  the  effects  of  the  pandemic.  In  parallel,  work  on 
improving  the  digital  performance  of  the  economy  as  a  whole  continues,  which  is 
expected  to  contribute  to  boosting  productivity  in  the  private  sector.  Moreover,  the 
authorities  have  committed  to  delivering  a  number  of  complementary  actions  by  end-
2021  to  further  ease  the  administrative  burden,  amongst  others,  for  businesses,  and  to 
implement a new digital tool by end-2021 to provide clarity to investors in relation to 
land use rules across Greece. These are expected to further contribute to the creation of 
a  simplified  and  predictable  framework  for  electronic  transactions  between  businesses 
and the state, and a transparent set of rules for the development of investment projects 
(see Box 9.1). 

Economic Diplomacy 

The  focus  of  administrative  entities  involved  in  the  area  of  economic  diplomacy 
and trade facilitation shifted towards tackling the Coronavirus outbreak, however 
work is overall progressing on a number of fronts. Specifically, albeit with a delay, 
the  legislation  enlarging  the  mandate  and  responsibilities  of  the  Ministry  of  Foreign 
Affairs  on  economic  diplomacy  is  expected  to  be  finalised  shortly,  with  a  view  to 
consolidating  all  relevant  policies  and  tools  under  a  single  roof  and  create  synergies. 
The  new  strategic  plan  on  economic  diplomacy  is  also  expected  to  be  finalised  soon, 
which will incorporate new short-term priorities, such as safeguarding import routes for 
key  products,  supporting  the  development  of  e-commerce  and  e-marketing  tools  for 
businesses,  and  providing  guidance  to  businesses  in  the  recovery  period.  In  parallel, 
with  the  help  of  technical  support  provided  by  the  European  Commission,  the 
authorities  are  preparing  an  elaborate  mid-term  strategy  for  2021-2023,  including  a 
reporting framework on key performance indicators. Further, the authorities completed 
the  tender  specifications  for  the  integrated  Single  Window  system  for  imports  and 
exports,  though  the  launch  of  the  tender  will  be  postponed  until  the  pandemic  has 
subsided. Such actions are expected to significantly contribute to the continued efforts 
to rebalancing the economy towards tradable sectors, as well as to support the recovery. 
To this end, it would be necessary to swiftly proceed with the adoption of legislation on 
the  new  mandate  of  the  Ministry  of  Foreign  Affairs  and  the  establishment  of  the  new 
governance  structures  for  inter-ministerial  coordination  on  trade  facilitation  to  ensure 
effective  oversight  and  coordination  under  the  said  Ministry  across  all  involved 
government services. 

Investment Licensing 

Work  on  investment  licensing  is  progressing  across  a  number  of  fronts,  despite 
delays  caused  by  factors  mostly  outside  the  authorities’  control.  The  authorities 
remain  committed  to  completing,  to  the  extent  possible,  reform  elements  within  the 
commitment  deadlines.  In  this  context,  work  continues  across  government  services 

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Chapter 7 - Labour and product markets 

under  the  coordination  and  monitoring  of  the  responsible  Better  Regulation  Delivery 
Directorate,  and  with  the  help  of  further  technical  support  provided  by  the  European 
Commission,  delivered  through  the  World  Bank.  In  order  to  safeguard  reform 
continuity, full alignment of all future legislation with the principles of the investment 
licensing framework is needed. To this end, continuous efforts to ensure effective inter-
ministerial coordination would be crucial, amongst others via the implementation of the 
good law-making provisions stipulated in the Executive State Law (31) and elaborated in 
the  recently  adopted  legislative  methodology  manual  that  will  be  used  by  the  whole 
administration (see section 9.1). 

Regarding  the  full  deployment  of  the  relevant  IT  system  to  support  the  investment 
licensing  framework  (an  end-2019  specific  commitment),  a  further  complication 
arose  in  the  tender  process  for  the  procurement  of  this  system.  A  request  for  the 
enforcement  of  suspension  measures  is  pending  before  the  Athens  Administrative 
Court of Appeal since April 2020, and a decision is expected to be issued shortly. For 
the  moment,  this  complication  brought  the  process  for  awarding  the  contract  to  a 
halt. Whilst this outturn of events is outside the authorities’ control, it endangers the 
prospects of the licensing reform in general, as the full and effective deployment of 
reform elements is dependent on the availability of this digital infrastructure. 

Work  on  the  implementation  of  the  inspections  framework  law,  a  mid-2020  specific 
commitment,  is  progressing,  though  in  some  areas  more  slowly  than  expected.  A 
number of tools relating to the food safety domain were adopted, ahead of the revised 
June  2020  timeline.  With  respect  to  the  enforcement  management  model  for  this 
area, as expected, the amendment  of legislation on sanctions is  likely to face some 
delays. Work in the environmental protection domain is advancing at a slower pace 
than expected, with most tools, which were due by April 2020, remaining pending. 
Dedicating adequate resources would thus be important to complete this part of the 
reform.  As  regards  the  product  safety  domain,  the  authorities  aim  to  develop  the 
relevant  tools  with  the  help  of  a  technical  advisor  by  June  2020,  in  line  with  the 
revised timeline. Moreover, the authorities are drafting enabling legislation to define 
the responsible inspection authorities for each domain by June 2020, with a view to 
operationalise the relevant provision of the Inspections Law 4512/2018. 

The extension of simplification of the investment licencing procedures in the remaining 
sectors of the economy (a mid-2020 specific commitment) is progressing, inevitably, 
with some delay. The authorities have drafted primary and secondary legislation for 
the  simplification  of  the  primary  production  sector,  though  adoption  has  been 
delayed  due  to  the  prioritisation  of  other  legislation  submitted  to  parliament.  A 
greater  scope  for  simplification  would  be  beneficial  to  businesses  in  this  sector, 
supported by the full deployment of a robust and comprehensive inspections system, 
which is expected to reduce necessity for ex-ante control without compromising on 
health  and  safety.  With  respect  to  the  transport  sector,  the  first  deliverable  –the 
mapping of economic activities- was completed, and the authorities aim to develop 
proposals for simplification shortly, i.e. with a slight  delay compared to the revised 
end-April timeline. Regarding the post-secondary education and vocational  training 

(31) OJ A 133/2019.08.07. 

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sectors,  the  authorities  concluded  the  mapping  of  economic  activities,  with  the 
intention to develop proposals for simplification by end-June 2020. 

The  authorities  aim  at  concluding  the  revision  of  the  nuisance  classification  by  mid-
2020,  well  ahead  of  the  mid-2021  specific  commitment  deadline.  Work  is 
progressing  with  the  help  of  a  technical  advisor,  on  track  with  the  revised  action 
plan, with a view to issue the relevant Joint Ministerial Decision by mid-2020, as per 
the relevant  provision adopted in  the Development  Law of October 2019. The next 
deliverable  concerns  the  specification  and  implementation  of  the  methodology  for 
the  categorisation  of  activities,  which  is  expected  to  be  completed  shortly.  Social 
partners continue to be involved in the process, which is considered highly beneficial 
to this reform area. 

The  implementation  of  all  key  programme  reforms,  which  is  an  ongoing 
commitment,  continues.  With  respect  to  environmental  licensing,  the  authorities 
recently  adopted  legislation (32)  to  improve  the  environmental  permit  process.  Key 
elements include extending the permit duration, shortening the processing deadlines and 
strengthening  the  role  of  intervention  mechanisms  in  the  of  case  of  delays  in  the 
submission  of  opinions  by  relevant  services,  rationalising  the  requirements  for  permit 
renewal  and  amendment,  in  addition  to  widening  the  scope  for  involving  external 
environmental assessors and for carrying out steps digitally in the permit process. The 
authorities also expect to finalise secondary legislation for the certification of external 
environmental  assessors  shortly,  which  has  been  pending  since  the  ESM  programme, 
whilst they are also working towards upgrading the environmental registry. In relation 
to  the  inspections  framework,  work  on  secondary  legislation  for  the  certification  of 
external  inspectors  is  ongoing,  with  the  drafting  of  the  relevant  presidential  decree 
expected by mid-2020, as compared to the initial timeline of March 2020. Further, with 
a view to streamlining the administrative burden on producers and buyers of milk, the 
authorities  undertook  to  review  and  amend,  as  necessary,  secondary  legislation  on 
measures to control the milk market (33) by September 2020. 

Better regulation 

With  a  view  to  further  improving  the  business  environment,  the  authorities  are 
pursuing  complementary  actions  to  cut  red  tape,  help  establish  clear  rules  for 
government-to-business  interactions,  and  increase  the  predictability  of  economic 
transactions.  With  the  help  of  technical  support  provided  by  the  European 
Commission,  delivered  by  the  World  Bank,  the  authorities  aim  to  improve  Greece’s 
performance in relation to the Word Bank’s Doing Business indicators (34), including on 
areas  in  which  the  country  has  been  consistently  underperforming,  such  as  contract 
enforcement, resolving insolvency, and registering property. In parallel, the authorities 
are  working  towards  identifying  problems  and  improving  all  remaining  indicators  not 

(32) OJ A 92/2020.05.07. 
(33) This  refers  to  a  Joint  Ministerial  Decision  issued  by  the  Ministry  of  Finance  and  the  Ministry  of 

Agricultural Development and Food on 21 March 2019. 

(34) The indicators covered through technical support relate to the areas of construction permits, obtaining 
access to electricity, registering property, resolving insolvency, accessing credit, protecting  minority 
investors, contracting with the government, and enforcing contracts. 

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included  in  the  scope  of  this  project  (35).  To  this  end,  they  prioritised  a  number  of 
actions to be implemented by June 2020. Specifically, these include actions to introduce 
the  electronic  submission  of  documents  (except  in  the  case  of  notarial  deeds)  to  the 
general  commercial  registry (GEMI) for  certain  categories of firms,  and  to  effectively 
enforce the use of the e-business  stamp when starting a business.  Priority actions also 
include  legislative  improvements  in  relation  to  the  governance  of  listed  companies  to 
protect  minority  investors.  In  addition,  the  authorities  are  working  towards  a  detailed 
action  plan,  due  by  June 2020,  to  include  deliverables  over  the  short-  and  mid-term 
across  all  areas.  These  initiatives  are  expected  to  help  bring  Greece’s  performance 
closer  to  the  OECD  high-income  country  average,  but  also  to  accommodate  the 
objectives of the new Growth Strategy that is underway. 

Cadastre 

The Coronavirus outbreak has affected the cadastre project, and some slippages of 
the  recently  updated  roadmap  are  to  be  expected  if  the  crisis  persists.  The 
expression  of  interest  for  Deputy  General  Managers  has  been  published  on  3 April 
2020. The length of the process depends on the number of candidates, but it should be 
possible  to  complete  it  by  end-May 2020  or  shortly  thereafter.  The  preparation  of  the 
Corporate Strategy  – a milestone for June 2020 - is  progressing. Cooperation with  the 
World  Bank  continues  remotely.  Draft  technical  specifications  for  the  archive 
digitalization  strategy  have  been  prepared  and  the  Hellenic  Cadastre  has  submitted  to 
the  European  institutions  a  note  summarising  the  key  steps  and  the  envisaged 
digitalisation  strategy.  The  objective  is  to  create  a  central  database  that  contains  all 
documents  (property  rights,  mortgages,  court  decisions  affecting  the  legal  status  of  a 
property, indexes, personal data etc.) currently distributed in analogue form in cadastre 
and  mortgage  offices  along  with  all  software  applications  that  will  allow  interested 
parties  (professionals,  agencies,  citizens)  to  search  and  remotely  retrieve  information. 
The  award  of  the  final  five  contracts  that  was  delayed  due  to  judicial  proceedings  is 
progressing.  The  contract  for  Rethymnon  will  be  signed  in  May 2020.  The  remaining 
four  contracts  (Chania/Heraklion/Thesprotia-Kerkira  and  Cyclades)  are  expected  to  be 
signed by July 2020. 

An issue that has not been resolved is that of the recruitment of staff. It concerns 49 
staff  for  the  migration  team,  a  team  needed  to  put  in  place  the  transition  from  the 
mortgage offices to the cadastral offices, the return of the lawyers and the launching of 
the  recruitment  of  long-term  staff.  Provisions  for  the  recruitment  of  staff  have  been 
included in the bill of the Ministry of Environment that was adopted on 5 May 2020.  

The  public  presentation  of  all  remaining  forest  maps  scheduled  to  start  on 
January 2020  and  to  be  gradually  completed  by  June 2020  has  been  frozen.  The 
reasoning behind the freezing is to adopt legislation that would address problems with 
building concentrations and other uses in presumably forest land where the Council of 
State had judged that they should be included in the maps. The maps essentially depict 
the situation according to the existing legislation and the Greek constitution. The maps 
give  a  clear  overview  to  the  political  leadership  of  existing  problems,  and  what 
legislative changes are needed. In that sense, the 170,000 objections that were raised are 

(35) These relate to the areas of starting a business, paying taxes, and trading across borders. 

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not  excessive,  compared  to  the  millions  of  plots  that  did  not  raise  objectives.  The 
European  institutions  encouraged  the  authorities  to  proceed  with  the  uploading  and 
partial ratification of the maps to cover the whole of Greece (already 50% is covered) 
and  continue  in  parallel  to  address  problematic  areas,  correct  errors  and  complete  the 
maps gradually. It is estimated that an area of the order of 5% of the surface of Greece 
would fall in this category. The delays in the uploading of the maps will have an impact 
on the completion of the cadastral mapping as a whole.  

The  Coronavirus  outbreak  is  delaying  the  establishment  of  17  Cadastral  Offices 
and  branches  substantially.  As  travels  have  been  banned,  training  cannot  be 
implemented.  The  openings  of  two  new  cadastral  offices  that  we  were  planned  for 
9 April and 30 have been cancelled. 

Energy  

The  Coronavirus  outbreak  has  had  an  impact  on  the  Greek  energy  sector,  with 
lower oil and gas prices, with social distancing measures affecting demand patterns 
and  certain  technical  projects;  it  has  also  caused  a  liquidity  problem  for  market 
actors  given  a  slowdown  in  payment  of  bills.  Nonetheless,  Greece  managed  to 
progress  with  several  reforms,  notably launching the forward market  for energy under 
the target model, and has kept its mid-to-long term plans intact, particularly regarding 
its lignite decommissioning plan. However, challenges are reported in progressing with 
some  technical  work  related  to  the  balancing  market,  which  are  currently  under 
assessment  regarding  their  impact  on  the  overall  timing  for  the  go-live  of  the  target 
model. Regarding the liquidity problem for energy providers, the authorities have taken 
measures to try to stem its impact. The Renewable Energy Sources Special Account has 
come under particular strain due to market changes affecting its revenues. 

Discussions  continue  on  the  specifics  of  the  anti-trust  remedy,  with  the  aim  of 
presenting  a  market-testable  proposal,  a  key  step  in  finally  implementing  the 
remedy  and  closing  this  end-2020  commitment.  The  revised  remedy  proposal 
envisages  the  possibility  for  PPC’s  competitors  to  access  a  certain  share  of  PPC’s 
generation. This share would be dynamically linked to the decommissioning of lignite 
plants  in  Greece.  Some  improvements  are  being  discussed  so  as  to  allow  the 
Commission to carry out a market test with stakeholders, a key step  in view of finally 
implementing the remedy and closing this case. In particular, improvements are sought 
in terms of ensuring that (i) there is a transparent selection process; (ii) smaller players 
in the Greek retail market can access the power sold through the remedy; (iii) a detailed 
implementation  mechanism,  with  direct  involvement  of  the  Greek  Government,  is  in 
place for the mechanism.  

The second quarter of 2020 saw Greece launch the forward market for electricity, 
with the first trades coming soon after. Based on a proposal of the authorities to make 
up  for  the  cancellation  of  the  final  NOME  auction  round,  the  forward  market  was 
launched on 28 March, with trades taking place soon after. The delivery of this project 
is  an  important  step  and  was  completed  under  difficult  circumstances,  and  was  an 
additional  work  stream  on  top  of  the  preparation  of  the  spot  markets  for  the  target 
model. So far, the derivatives market offers only products with financial settlement. Its 
development alongside the target model and anti-trust remedy will be closely observed. 

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The  work  on  the  implementation  of  the  Target  Model  (a  rescheduled  mid-2020 
specific  commitment)  for  the  local  electricity  day-ahead,  intra-day  and  balancing 
markets  planned for  the  second  quarter  of  2020  is  ongoing.  Considerable  progress 
has been made at  technical  level  regarding  IT system development.  As far as the spot 
markets (intra-day and ahead) are concerned, the work has been running to schedule and 
the IT work has almost been completed. The technical readiness of the new balancing 
market is encountering challenges related to contractors’ difficulties in deploying staff 
as a result of the containment measures, which may cause slight delays to the go-live. 
The  exact  new  timeline  and  mitigation  measures  are  under  assessment  by  the  Greek 
authorities  in  cooperation  with  the  Greek  Transmission  System  Operator  and  related 
contractors. From the regulatory point of view, the removal of price caps other than EU-
harmonised  technical  limits  is  a  welcome  step.  Regarding  the  readiness  for  market 
coupling with neighbouring markets, local technical readiness and coordination with the 
pan-EU  projects  are  necessary  conditions.  There  are  some  external  risk  factors 
regarding the completion of market coupling in 2020, again related to the Coronavirus 
outbreak,  but  nonetheless  significant  steps  have  been  taken  in  this  regard  and 
discussions with the counterparties are intense. 

Legislative  work  on  establishing  the  relevant  framework  of  rules  is  planned  to 
continue  as  scheduled  in  order  to  deliver  on  time;  the  national  energy  regulator 
will play a very important role here. The day-ahead, intraday and balancing clearing 
rules  are  been  developed  to  ensure  liquidity  and  manage  counter-party  risk,  which 
should  encourage  wider  participation.  A  number  of  technical  codes  and  implementing 
decisions are still under approval or review by the energy regulator based on the agreed 
timeline.  The  regulator’s  monitoring  mechanism  before  the  go-live  to  allow  the 
regulator  to  properly  monitor  anticompetitive  behaviours  from  the  outset  of  the  new 
markets and strengthen the trust of the market participants. Overall, progress has been 
positive and Greece could be able to implement a new electricity market model by the 
third quarter of 2020. 

The  Coronavirus  outbreak  has  exacerbated  the  long-standing  problem  of 
widespread non-payments in the electricity market. Initial estimates are that liquidity 
issues  will  affect  all  players  on  the  market,  despite  the  fact  that  initial  demand  for 
electricity  has  not  been  seen  to  drop  significantly.  While  some  methods  of  payment, 
such as physically paying at a counter, have been cut off due to social restrictions, many 
customers  are  now  accustomed  to  paying  through  electronic  bank  transfers  and  thus 
should  be  able  to  make  the  transactions.  The  Public  Power  Company  has  been 
increasing  its  numbers  of  customers  joining  e-billing  schemes.  As  of  end-March (36), 
The  Public  Power  Company’s  retail  market  share  stood  at  69.6%,  around  the  level  of 
November 2019  but  still  continuing  the  longer-term  downward  trend.  Regarding  the 
company’s  arrears,  further  parts  of  these  arrears  have  been  categorised  as  allocated  to 
‘non-active customers’, i.e. those no longer with  the company, but the overall stock is 
stable whilst the company focuses on stopping new arrears systematically accumulating. 
So  far,  some  measures  have  been  taken  to  support  the  sector  regarding  strains  on  bill 
payments resulting from the outbreak. This includes bank guarantees to support loans to 

(36) Energy Exchange Group Monthly wholesale and retail penetration and market share report, February 
2020: http://www.enexgroup.gr/fileadmin/groups/EDSHE/FEP/MonthlyReports/FEPAS_MonthlyRep
ort_202002_EN_V01.pdf.  

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companies,  including  energy  providers,  as  vital  liquidity  provision  taken  as  an 
economy-wide action that includes energy. A more specific measure for the sector was 
also made available, allowing energy companies to pay a share of their regulated tariffs 
in instalments. 

Greece has taken first steps in implementing its ambitious lignite decommissioning 
plan,  with  the  establishment  of  an  inter-ministerial  committee  to  examine  the 
transition  at  national  and  regional  level,  with  2020  the  date  for  the  first  plant 
closures.  Focus  on  the  regions  most  affected  and  handling  the  associated  socio-
economic  challenges  will  be  key  in  delivering  a  just  transition  that  will  have  public 
backing. Greece is preparing a ‘master plan’ looking at the issue at a national level and 
from  a  variety  of  angles,  as  well  as  developing  specific  plans  for  the  key  regions  and 
municipalities,  namely  Western  Macedonia  and  Megalopolis.  EU  funds,  particularly 
under the Just Transition Mechanism in line with the Commission’s Green Deal, could 
contribute  to  the  necessary  investments  in  transforming  regions,  an  issue  which  is 
covered in more depth in the Commission 2020 Country Report for Greece (37). As part 
of support provided by the European Commission, the World Bank is preparing a road 
map for the planning, design and implementation of the economic and energy transition 
of Western Macedonia, which could feed into the Greek Territorial Just Transition Plan 
that will be developed.  From a more  energy-oriented perspective,  Greece will need to 
prepare for the  removal  of lignite  capacity  through  replacement  generation of  gas  and 
renewables, as its National Energy and Climate Plan makes clear. 

Greece’s  National  Energy  and  Climate  Plan  is  currently  under  review  by  the 
European  Commission.  The  Commission  is  assessing  the  final  Plans  of  all  Member 
States and will issue an EU-wide as well as a country-specific assessment later this year 
in  line  with  Governance  Regulation.  The  Commission  will  assess  all  Member  States’ 
contributions to see how far these will help delivering the Union’s energy and climate 
objectives  and  in  particular  the  Union’s  2030  goals  for  emissions  reduction,  energy 
efficiency  and  renewable  energy.  In  particular  for  Greece,  the  new  ambition  for  early 
decommissioning of lignite and the other ambitious objectives will be assessed in terms 
of the challenges to be addressed in the coming years.  

The final 2019 figures for the Renewable Energy Sources Special Account showed 
it ending in surplus (a continuous commitment) but 2020 brings substantial risks. 
Funded  by  revenues  from  the  market,  maintaining  the  account  in  surplus  is  key  for 
supporting  renewables  projects.  A  lower  market  price  on  the  energy  system  price  and 
reduced EU emissions trading prices have had large negative effects on revenues, while 
expected reduction in demand due to the Coronavirus outbreak will put further strain on 
inflows. However, the authorities are committed to  ensure that the account  remains in 
surplus and will discuss necessary steps to ensure this with the renewable energy market 
operator, who recently prepared an updated report of the account (38). A loan will also 
be granted to the operator with the purpose of supporting the account, while the special 
levy (39) is expected to remain the key instrument to ensure the long-term viability of the 

(37) https://ec.europa.eu/info/files/2020-european-semester-country-report-greece_en.  
(38)http://www.lagie.gr/fileadmin/groups/EDSHE/MiniaiaDeltiaEL/01_JAN_DELTIO_ELAPE_v1.0_03.

04.2020.pdf. 

(39) Special Duty of Greenhouse Gas Emissions Reduction (ETMEAR). 

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account.  The  renewables  auction  of  April (40)  went  ahead  as  planned  through  online 
systems. Low prices were observed, though take-up of the available quantities was high. 
The authorities have indicated their intentions to continue the auction system. 

The  adoption (41)  of  an  environmental  law  aimed  at  improving  the  process  for 
setting  up  and  developing  renewable  energy  projects  is  a  welcome  step.  Key 
provisions include the creation of a renewable energy production certificate to ease the 
establishment of projects, as well as efforts to help prevent a freeze in ongoing projects. 
Further details on environmental licensing provisions are given in the licensing chapter 
of this report. Given the various wider issues involved with renewable energy projects, 
particularly  in  Natura  2000-protected  areas,  attempts  to  improve  coordination  and  to 
give the Ministry of Energy more oversight could also help prevent projects stalling. 

Regarding  gas  markets,  there  was  progress  with  regulatory  developments.  This 
included  the  settling  of  an  outstanding  issue  related  to  the  return  of  grid  fees  to 
industrial  customers  and  the  energy  regulator’s  decision  on  the  methodology  for 
operator  premiums,  with  the  decision  expected  to  be  published  end  of  May.  Such 
developments  took  place in  the context  of Expressions of  Interest  being  submitted for 
the  DEPA  Commercial  and  DEPA  Infrastructure  tenders.  Further  details  of  the 
transaction are covered in the privatisation section of this report. 

Transport and Logistics 

The drop in external demand and lower domestic demand, the disruption of global 
supply  chains  and  the  effects  of  the  travel  restrictions  lead  to  a  strong  decline  in 
the transport and logistics  sector. The transport sector accounted for 42% of service 
exports  in  2019  and  is  manly  focused  on  shipping.  With  the  closure  of  international 
ports  and  restrictions  on  travel  for  crew  members  as  well  as  the  expected  significant 
drop in global trade and disruption of international supply chains, the transport industry 
is  expected  to  be  strongly  affected  in  2020.  The  impact  on  domestic  transport  is 
expected  to  be  concentrated  in  the  months  of  the  strict  containment  measures  and  to 
decline as the containment measures are lifted. The effect of the slowdown in trade on 
shipping  depends  more  on  the  containment  measures  taken  internationally  and  the 
overall economic impact of the Coronavirus pandemic. 

The  authorities  have  adopted  the  National  Transport  Master  Plan  in  September 
2019 and are proceeding to its further specification at regional level. The Plan was 
developed  with  technical  support  provided  through  s  the  European  Commission.  The 
Ministry of Infrastructure and Transport prepares further specification of the Transport 
Plan at regional level, in consultation with stakeholders, in order to fulfil the associated 
enabling  condition  of  the  upcoming  structural  funds  programming  period  for 
comprehensive  transport  planning  and  introduce  a  pipeline  of  projects  for  the  next 
programming period. 

The  key  railway  investment  projects  continue  to  face  a  substantial  delay.  The 
planning  was  to  commit  €1.2-1.4 billion  from  the  2014-20  transport  and 

(40) http://www.rae.gr/site/categories_new/about_rae/factsheets/2020/maj/0204_4.csp.  
(41) OJ A 92/2020.05.07. 

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environment operational programme, but in practice the commitments so far did 
not exceed €200 million. The delays concern ongoing and planned railway projects and 
the new Athens metro line 4. These delays contribute to the under-performance of the 
public investment budget. The authorities have set up a committee with the participation 
of the European Commission to rationalize the way that railway projects are delivered 
and to make proposals for new projects covering both the current programming period 
and  the  period  2021-27.  Out  of  these,  three  to  four  projects  will  be  funded  under  the 
current  operational  programme  with  a  value  of  300-€400 million.  At  the  beginning  of 
2021  the  signalling  upgrade  of  the  Athens-Thessaloniki  section  will  be  delivered,  and 
the train running time from Athens to Thessaloniki will be reduced to 3-3½ hours. The 
procedure for line 4 of the Athens metro is progressing. The decision of the Council of 
State is awaited, but the project will be transferred to the programming period 2021-27. 

Regarding  the  Urban  Transport  of  Thessaloniki  (OASTH),  a  concession  contract 
with the joint-venture of regional transport (KTEL) has been approved. Under this 
agreement, the KTEL will operate bus lines peripheral to the city and thereby increase 
the capacity of the public transport in Thessaloniki by 100 buses. At the same time, an 
additional  number  of  buses  is  being  procured  by  leasing  and  a  tender  for  purchase  of 
new buses in preparation.  

By June 2020, OASTH will adopt a strategic plan for its future reform, integrating 
also  the  Thessaloniki  metro.  Regarding  income  from  sales,  the  revenues  increased 
from €24 million in 2018 to about €28 million in 2019. However, since then the demand 
has collapsed due to the current restrictions in movement. The balance sheet for the year 
2019,  still  in  draft  form,  was  submitted  to  the  Institutions  demonstrating  substantial 
deficit in the company’s balance sheet, addressed with state transfers. The strategic plan 
is  expected  to  include  the  company’s  transformation  plan  and  cost  containment 
measures. 

The  logistics  sector  has  suffered  significantly  from  the  Coronavirus  outbreak,  as 
transport  has  decreased  massively,  with  the  exception  for  food  and  medicine.  In 
the 
mid-March 
implementation of the action plan for logistics, which had been adopted in 2017. Given 
the current circumstances, the committee is dealing primarily with issues related to the 
current effects of the Coronavirus outbreak. 

inter-ministerial  committee  for 

the  authorities  established  an 

Some  progress  has  been  made  regarding  the  opening  of  Thriassio  logistics 
complex. Once fully operational, this investment – co-financed with EU funds – could 
give  a  big  boost  to  rail  freight  and  the  overall  competitiveness  of  the  country.  The 
concession contract for the private freight centre has not been activated as the contract 
was  signed  without  the  competition  clearance  by  the  Commission.  The  tender  for  the 
management  and  operation  of  the  park  of  1,450  hectares  is  severely  delayed.  The 
Commission has started the procedures for recovering EU structural funds. 

Water and environment 

implementation  of  the  information  system  to  monitor  the 
Progress  with 
performance  of  water  companies  throughout  the  country  has  been  gradual  and 
slow.  For  the  purposes  of  monitoring  and  improving  water  services  for  all  uses,  a 

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Chapter 7 - Labour and product markets 

website  of  the  Ministry  of  the  Environment  and  Energy  is  operational  since 
January 2019,  whereby  the  water  service  providers  (water  supply  and  sewerage 
companies  (DEYA),  municipalities,  irrigation  associations  and  other  water  providers) 
are  required  annually  to  enter  data  relating  to  their  activity  in  the  system.  During  the 
first year of operation of the IT system, the authorities have taken steps to induce water 
providers  to  populate  the  database,  but  the  containment  measures  have  set  some 
limitations  to  the  actions  that  the  competent  authorities  can  take.  Nevertheless,  the 
number of utilities that are using the IT system is steadily increasing, with about half of 
the  water  suppliers  having  uploaded  data  for  2017  and  2018  so  far.  While  the  water 
providers are expected to prepare comprehensive reports by this summer, the authorities 
are preparing legislation to help accelerate implementation, including through sanctions 
for  breaching  reporting  requirements. 
the  fragmentation  of 
responsibilities  among  three  Ministries  (environment,  interior,  rural  affairs)  has 
arguably impeded the functioning of the framework. 

this  respect, 

In 

The Ministry of Environment has started preparing the enabling conditions for the 
new programming period. Six regional sewerage plans have been prepared and seven 
are under preparation, while a team has been set up to prepare regional plans for water 
supply. Finally, a legislative provision will be included in the next bill of the Ministry of 
Environment allowing to subsidise the private connections of the sewerage system. 

63 

 
8.  HELLENIC CORPORATION OF ASSETS AND 

PARTICIPATIONS (HCAP) AND PRIVATISATION 

8.1.  HELLENIC CORPORATION OF ASSETS AND PARTICIPATIONS 

Inevitably,  the  Coronavirus  pandemic  has  affected  the  functioning  of  the 
Corporation and its portfolio companies and has led to adjustments and/or change 
of  priorities  for  the  Corporation  as  well  as  to  unavoidable  adjustments  of  the 
schedule of part of Greece’s commitments.  

Updated Ministerial Guidance, which is needed for the continued implementation 
of  the  Corporation’s  strategic  plan  (a  continuous  commitment),  will  be  delayed 
until the impact of the Coronavirus pandemic can be assessed.  The authorities had 
expected  to  provide  updated  Ministerial  Guidance  to  the  Corporation  during  the  first 
quarter  of  2020  and  had  developed  the  content  of  this  guidance,  but  its  continued 
appropriateness  will  need  to  be  reviewed  in  light  of  the  Coronavirus  pandemic  and 
therefore the release of this guidance will be postponed. 

The  Corporation’s  planned  update  to  its  business  plan  will  also  be  delayed  until 
the  impact  of  the  Coronavirus  pandemic  can  be  assessed.  The  Corporation’s 
management had prepared an update of the Business Plan for the period 2020-2022 as 
well as key performance indicators for 2020 for the subsidiaries within the framework 
of the implementation of the strategic plan. However, under the current unprecedented 
circumstances, the updated business plan for 2020-2022 can only be finalised once more 
accurate  estimates  of  the  financial  impact  of  the  Coronavirus  pandemic  are  possible. 
This will include assessing the effect of the pandemic on key performance indicators for 
the direct and other subsidiaries.  

Similar  considerations  apply  to  the 
implementation  of  the  Coordination 
Mechanism.  The  mandates  of  the  state-owned  enterprises  were  finalised  during 
February  and  approved  by  the  Cabinet  Committee  on  12 March.  The  next  step  in  the 
implementation  of  the  coordination  mechanism  is  the  preparation  of  a  statement  of 
commitments  regarding  each  state-owned  enterprise,  setting  out 
its  financial, 
operational and other objectives. This step is not advisable at this juncture, as the impact 
of the Coronavirus pandemic has to be taken into account in designing the financial and 
operational  objectives  to  be  included  in  the  statement  of  commitments.  Similarly,  the 
preparation of performance contracts setting out public service obligations for a limited 
set  of  state-owned  enterprises  will  need  to  wait  until  the  Coronavirus  pandemic  has 
subsided. 

The Corporation’s highest priority at this juncture is the continued operation of its 
state-owned enterprises in key sectors of the economy and the health and safety of 
their  staff.  The  Corporation  is  in  continuous  contact  with  the  state-owned  enterprises 
and  is  continuously  updated  on  the  financial  situation  of  the  companies.  In  brief,  the 
guidelines given to the subsidiaries by the Corporation foresee that they should take all 
measures required to remain operational with the staff that can be safely present in their 
premises.  The  uninterrupted  provision  of  electricity,  water  and  postal  services  is 

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paramount. Contingency plans have been developed to ensure this. It is also important 
to prevent disruptions in the operation of the central markets in Athens and Thessaloniki 
as this could impact the supply chain of fruit, vegetables, meat and fish in the market. 
The  Athens  bus  and  metro  companies  are  reviewing  on  a  very  frequent  basis  their 
transport  plans  to  account  for  both  a  dramatic  reduction  of  passengers  as  well  as  a 
decrease  of  the  available  staff  due  to  the  regime  of  special  purpose  leave  (for  health 
reasons and compulsory isolation due to Coronavirus pandemic). 

The  negative  repercussions  of  the  Coronavirus  pandemic  are  expected  to  be 
particularly severe for the Athens Urban Transport Organisation and the Hellenic 
Post.  More  specifically,  the  revenue  of  the  Athens  Urban  Transport  Organisation  has 
declined dramatically due to the measures for isolation and restrictions on movement of 
citizens. Also the operation of the post offices has been disrupted due to restrictions in 
the  movement  of  citizens  and  isolation  measures,  whereas  the  Hellenic  Post  has  to 
continue rendering universal service with the associated costs. It is noted that the above-
mentioned  update  of  the  Corporation’s  business  plan  will  take  into  consideration  the 
impact  of  the  Coronavirus  pandemic  on  the  state-owned  enterprises  under  the 
Corporation, including the impact on the Athens Urban Transport Organisation and the 
Hellenic Post.  

Despite these difficulties, the work of the Corporation on the key areas covered by 
the  commitments  to  the  Eurogroup  is  continuing,  to  the  extent  possible.  The 
implementation  of  the  strategic  plan  is  ongoing,  but  the  finalisation  of  the  updated 
business plan for 2020-2022 has to be delayed due to the unprecedented events as noted 
above. The review and replacement, if needed, of the Boards of state-owned enterprises 
is  close  to  being  completed.  Since  the  publication  of  the  fifth  enhanced  surveillance 
report  in  February 2020,  further  progress  has  been  made  in  improving  corporate 
governance in state-owned enterprises through board reviews and appointments.  

The authorities have continued their strong engagement with the Corporation. The 
authorities  have  coordinated  the  engagement  between  line  ministries  and  the 
Corporation through the initial stages of the relaunched Coordination Mechanism. The 
authorities  and  the  Corporation  have  also  been  in  consultation  in  relation  to  measures 
necessary  for  ensuring  business  continuity  and  enterprise  viability  of  the  state-owned 
enterprises in the Corporation’s portfolio. 

The  Coronavirus  pandemic  will  limit  improvements  in  the  performance  of  the 
Corporation’s real estate portfolio during 2020. This performance had showed some 
signs of improvement during 2019, following the restructuring of the Public Real Estate 
Company  (ETAD),  the  real  estate  management  arm,  but  performance  had  remained 
below  expectations.  In  November 2019,  the  Corporation  appointed  a  new  Chief 
Executive  Officer  and  a  new  second  executive  to  the  board  of  the  Public  Real  Estate 
Company.  While  the  commercial  environment  in  2020  will  hamper  the  delivery  of 
commercial results, operational improvements should remain feasible. Furthermore, the 
Public Real Estate Company faces certain legal cases, which go back many years with 
great  uncertainty  as  to  extent  of  claims  and  economic  impact.  Addressing  these 
significant challenges and achieving the full potential of the real estate portfolio are key 
to the future of the Corporation.  

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The  authorities  have  made  some  further  progress  in  evaluating  an  additional 
package of real estate for transfer to the Corporation. While a large package of real 
estate was identified  for  transfer in  2018, screening indicates that many properties are 
ineligible for the transfer. The authorities expect the screening process to be completed 
shortly. 

The  Corporation  has  continued  its  work  on  corporate  governance,  in  particular 
regarding the review of the boards of the state-owned enterprises (a specific mid-
2019  commitment),  and  improving  internal  and  external  audit  capabilities.  The 
assessment of the board of directors for the subsidiaries of the Athens Urban Transport 
Organisation, responsible for bus and metro transport, was completed on 12 March, in 
cooperation  with  the  Athens  Urban  Transport  Organisation’s  management,  with  the 
appointment  of  new  boards  in  the  Athens  bus  and  metro  companies.  Only  the 
assessment  of  the  board  of  directors  for  the  Hellenic  Exhibition  Organisation  and  the 
Greek  Saltworks  remain  pending.  The  assessment  of  the  boards  of  these  state-owned 
enterprises  and  the  process  for  the  selection  of  the  new  boards  are  expected  to  be 
completed  soon.  The  replacement  of  two  out  of  four  non-executive  positions  at  the 
Hellenic  Exhibition  Organisation  was  decided  by  the  Corporation’s  board  on  9 April 
2020.  So  far,  the  Corporation  has  identified  and  appointed  some  70  board  members 
(executive and non-executive) in its portfolio enterprises through open, professional and 
transparent  procedures.  The  Corporation  is  also  preparing  an  e-learning  compliance 
programme for its subsidiaries. 

The Corporation’s focus on operational  improvements in state-owned enterprises 
is continuing and is more urgent in the Coronavirus context. A key challenge relates 
to the significant operational and financial issues at Hellenic Post, which faces a serious 
liquidity  problem  as  well  as  underlying  structural  weaknesses.  The  company  requires 
urgent restructuring to reduce its cost base and to develop new and sustainable revenue 
streams over the medium to long term to ensure its viability. The Greek authorities, with 
the participation of the Corporation, are in consultation with the Commission within the 
framework of the state aid pre-notification process.  

The  transfer  of  the  Olympic  Athletic  Centre,  which  was  a  specific  end-2018 
commitment, proves to be very complex, involving multiple stakeholders as well as 
a series of administrative (including maintenance requirements) and procurement 
steps. These include procurement for the repair or overhaul of significant facilities, in 
order to ensure that the asset is provided in a satisfactory condition. At the beginning of 
April 2020,  the  technical  advisor  for  the  project  submitted  his  final  report  on  the 
condition  of  the  main  stadium  and  his  proposal  on  possible  support  of  the  tier  on  the 
main stadium, whereas his work on the remaining deliverables is at an advanced stage. 
The  next  steps  include  the  conclusion  of  the  work  of  the  technical  advisor  and  the 
launch of the tender for the main technical study.  

Separately, it is highly  welcomed that the efficient and effective public real estate 
management  is  a  priority  for  the  authorities. In  the  framework  of  their  plans  of  a 
holistic  and  coherent  strategy aiming  to  optimise  the  protection,  management  and 
investment - oriented exploitation of public real estate, the authorities have agreed to a 
complementary commitment to present by end-September a memo - and if possible an 

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action  plan  - including  all  organisations  involved  with  public  real  estate  management 
without prejudice to their mandates. 

8.2. 

IMPLEMENTATION OF THE ASSET DEVELOPMENT PLAN 

Implementation  of  the  Asset  Development  Plan  of  the  Hellenic  Republic  Asset 
Development  Fund  (TAIPED)  is  key  to  stimulate  private  investment,  increase 
efficiency  and  provide  financing  to  the  state.  In  June 2018,  the  authorities  made  a 
specific  commitment  to  the  Eurogroup  to  implement  the  Plan,  which  will  be  updated 
every six months, and in this context to complete the transactions on Hellenic Petroleum 
(HELPE) and the Marina of Alimos by mid-2019. Further, the authorities committed to 
complete  the  transactions  on  Egnatia,  Public  Gas  Corporation  (DEPA)  Commercial, 
Athens International Airport shares, Water Supply and Sewerage Companies of Athens 
and  Thessaloniki  and  the  regional  ports  of  Alexandroupolis  and  Kavala.  Additional 
commitments were taken for beyond 2019. Last, but not least, the Hellinikon transaction 
(development of the site of the former Athens International Airport, a specific end-2018 
commitment) has remained pending.  

The  momentum  in  the  privatisation  process  observed  over  the  previous  months 
could  not  be  maintained  due  to  the  Coronavirus  pandemic  developments.  The 
Coronavirus pandemic is impacting the implementation of the privatisation programme 
in many ways, inter alia:  

potential  investors  –  inability  of  site  visits,  difficulty  of  contacts,  preoccupation  of 
investors with safeguarding their existing business, financing problems, creation of a 
risk aversion approach; 

asset valuation impact – in some cases such as the Hellenic Petroleum and the Athens 

international Airport there has been a very significant negative impact; 

reduced  capacity  of  the  authorities  or  regulatory  bodies  in  implementing  the  actions 

required for the transactions;  

construction  works  have  been  negatively  affected  also  because  of  missing  raw 

materials. 

Based  on  the  above,  the  Fund  considered  it  necessary  to  delay  the  submission  of 
binding  offers  in  the  transactions  for  the  Athens  International  Airport  and 
Egnatia, delay the launching and/or execution process of the binding offers phase in the 
Public Gas  Corporation transactions and also  delay the launching of the  expression of 
interest in the regional ports transaction.  

Despite the overall negative commercial environment caused by the pandemic, the 
Fund is  proceeding with  the maturing of the transactions and the authorities are 
supportive on their side in taking the required government actions. This will make 
possible the launching of the next steps in the respective transactions, at a time that the 
situation normalises. 

Overall,  the  Coronavirus  pandemic  will  delay  the  implementation  of  the 
privatisation  programme.  As  mentioned  in  previous  reports,  the  timeline  of  the 

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flagship  projects  below  had  been  affected  by  delays  or  factors  largely  outside  the 
control  of  the  authorities.  The  only  transactions  that  can  theoretically  be  financially 
closed in 2020 are Hellinikon and the marina of Alimos. In particular: 

Hellinikon  (a  2018  specific  commitment):  Despite  the  continued  strong  engagement 
and efforts of the authorities to complete the conditions precedent to allow the transfer 
of  shares  to  the  preferred  investor  (Lamda),  the  financial  closing  does  not  seem  to  be 
forthcoming  due  to  complications  in  the  tender  process  for  the  award  of  the  casino 
licence. The current state of play on key elements is as follows:  

The tender process for awarding the casino licence is still ongoing. The evaluation of 
the  legal  documents  submitted  by  the  two  bidders  for  the  casino  licence  led  to  the 
exclusion  of  one  of  the  two  bidders  from  the  process.  The  appeal  by  the  excluded 
bidder was dismissed by the Authority for the Examination of Preliminary Appeals 
on  13 March  2020.  Following  the  notification  of  this  decision,  the  excluded  bidder 
lodged  a  petition  for  annulment  along  with  interim  relief  measures  before  the 
Council  of  State.  The  Council  of  State  rejected  the  petition  for  interim  relief 
measures  on  7 May  2020.  This  opens  the  way  for  a  continuation  of  the  tender 
process. However, the decision on the petition for annulment remains pending. The 
complications  that  could  arise  from  any  potential  future  litigations  during  the  next 
steps  of  the  tender  process  may  lead  to  further  delays  in  the  completion  of  the 
process.  

The relocation  of  the public users still on the site can be completed soon without  any 
problems;  there  is  a  pending  relocation  issue  with  only  one  private  user.  A  second 
instance court decision is already issued in favour of Hellinikon S.A., paving the way 
for its enforcement and another one is still pending. The private user has proceeded 
with  filing  a  new  appeal  before  the  Supreme  Court  but  this  does  not  hinder  the 
execution  of  the  enforcement  process  once  the  pending  decision  at  the  second 
instance court is issued.  

Regarding the partition of the Hellinikon site, an agreement has been reached between 
all  involved  parties  in  February  2020,  which  will  be  reflected  in  a  contractual 
binding  document  planned  to  be  executed  and  then  ratified  by  Parliament.  The 
document,  currently  being  drafted,  will  be  finalised  following  the  enactment  of 
specific  legislative  provisions to  that  end,  which  have  been  prepared  and  sent  for 
review to the Ministry of Finance. 

Demolition of current buildings on the site – A legislative provision has been adopted 
on  12 February  2020  (Law  4663/2020),  which  makes  possible  the  demolition  of 
buildings  on  the  site  by  Lamda.  The  launching  of  the  implementation  of  the 
demolition process is expected to start soon. 

Marina  of  Alimos  concession  (a  mid-2019  specific  commitment):  The  marina  of 
Alimos is one of the largest marinas in the South-Eastern Mediterranean, located on the 
South-Eastern waterfront of Athens. Following the selection of the preferred bidder and 
approval by the Court of Audit in April and June 2019, respectively, the closing of the 
transaction was delayed primarily due to the time taken for the due diligence process by 
banks  required  in  financing  the  transaction.  On  7 April  2020,  the  Cabinet  Act 

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authorising the Ministers of Tourism, Development and Finance to sign the Concession 
Agreement  on  behalf  of  the  Greek  State  was  published  in  the  Official  Gazette. 
Following  this,  the  concession  agreement  was  signed  on  13 May  2020.The  financial 
closing of the transaction is expected within 120 days from signing (as provided for in 
the contract).  

Hellenic  Petroleum  (a  mid-2019  specific  commitment):  The  authorities  are  yet  to 
decide on the approach to be followed after the failure of the first tender in mid-2019; 
No  binding  offers  had  been  submitted  for  the  joint  sale  (along  with  PanEuropean  Oil 
and Industrial Holdings S.A., the other strategic shareholder of Hellenic Petroleum) of a 
majority  stake  (50.1%)  and  thus  there  was  no  positive  outcome  of  the  specific 
transaction.  The  financial  closure  is  thus  inevitably  subject  to  significant  delays.  The 
Fund  is  considering  all  options.  However,  following  the  recent  significant  fall  in  the 
capitalisation  value  of  the  company,  the  Fund  considered  appropriate  to  delay  further 
the launching of the transaction to a later point of time.  

Sale  of  30%  of  Athens International  Airport  (an  end-2019  specific  commitment): 
The  tendering  process  was  proceeding  well  prior  to  the  Corona  virus  outbreak.  Ten 
investment  parties expressed their interest  to  acquire a 30% stake in  the first  phase of 
the  process  concluded  in  October  2019.  Following  the  evaluation  of  the  investors’ 
proposals,  on  31 January  2020  the  Board  of  Directors  of  the  Fund  decided  that  nine 
investment parties were qualified to proceed to the Binding Offers Phase. However, due 
to the Coronavirus pandemic impact on the economy in general and on the air transport 
sector in particular, it was considered necessary to delay the scheduled timeline for the 
second phase of the tender and the deadline for the submission  of binding offers. The 
Fund  is  monitoring  market  conditions  and  will  determine  the  updated  tender  timeline 
and  the  submission  of  the  binding  offers  date,  once  a  normalization  of  the  situation 
takes place. 

Public Gas Corporation – DEPA Commercial (an end-2019 specific commitment) – 
DEPA  Infrastructure  (a  mid-2021  specific  commitment):  The  international  tender 
process for DEPA Infrastructure was launched on 9 December 2019, whereby the Fund 
and  Hellenic  Petroleum  are  acting  as  co-sellers  (offering  100%  of  the  share  capital  of 
DEPA Infrastructure), while the international tender process for the sale of 65% of the 
share  capital  of  DEPA  Commercial,  with  an  option  of  acquiring  100%  of  its  share 
capital, was launched on 23 January 2020.  

Good  progress  was  achieved  with  both  tenders  attracting  strong  investment 
interest.  Nine  interested  parties  submitted  Expressions  of  Interest  in  each  of  the  two 
international tender processes, whose expression of interest phase ended on 21 February 
and 23 March 2020 respectively. The evaluation of the expression of interest proposals 
is  underway  by  the  Fund  and  its  consultants.  However,  due  to  the  unprecedented 
events, the launch of the second phase (binding offers phase) of both transactions will 
be delayed until further notice. 

At the same time, the national energy regulator adopted a decision on the compensation 
measures  to  industrial  consumers  regarding  distribution  tariffs,  which  brings  further 
clarity to potential investors, and it is expected to be published by end of May 2020. 

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Egnatia (an end-2019 specific commitment): The privatisation process for the Egnatia 
motorway  entails  the  award  of  a  long-term  concession  for  the  operation  and 
maintenance  of  the  motorway  and  its  three  vertical  axes.  The  transaction  had  been 
characterised  in  the  past  by  systematic  delays  and  problems,  showing  a  lack  of 
ownership.  The  authorities  have  stressed  their  commitment  to  proceed  with  the 
transaction. In this respect, the following actions have recently been completed: 

Signing  of  a  Joint  Ministerial  Decision  on  12 May  2020,  which  will:  remove  the 
obligation of the concessionaire to implement a closed tolling system; provide for a 
gradual implementation of the new toll pricing policy approved by the Commission; 
and  provide  for  a  new  frontal  toll  station  between  Veroia  and  Kleidi  and  resulting 
amendments  in  the  charging  distances  of  the  affected  toll  stations.  The  Joint 
Ministerial Decision is expected to be published in the coming days.  

Appointment  of  the advisor  who will carry out  all the preparatory work necessary for 

the remaining land expropriations at the end of April 2020. 

Despite the need to delay the submission of binding offers due to the impact of the 
Coronavirus  pandemic,  the  specific  actions  are  considered  to  be  positive  in 
providing  clarity  on  important  elements  of  the  concession  agreement.  The 
authorities  and  Egnatia  S.A.  are  expected  to  proceed  with  the  implementation  of  all 
remaining  pending  actions,  namely:  (i)  clarity  on  the  works  needed  for  bridges  to  be 
classified as safe; (ii) completion of the construction of all remaining frontal and lateral 
toll  stations;  (iii)  licensing  of  all  tunnels  by  the  Tunnel  Licensing  Authority;  and  (iv) 
resolution by Egnatia S.A. of the open issues related to the four motorist service stations 
contracts that have been inactive since 2011.  

Regional  Ports  (an  end-2019  specific  commitment):  Following  a  long  period  of 
delays  and  problems  in  the  launching  of  the  specific  transactions,  good  progress  has 
been achieved over the last months. The legal amendment giving the Fund the flexibility 
of  choice  (i.e.  sub-concession,  sale  of  equity)  was  adopted  by  Parliament  on 
12 February 2020, while the Fund at the same time launched the process for recruiting 
external consultants for the sale of equity for four ports. The recruitment of the advisors 
(financial, legal and technical), to support the sale of shares transactions for four ports, 
was  concluded  in  April.  However,  due  to  the  unfavourable  environment,  it  was 
considered reasonable to delay the launching of the transaction (sale of shares) for the 
first regional ports to a later point of time.  

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9. 

PUBLIC ADMINISTRATION AND JUSTICE 

9.1.  PUBLIC ADMINISTRATION 

The public administration has been faced with a dual challenge in dealing with the 
Coronavirus  pandemic,  as  it  has  been  called  to  spearhead  the  authorities’ 
response, but at the same time seen its overall capacity being  reduced due to the 
confinement  measures  as  well  as  precautionary  measures  taken  for  specific  risk 
groups. Overall, the response of the public administration has allowed key services that 
citizens  and  businesses  rely  on  to  continue  largely  uninterrupted.  A  number  of  digital 
tools have been launched during the containment period, see section 7.2 and Box 9.1. 

The Ministry of Interior has drawn up emergency plans to ensure the operation of 
public services. These plans covered two scenarios. In the first scenario, the operations 
continue, but staff presence is reduced and a system of rotation is adopted between staff 
teleworking and working from the office. In the second scenario, covering the event of a 
general  suspension,  the  plan  identifies  critical  public  services  that  would  continue  to 
operate  with  a  minimum  number  of  personnel.  Further,  contingency  plans  were 
established  to  move  staff  from  suspended  or  non-critical  entities  to  the  services  that 
remained  operational.  Additional  provisions  were  adopted  to  temporarily  suspend 
mobility  procedures  regarding  the  staff  serving  in  the  Ministry  of  Health  and  some 
municipalities, while a reasoned decision is needed when granting special purpose leave 
to the staff of the Ministry of Health, Ministry of Migration and Asylum and uniformed 
personnel. 

Appointments of senior management positions in the public sector 

The appointments of the Permanent Secretaries in the public administration have 
been completed, whereas the selection process for Directors that had been resumed 
has  been  temporarily  paused  again  due  to  the  Coronavirus  pandemic.  The 
Permanent Secretaries appointed in the 13 Ministries have taken up their role, while the 
planned training has been postponed due to the Coronavirus pandemic. The authorities 
have  confirmed  their  intention  to  establish  a  Permanent  Secretary  post  at  the  recently 
established  Ministry  of  Migration  and  Asylum.  The  selection  process  for  Directors  at 
the Ministries had been resumed, but had to be stopped due to the Coronavirus outbreak. 
The  selection  processes  yet  to  be  launched  for  Directors  as  well  as  for  the  Heads  of 
Division  to  follow  will  be  governed  by  recently  adopted  legal  provisions (42),  which 
attach more importance to relevant experience and also strengthening the link with the 
annual appraisal process. 

In  March  2020,  the  authorities  adopted  legal  provisions  extending  the  selection 
process at the central administration to also apply at the local administration level, 
which  is  welcome.  In  order  to  establish  a  uniform  selection  process  of  management 
posts  across  the  public  administration,  the  authorities  decided  to  extend  the  selection 
procedure to also cover the level of municipalities. Beyond the positive aspect in terms 

(42) OJ A 53/11.03.2020, Articles 45-46. 

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Chapter 9 - Public administration and justice 

of  transparency  of  applying  the  same  selection  procedure,  this  also  provides  a  strong 
signal of ownership of the reform by the authorities. 

Draft  provisions  have  been  prepared  to  set  up  an  uniform  selection  process  for 
senior management posts at public sector entities (43) that is expected to be adopted 
shortly  and  to  come  into  effect  on  1 September  2020.  The  authorities’  revised 
proposal  sets  out  that  the  selection  process  will  apply  for  all  these  entities  where  the 
appointment  powers  currently  belongs  to  the  government.  This  is  a  welcomed 
development  as  it  is  expected  to  contribute  both  in  terms  of  the  transparency  and 
efficiency  of  this  reform.  The  central  role  foreseen  for  the  Supreme  Council  for  Civil 
Personnel Selection in the selection process is also welcomed, in particular in terms of 
contributing  to  the  further  depoliticisation  of  the  public  administration.  Finally,  it  is 
understood  that  the  selection  process  rests  on  the  main  principles  applied  for  other 
selection procedures, but leaves the final decision with the relevant Minister, but at the 
same time restricts the tenure to three years. 

The ongoing selection process for the structures managing the EU structural funds 
(National  Strategic  Reference  Framework)  under  the  mandate  of  the  Ministry  of 
Development  and  Investments  have  not  progressed  and  plans  to  relaunch  a  new 
selection  process  could  affect  the  stability  and  effective  functioning  of  the 
management and control systems put in place. The ongoing selection process, which 
has  been  faced  with  severe  delays,  concerns  close  to  200  posts  and  has  been  a  key 
element  of  the  reforms  concerning  the  management  of  the  Framework  as  part  of  the 
European  Stability  Mechanism  programme.  The  first  phase,  including  written  exams, 
has been completed for all posts, while for a limited number of posts the whole selection 
process  has  been  completed.  Cancelling  the  selection  process  at  this  stage  could 
therefore risk legal challenges while the validity of the already completed appointments 
could also come into doubt. This uncertainty is likely to have a detrimental impact on 
the  business  continuity  of  these  structures,  coming  at  a  very  critical  period,  as  it 
coincides with the preparation of the next programming period (2021-2027). It would be 
preferable for the ongoing selection process to be completed uninterrupted as a matter 
of  urgency,  and  thereafter  to  review  the  selection  process  and  introduce  specific 
improvements for the next selection round.  

Improving the human resource management in the public administration 

Overall  good  progress  has  been  made  in  developing  a  Human  Resources 
Management  System  (HRMS),  including  completion  of  a  significant  number  of 
digital organigrams and job descriptions (an end-2019 specific commitment), while 
a link between these job description and job holders have also been established for 
most  of  the  posts.  Until  mid-March  over  1,100  general  government  entities  had 
completed its digital organigram, representing more than half of all entities and close to 
70%  of  personnel,  including  most  of  the  large  entities.  For  example,  both  the  Single 
Social  Security  Fund  (EFKA)  and  the  Employment  Fund  (OAED)  completed  their 
respective  organigram  during  this  reporting  period.  The  process  of  establishing  a  link 
between  the  job  description  and  jobholder  is  ongoing,  and  according  to  estimates 
provided by the authorities this link has been established to date for approximately 75% 

(43) In the Greek context, these public sector bodies are referred to as legal entities of public law and legal 

entities of private law. 

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of currently occupied posts. Progress  has been made with  the EU-funded (through the 
National Strategic Reference Framework) tender on Human Resources System Support 
Services,  with  the  public  consultation  phase  ongoing  and  the  tender  expected  to  be 
launched  in  June  2020.  In  this  regard,  a  working  group (44)  has  been  established  that 
will follow this reform and ensure efficient coordination and preparations proceeding as 
planned.  The  authorities  are  progressing  in  upgrading  the  census  database  until  the 
system is operational by mid-2021, as set out in the National Reform Programme.  

The  authorities  have  committed  to  strengthen  the  personnel  selection  system 
through  updating  the  enabling  law  of  the  Supreme  Council  for  Civil  Personnel 
Selection and to increase its overall capacity (a complementary commitment). The 
new  commitment  entails  a  revised  law  to  be  adopted  by  October 2020.  Thereafter,  a 
detailed action plan for the Supreme Council’s reorganisation will be finalised by end-
2020  with  the  implementation  of  specific  key  actions  being  monitored  from  2021 
onwards.  Work  has  already  been  initiated,  with  a  number  of  working  streams  being 
defined,  including  application  process,  special  hiring  provisions  (incl.  for  temporary 
staff)  and  organisational  issues.  A  steering  committee,  with  the  participation  of  the 
Supreme Council, has been established, but due to the Coronavirus pandemic the work 
of the committee has been suspended for the moment. It is welcomed that the authorities 
have  taken  a  holistic  approach  when  reviewing  the  enabling  law,  including  the  hiring 
procedure  for  temporary  staff,  which  are  not  fully  coherent  across  the  public 
administration, in particular as concerns the advantage provided to this category of staff 
in future hiring procedures for permanent staff. 

The mobility cycle for 2020 has been launched in accordance with new legislation 
aiming  to  further  improve  this  reform.  The  legislation  adopted  in  March 2020 (45) 
strengthens the link between the mobility scheme and the annual recruitment planning. 
Further, it reduces the cycles conducted per year, while enforcing the timeframe. In this 
regard,  it  also  sets  out  a  specific  provision  for  previous  cycles  that  had  not  yet  been 
completed,  while  stating  that  all  ongoing  procedures  needs  to  be  completed  by  end-
May 2020. Due to the Coronavirus pandemic an extension has been granted (46) for the 
first mobility cycle launched in 2019 that needs to be completed by end-June 2020. The 
application  of  a  stricter  timeframe  is  expected  to  bring  more  clarity  as  various  cycles 
will not be running in parallel, which should also facilitate the authorities’ intention to 
carry out an assessment of the overall efficiency of the mobility cycle system. 

The  performance  assessment  cycle  for  2019  has  been  delayed  due  to  the 
Coronavirus  pandemic,  but  the  authorities  are  moving  ahead  with  plans  to 
strengthen  the  assessment  framework  and  link  it  with  the  annual  action  plans  of 
each Ministry. Legal provisions adopted in March 2020 (47) set out that the assessment 
period is set for January till June in each year and that all assessments will from now on 
will  be  completed  obligatory  online.  In  terms  of  the  future  plans  to  improve  the 

(44) Members  included  the  Ministry  of  Interior  (Secretariat  General  for  Human  Resources  in  the  Public 
Sector), the Ministry of Digital Governance, the Single Payment Authority, the Supreme Council for 
Civil  Personnel  Selection  (ASEP)  and  the  National  Centre  for  Public  Administration  and  Local 
Government (EKDDA). OJ YODD 25/17.01.2020. 

(45) OJ A 53/11.03.2019, Articles 41-43 and 79. 
(46) OJ A 90/2020.05.01, Article 27. 
(47) OJ A 53/11.03.2019, Articles 51 and 79. 

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assessment  framework,  the  new  system  is  expected  to  (i)  define  targets  linked  to  the 
action  plans  of  each  entity;  (ii)  participation  of  the  Permanent  Secretaries,  Internal 
Control  Units  and  the  Supreme  Council  for  Civil  Personnel  Selection  in  the 
performance  appraisal  procedure;  and  (iii)  applying  distinct  and  specific  criteria, 
tailored for every category of civil servants, based on the generic job descriptions.  

Work  has  continued  on  streamlining  the  job  classification  system  (‘klados’)  with 
technical support provided by the European Commission. The plan is to update the 
relevant Presidential Decree (PD 50/2001) and to set out the job classification categories 
that will remain in effect. Thereafter, the focus is expected to turn to strengthening the 
link of the streamlined system with recruitment procedures, which is expected to reduce 
the time for issuing job announcements. 

Progress  has  been  made  to  strengthen  the  public  sector’s  integrity  system.  The 
Ministry of Interior in cooperation with the National Transparency Agency has set up an 
ambitious  plan  with  specific  actions  based  on  three  pillars,  namely  suppression, 
prevention  and  awareness.  Under  the  prevention  pillar,  a  draft  law  to  establish  an 
internal  control  system  is  expected  to  be  ready  by  June 2020.  During  this  reporting 
period  the  authorities  have  also  progressed  on  other  related  key  human  resources 
policies,  including  electronic  timekeeping  and  mapping  out  a  transparent  process  of 
granting sick leave to be applied across the public administration.  

Legal codification 

The  authorities  are  seeking  to  progress  with  ongoing  work  on  legal  codification, 
despite  current  disruptions  due  to  the  Coronavirus  pandemic  with  the  Central 
Codification Committee being re-established (48) and is expected to have a key role 
in  pushing  ahead  with  the  legal  codification.  As  a  first  step,  the  Committee  is 
expected  to  shortly  adopt  a  manual  for  legal  codification  that  has  been  prepared  with 
technical  support  provided  by  the  European  Commission.  The  Committee  is  also 
mandated to prepare an annual plan that will prioritise the various codification projects. 
Furthermore,  the  Committee  will  have  a  key  role  to  ensure  that  available  funding 
through the National Strategic Reference Framework is used in an efficient manner and 
in accordance with the principles to be set out in the manual. In this regard, it will also 
be important for the various tenders to be launched swiftly, as the funding available will 
have to be fully disbursed within the next two years. 

Due to the Coronavirus pandemic, the authorities have slightly delayed their plans 
to  adopt  a  new  codification  law  for  the  Labour  Law  Code  and  Code  of  Labour 
Regulatory  Provisions  (a  mid-2020  specific  commitment).  The  Ministry  of 
Employment remains fully committed to proceed with the new codification law that is 
expected to be adopted by September 2020. 

(48) OJ ΥΟΔΔ 340/2020.05.04. 

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(Continued on the next page) 

77 

Box 9.1: Digital transformation of the public sector and the Greek economyThe Coronavirus pandemic has worked as a catalyst for advancing the digital agenda. The authorities’ efforts to accelerate the digital transformation of the public administration and the economy as a whole have significantly contributed to ensuring business continuity and keeping the administration afloat, despite the unprecedented operational disruptions. In this sense, the urgency of the situation appears to have provided the necessary leverage for the Greek government to leapfrog long-standing legacies of resistance to administrative change and overcome previous security concerns. These initiatives, along with efforts to thwart internal impediments such as the reluctance of public services to accept the legality of electronic documents or their unwillingness to apply the new digital processes, have been spearheaded by the recently established Ministry of Digital Governance. Key projects to support citizens and businesses, as well as visibility initiatives, have been frontloaded. One of the first actions of the government was the early launch of a pilot for the single gateway to public services, the gov.gr portal, to offer more than 500 services electronically for citizens and businesses, including e-prescription to increase patients’ access to medicine. To this day, more than 350,000 citizens have subscribed to the e-prescription scheme, with more than 850,000 prescriptions ordered through the system and more than 410,000 executed. In addition, through the establishment of the ‘myBusinessSupport’ application under the ‘TAXISnet’ system of the Independent Authority for Public Revenue, the government has managed the submission of applications for financial assistance to businesses and self-employed workers affected by the pandemic. Around 138,000 applications were submitted for the repayable advance scheme, in the first round of applications in April, alone. Lastly, Greece has been able to gain wide visibility through the Ministry of Tourism’s ‘Greece from Home’ initiative, set up to promote Greece as a tourism destination (www.greecefromhome.com). With a view to responding to the social implications of the Coronavirus outbreak, the authorities swiftly established digital infrastructure to organize solidarity initiatives and effectively enforce social distancing measures, while also introducing provisions to facilitate distance education. This includes the creation of a digital solidarity platform to manage the voluntary contributions of more than 170 businesses that offer free or low cost services to citizens at home (www.digitalsolidarity.gov.gr) and a volunteers’ platform, which attracted more than 12,500 citizens who wished to contribute to the tackling of the crisis (www.ethelontes.gov.gr). Further, through the creation of the forma.gov.gr platform, the authorities were able to grant and monitor approvals to citizens for commuting during the enforcement of containment measures. The Ministry of Education adopted provisions allowing for distance education through the use of modern telecommunications at primary and secondary schools. This will allow for children in a risk group to continue their education uninterrupted during the Coronavirus pandemic, while the Data Protection Authority has been consulted that adopted provisions are complying with the rules for the protection of personal data and privacy. A number of interventions were implemented as a priority to ensure business continuity within the public administration. Key elements include the provision of remote virtual private network (VPN) access to staff handling sensitive information in critical government services such as the Independent Authority for Public Revenue and the Ministry of Finance. Further elements included an extension of inter-service system interoperability coupled with an increase in the capacity, performance and security of IT systems, the establishment of a system for the electronic distribution of documents, and the creation of the ‘e-private’ platform to facilitate video-conferencing among public sector staff. Finally, the authorities proceeded with the distribution of digital signatures to all Cabinet members to ensure continuity in the legislative process, whilst frontloading the roll-out of the distribution of 150,000 digital signatures to public sector staff. In parallel, despite uncertainties stemming from the Coronavirus pandemic, work continues on key projects to enhance the digital performance of the public administration and the economy. Albeit with some delays in the tendering process, major projects supported by EU funding are progressing. Specifically, the submission of final offers for the ‘Syzefxis II’ project, aimed at improving the telecommunication infrastructure of the existing public administration network, is expected soon, subject to possible delays stemming from the pandemic. Further, the first stage of the tender process on the ‘Ultra-Fast Broadband’ project aiming to fill gaps in very-high-speed connectivity and to help Greece achieve its gigabit society  
   
 
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Box (continued) 

The  tender  for  the  flagship  project  to  set  up  the  national  gateway  for  legal 
codification  (a  mid-2022  specific  commitment)  has  been  published  for  public 
consultation  and  is  expected  to  be  launched  shortly  by  the  Ministry  of  Digital 
Governance.  The  close  collaboration  that  has  been  established  with  the  Presidency 
office (Secretariat General for Parliamentary and Legal Affairs) is expected to facilitate 
the  planned  tenders  to  support  the  preparations  of  legal  codification  laws,  as  it  is  an 

78 

targets has been concluded. In addition, the ‘Superfast Broadband’ project, which aims to stimulate demand and support citizens by providing very high capacity network service, is now progressing, following initial delays. Given the importance of these projects in the digital transformation of Greece, the formulation of detailed implementation timelines are needed to enable better monitoring and ensure the projects’ timely delivery, as well as full absorption of EU funds. Lastly, despite some inevitable delay, the new national strategy (‘Digital Bible’) for the digital transformation of the public administration and the economy is expected to be finalised shortly. The ‘Digital Bible’, once adopted, will eventually replace the existing National Digital Strategy. The authorities have committed to the delivery of specific complementary actions to further ease the administrative burden for businesses and citizens, in line with the government’s ambitious reform agenda in this area. These commitments, led by the Ministry of Digital Governance, go in the direction of advancing the implementation of the National Programme for Process Simplification in key policy areas and further extending the interoperability of registries, data and IT systems by end-2021. To this end, the authorities aim to issue a Ministerial Decision soon, to set out the responsibilities of the said Ministry and other Ministries with respect to the Simplification Programme and define core simplification actions. With the help of technical support provided through the European Commission, they also expect to issue an implementation guide for simplification soon. These actions are expected to provide the necessary organisational set up for the forthcoming steps. Further, under the remit of the Ministry of Digital Governance, the authorities committed to continue working towards the integration of all transactions with the state within the single digital portal (gov.gr), unifying the legal framework on digital policy, and safeguarding business continuity by ensuring sufficiency of digital infrastructure by mid-2021. To this end, the authorities are about to set up a dedicated unit at the said Ministry to coordinate the development of this portal and the next steps concerning the key functionalities and the procedures to be digitalised. In addition, they are also working towards the creation of a new Code of Digital Governance that is expected to create a comprehensive, transparent and unified legal framework on digital policy.  The authorities are also pursuing complementary commitments towards digitising geospatial data to facilitate private sector investment projects and improve the management of public infrastructure. Firstly, through the creation of a new tool ‘the Single Digital Map’ under the responsibility of the Ministry of Energy and Environment, the authorities aim to increase transparency to investors concerning land use rules across Greece by matching geospatial data with business activity codes, thus improving predictability of investment licensing decisions. To this end, the authorities issued secondary legislation in April 2020 to define responsibilities for the development and oversight of this project. Further, the authorities committed to developing an action plan by June 2020 to implement the programme on a two-year pilot basis in five municipalities in three regions in Greece, as per the relevant provisions of the Development Law adopted in October 2019. Secondly, the authorities are pursuing the development of a State Infrastructure Registry, under the responsibility of the Ministry of Infrastructure and Transport, to record technical and geospatial information about all public infrastructure projects, including for construction and maintenance planning purposes. To this end, they committed to developing, by May 2020, an action plan for the implementation of this registry. Sustaining the momentum going forward is a priority and will underpin post-pandemic recovery. Locking in and further accelerating the digital transformation of the public administration, the judicial system and the economy as a whole after the easing of containment measures is likely to be challenging. Nonetheless, keeping the momentum would translate into boosting productivity in the private sector and enhancing the quality of the public administration. In turn, these would buttress Greece’s recovery and facilitate the creation of an economic environment conducive to investments and growth.  
   
 
 
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intermediate body under the Ministry of Digital Governance that has been assigned the 
contracting responsibility. 

Implementation of the Executive State Law 
The authorities have adopted a detailed legislative methodology manual (49) and a 
template  for  a  comprehensive  impact  assessment,  which  were  prepared  with 
technical support provided by the European Commission, and constitute key tools 
to enforce the good law-making provisions that came into effect in January 2020. A 
legislative  amendment  has  been  adopted (50)  to  introduce  the  needed  changes  in  the 
code  of  procedures  of  the  Parliament  that  will  come  into  effect  in  October 2020. 
However,  it  is  the  expressed  intention  of  the  authorities  that  new  laws  being  drafted 
from  here  on  will  be  in  accordance  with  the  manual  setting  out  the  legislative 
methodology and be supplemented with the new and comprehensive impact assessment 
template. This is a significant reform as it is expected to improve the legislative process 
and gradually remove obsolete or even mutually contradicting provisions.  

According to preliminary findings the delegation of signature powers to the non-
political  level  that  came  into  effect  in  February 2020  is  being  applied  efficiently 
across the central administration. This entails a major reform at the core of the public 
administration,  as  one  of  its  main  characteristics  had  been  the  high  degree  of 
centralisation  in  the  decision-making.  It  is  estimated  that  approximately  80%  of  all 
decisions  taken  in  each  ministry  will  from  now  on  be  signed  off  at  Director-General 
level. This reform is expected to contribute to the further depoliticisation of the public 
administration, as the borders between the political  and  administrative levels  becomes 
more distinguished. 

Controlling the size and cost of public sector 

Hiring of permanent staff in 2019 was in compliance with the staffing plan and the 
staffing plan for 2020 respects the set hiring limits under the 1:1 replacement rule. 
As can be seen from Table 9.1, the number of permanent staff increased slightly during 
2019. This increase remains within the so called attrition rule currently in effect (i.e. one 
new hiring for each exit), as the limit set for previous years was under-executed due to 
fiscal  constraints,  but  also  time-consuming  hiring  procedures.  In  terms  of  the  overall 
number of personnel in the public sector, as is also set out in the table, saw an increase 
of  1.7%  in  2019  compared  to  2018,  which  is  mainly  attributed  to  the  increase  of  the 
temporary staff. 

Temporary  staff  has  continued  decreasing  since  its  peak  in  mid-2019.  Although, 
overall  number  of  temporary  staff  increased  in  2019  compared  to  2018,  the  rapidly 
increasing  trend  seen  since  2018  was  reversed  during  the  second  half  of  2019  with 
number  of  temporary  staff  actually  starting  to  decreasing.  However,  the  number  of 
temporary staff remains well above the level in 2018 when Greece exited the European 
Stability Mechanism Programme.  

(49) https://gslegal.gov.gr/?p=7041  
(50) OJ A 81/2020.04.10. 

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Table 9.1:  Evolution of public sector staff and wage bill (2009-2019) 

Notes:  
/1: Includes all temporary contracts in General Government entities and legal entities under 
private law. For 2009-2013 the figure refers to the stock at the end of each year, whereas for 2014-
2019 the figure is a yearly average (Jan-Dec)  
/2: 2014 figures are not comparable because data on personnel of legal entities of private law 
(permanent & temporary) are not available in census database.  
/3: Data on temporary staff not burdening the budget is not available for 2014. The figure of 
temporary staff for 2014 derived based on the census database comment that the number of 
temporary staff not burdening the budgets is 45,000 for 2014 (which equals the approvals of 2013 
for this type of personnel). 
Source: Apografi database 

Given the sharp increase of temporary staff since 2018, it is highly welcomed that 
the  authorities  have  agreed  to  a  new  complementary  commitment  to  reinstate  a 
ceiling of temporary staff from 2021 onwards. This new commitment is expected to 
contribute  to  the  authorities’  ambition  to  strengthen  the  central  control  of  hiring 
procedures. As a first step, the authorities are expected by September 2020 to carry out 
a  comprehensive  review  of  posts  included  currently  under  the  'temporary  staff' 
monitored  with  an  aim  to  remove  posts  of  a  permanent  nature.  Thereafter,  a  study 
assessing appropriate employment levels, which is carried out through technical support 
provided by the European Commission, is expected to be completed. The completion of 
the preceding two steps, will allow for a methodology to be developed that will define 
an annual ceiling on temporary staff, including incorporation of completed conversions 
of temporary posts into permanent posts.  

Continued progress has been made in strengthening central control of the unified 
wage  grid  and  hiring  procedures  through  the  inter-ministerial  committee 
established  earlier  this  year.  Due  the  Coronavirus  pandemic  the  committee  has  not 
been able to convene its first meeting. The adoption of a new and more comprehensive 
impact assessment template to accommodate each law is also expected to contribute to 
strengthening  control,  as  a  dedicated  section  concerns  assessing  implications  of 
proposed  legal  provisions  on  hiring  procedures  and  the  wage  grid.  Depending  on  the 
extent  the  committee’s  recommendations  will  be  taken  into  account  by  the  political 

80 

YearPermanent staffTemporary staff burdening the budget /1Elected staffOther categoriesTotal2009730,234153,08721,2863,366907,9732010700,962109,96821,2863,262835,4782011674,01257,85312,1133,088747,0662012654,78141,86912,0313,053711,7342013618,57222,62613,2523,103657,5532014 /2576,85612,833 /36,1882,891585,9352015600,48456,3857,1494,773668,7912016598,87058,0538,0574,851669,8312017602,90859,7318,2485,728676,6152018601,78964,9118,8876,027681,6142019604,56472,03210,2806,320693,196Change to 2009-17.2%-52.9%-51.7%87.8%-23.7%   
 
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level and the adoption of legal provisions not fully consistent with the hiring procedures 
and  the  unified  wage  grid,  additional  measures  could  be  considered.  For  example, 
restricting remuneration-related amendments to dedicated wage grid laws to be adopted 
at  pre-set  periods  (e.g.  twice  a  year).  Finally,  a  positive  measure  to  further  strengthen 
central  control  of  hiring  procedures,  is  the  adopted  provision (51)  that  sets  out  that 
personnel  appointed  at  permanent  posts  at  municipalities (52)  that  are  expected  to  be 
covered  through  the  reciprocal  fees  collected  by  the  municipalities  need  to  remain,  at 
least, seven years in the post they have been recruited for. This will hopefully address a 
long-standing issue in the Greek public administration, where personnel hired for to fill 
specific  roles  moved  on  to  other  posts  in  the  public  sector,  resulting  in  the  need  for 
temporary  staff  to  subsequently  being  hired  to  fill  the  gap,  as  permanent  hiring 
procedures are time-consuming. 

Following adoption of legal provisions allowing for a key IT project to commence, 
the  authorities  are  preparing  an  action  plan  to  strengthen  the  capacity  of  the 
Single  Payment  Authority.  The  IT  project  being  developed  is  expected  to  be 
completed  within  two  years  and  will  allow  the  Single  Payment  Authority  to  calculate 
and  manage  remunerations  for  approximately  650,000  public  officials.  During  the 
implementation  period  of  this  IT  system,  the  Single  Payment  Authority’s  capacity  is 
expected  to  be  enhanced  on  the  basis  of  an  action  plan  that  is  being  developed.  To 
ensure  that  the  third  and  final  phase  of  the  Single  Payment  Authority  reform  is 
implemented  in  an  efficient  manner,  it  is  also  important  that  the  Single  Payment 
Authority  remains  mandated  to  manage  all  general  government  entities  without 
exception.  In  this  regard,  it  is  noted  that  a  recently  adopted  provision (53) excludes 
specific  municipal  organisations  from  the  responsibility  of  the  Single  Payment 
Authority. 

9.2.  JUSTICE 

As part of the project to strengthen E-Justice, some progress has been recorded in 
the transition to mandatory electronic filing and processing of legal documents in 
civil  and  penal  jurisdictions.  Whereas  the  “Invest  in  Greece”  law  of  October 2019 
provided for the mandatory electronic filing of all documents throughout all instances of 
the  administrative  branch  of  the  judiciary  as  of  1 January  2021,  this  manner  of  filing 
remains  optional  and  is  only  partially  available  in  civil  and  penal  jurisdictions.  The 
authorities  are  proceeding  with  setting  up  a  working  group  for  the  use  of  IT  in 
Justice with  the  mandate  to  map  the  current  situation  and  to  elaborate  the  relevant 
project roadmap; stakeholders of the legal professions as well as the Ministry of Digital 
Development  will  participate.  A  precondition  for  the  generalised  and  mandatory 
electronic  filing  is  the  acquisition  and  use  of  certified  digital  signatures  by  judges, 
administrative court staff and legal professionals. As these have been issued up to date 
to only 20% of lawyers and a handful of magistrates (and scarcely used), the Ministry of 
Justice,  in  collaboration  with  the  Ministry  of  Digital  Policy,  have  initiated  action  to 
simplify the procedure for the certification of digital signatures, by reducing red tape, in 

(51) OJ A 53/2020.03.11, Article 74. 
(52) Mainly  relate  to  the  hiring  procedure  3K/2018  with  8  166  posts,  out  of  which  a  substantial  part 

concerns staff to be employed in waste management by the municipalities. 

(53) OJ A 53/2020.03.11, Article 2. 

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order  to  facilitate  their  acquisition  by  all  legal  practitioners.  Provision  of  training 
sessions to court personnel is also being planned.  

Progress has also been recorded regarding the electronic issuance of certificates by 
a number of courts. As of 23 April 2020, three categories of court certificates related 
to probate matters and a further three categories pertaining to the filing of appeals and to 
postponements  of  hearings  can  be  obtained  electronically.  Additional  categories  of 
certificates  should  be  added  shortly  with  respect  to  the  magistrate’s  courts  of  Athens 
and  Thessaloniki  and  the  district  courts  of  Piraeus  and  Thessaloniki.  Moreover,  a 
provision  is  due  for  adoption  shortly,  allowing  for  the  electronic  notification  of  legal 
documents. Work is also ongoing regarding the digitization of criminal record extracts 
and the electronic delivery of the corresponding certificates. 

On  15 April  2020  the  authorities  published  the  long  overdue  call  for  bids for  the 
second  phase  of  the  Integrated  Judicial  Case  Management  System,  a  mid-2020 
specific commitment. The bids must be submitted by 26 May 2020 and the competition 
for  the  award  of  the  contract  will  take  place  on  1 June  2020.  The  delivery  of  the 
contractual  project  must  be  completed  within  36  months  from  the  signature  of  the 
agreement. 

The last stage of entry into force of the mandatory mediation framework has been 
completed  in  March.  The  third  and  final  stage  of  compulsory  mediation  came  into 
force on 15 March 2020, extending its coverage to all regular jurisdiction proceedings 
before first instance civil courts with a disputed value in excess of €30,000. However, 
due  to  the  suspension  of  the  function  of  courts  in  the  context  of  the  Coronavirus 
outbreak  until  27 April  2020,  the  effects  of  the  new  measure  will  be  measurable  only 
later  on  in  2020.  To  raise  awareness  of  the  availability  of  mediation  as  an  alternative 
dispute resolution  tool and to  facilitate its use by  stakeholders, the Ministry of Justice 
has  secured  pre-approval  of  funds  to  be  used  for  dissemination  of  information  and 
organizing training sessions for legal stakeholders. 

The  authorities  are  also  proceeding  with  the  initiative  of  creating  specialized 
chambers  in civil  and administrative courts (a complementary  commitment). The 
new  chambers  would  deal  with  specific  categories  of  cases  and  would  be  staffed  by 
judges with relevant professional experience or academic credentials. A draft bill, due to 
be put on public consultation shortly, would allow the setting up of special chambers in 
civil  jurisdictions  in  Athens  and  Thessaloniki,  at  first  instance  and  on  appeal,  to  deal 
with cases involving claims for damages based on the transgression of national and EU 
legislation on electronic communication, energy and the protection of private data; the 
addition of further categories of cases would also be allowed. The chambers in question 
would  acquire  expanded  territorial  jurisdiction  over  additional  regions  of  Greece.  The 
creation  of  special  chambers  would  also  be  allowed  in  administrative  jurisdictions 
operating more than three sections, both at first instance and on appeal, with respect to 
specific  categories  of  cases  to  be  defined  by  the  respective  heads  of  administration  of 
the relevant courts. 

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9.3.  ANTI-CORRUPTION 

The operational capacity of the National Authority for Transparency is gradually 
being  enhanced  with  a  view  to  being  fully  operational  by  November 2020.  The 
operational  capacity  of  the  Authority  has  been  reinforced  since  its  creation  in 
August 2019  with  the  recruitments  of  administrative  staff,  the  appointment  of  senior 
managers and the drafting of a strategic plan. The next steps include the appointment of 
the  President  and  the  members  of  the  management  board,  the  selection  of  the  audit 
committee members and the calls of interest for staffing the directorate of internal audit 
as  well  as  the  audit  and  investigations  unit.  The  awareness-raising  pillar  of  the 
Authority’s work is less developed so far, but the Authority regards it as a key pillar in 
the  fight  against  corruption  and  managed  to  launch  a  couple  of  projects  before  the 
implementation of the precautionary measures related to the Coronavirus outbreak.  

The National Authority for Transparency closely monitors the implementation of 
the National  Plan for Anticorruption  that shows  good results so far and that will 
be independently assessed before the Authority adopts the next plan by 2022. The 
National  Anticorruption  Plan  progress  report  for  the  second  half  of  2019  has  been 
published and show that 96% of the actions are either on going, either completed, with 
only 6 pending actions. On the positive side, the National Authority for Transparency, 
which is responsible for designing a structured internal control framework for the Greek 
public  administration,  is  working  in  cooperation  with  the  Hellenic  Court  of  Auditors 
with  a view to  strengthening the internal  control systems  in  both  the central  and local 
governments  and  has  started  to  deliver  (see  section  3.5).  The  plan  to  improve  the 
framework  for  asset  recovery  and  the  creation  of  an  information  system  for  the 
management of frozen assets, which is a national and an international obligation, is also 
progressing.  In  early  2021,  the  National  Authority  for  Transparency  is  scheduled  to 
receive  an  external  appraisal  of  the  national  anticorruption  plan  for  2018-2021  and 
drafted a timeline for launching the tender. The authorities foresee to carefully consider 
the providers’ conclusions before drafting the national anticorruption plan for the period 
running from 2021.  

The  National  Authority  for  Transparency  is  involved  in  the  oversight  of  political 
party financing and in the controls of asset declarations. Its Governor is a member 
of the Committee whose role is to issue decisions on state financing to political parties, 
monitor  private  financing  to  political  parties,  appoint  accountants  to  audit  political 
parties’ finances during election periods and perform audits on asset declarations. The 
Committee’s latest report on political party financing and on asset declarations concerns 
the economic year 2018 (54). The work of the committee for 2019, which was a multiple 
election year, has been delayed due to the Coronavirus pandemic and should began by 
October 2020. The authorities committed to report shortly on the implementation of the 
institutional  framework  on  political  party  financing  to  date.  Moreover,  the  legislative 
framework of party financing has been flagged by the authorities as an additional area 
for legal codification. The European institutions encouraged the authorities to include it 

(54) The  asset declarations covering the asset situation of  ministers,  mayors, and  members of Parliament 
and members of European Parliament as of end-2018 have been uploaded on the Parliament’s website 
in May 2020. 

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in the annual action plan that the Central Codification Committee is expected to publish 
later this year (see section 9.1).  

The  recommendations  of  the  Group  of  States  against  Corruption  (GRECO)  are 
taken  into  account  through  the  agreed  dedicated  committee.  In  March  2020,  the 
committee monitoring the implementation of the new Criminal Code and the Criminal 
Procedure Code has been set up. By December 2020, the Committee will propose some 
amendments to the Codes with a view to taking into account the recommendations by 
the Group of States against Corruption. When it will examine legal provisions related to 
these recommendations,  the National  Authority  for Transparency will be invited as an 
observer. 

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ANNEX 

Progress  with  the  implementation  of  end-2019  specific  commitments  and  relevant  continuous  commitments  (*)  given  to  the 
Eurogroup (Annex to the Eurogroup statement, 22 June 2018)  

Commitment 

State of play and next steps 

Fiscal. Achieve a primary surplus of 3.5% of GDP over the medium-
term. 

Greece reached its primary surplus target of 3.5% in 2019, meeting the target for the 
fifth year in a row. 

Fiscal structural. The authorities will complete the full offsetting and 
collection of the clawback by June every year for the previous calendar 
year. 

Public  financial  management.  Complete  the  cash  monitoring  and 
forecasting for the General Government Treasury account system. 

Clawback collection, a continuous commitment, is progressing with delays, not all 
imputable  to  the  current  emergency  situation.  The  authorities  aim  at  meeting  the 
originally  agreed  targets,  with  some  delays  due  to  the  containment  measures  but 
also  some  accumulated  from  before the  current  health  emergency.  The  authorities 
are planning to take measures to contain the increase in the amounts to be clawed 
back but further measures are likely to be needed to reverse the trend.  

The  Treasury  of  Single  Account  system  is  operational  and  provides  a  useful 
overview of the state cash situation while the cash forecasting project is progressing 
(an end-2019 specific commitment rescheduled for mid-2020). The pilot project on 
cash forecasting covering the majority of state’s cash reserves will be implemented 
according to the March 2020 draft strategy.  

Tax administration. Reach the agreed permanent staffing positions at 
the  Independent  Authority  of  Public  Revenue  (IAPR)  of  12,500  by 
end-2019. 

The  Independent  Authority’s  staffing  numbers  increased  at  a  modest  pace  during 
this period, although remaining well below the targets. Staffing levels continued to 
increase during the first quarter and currently stands at 11,916, compared to 12,500 
that was set as the target by end of 2019. 

* 

* 

1 

2 

The  complementary  measures  in  the  areas  of  human  resources,  IT  and  housing 
needs,  agreed  in  2019,  have  seen limited  progress. The  primary  legislation  on the 
human  resources  reform  remains  pending  and 
its  full 
implementation  will  be  affected  by  the  Coronavirus  pandemic,  but  a  revised 
timeline  is  yet  to  be  set.  Regarding  the  IT  infrastructure  and  to  clarify  the 

timeline  for 

the 

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* 

Arrears. The authorities will implement the arrears clearance plan and 
avoid the accumulation of new arrears. 

3 

Social  welfare.  Complete  the  rollout  of  all  three  pillars  of  the  Social 
Solidarity Income scheme by end-2019. 

competency  areas  of  the  Independent  Authority  no  concrete  progress  has  been 
made.  These  efforts  are  expected  to  be  stepped  up  with  greater  urgency,  as  the 
interoperability  of  various  databases  would  strengthen  the  capacity  to  combat  tax 
evasion and facilitate the timely collection of taxes. As concerns relocation of the 
headquarters of the Independent Authority into one single location, the previously 
identified building was passed to another public body. The authorities currently plan 
to  construct  two  new  buildings  to  host  the  Independent  Authority  next  to  the 
Ministry of Finance at the outskirts of Athens, with an expected completion in 2024. 

The Coronavirus outbreak has had an adverse effect on the implementation of the 
arrears  clearance  plan,  but  progress  has  been  made  on  improving  the  underlying 
processes  and  the  authorities  remain  committed  to  the  timeline  set  in  the  October 
2019  plan.  The  stock  of  arrears  in  January 2020  stood  at  €1.3 billion,  €69 million 
above the December 2019 level and €340 million above the clearance target.  

The authorities designed two measures that should clear 15% of the overall stock of 
arrears  once  operations  resume.  They  aim  to  speed  up  the  arrears  clearance  for 
health providers and allow for an immediate clearance of certain tax refunds. With a 
view to avoiding the accumulation of new arrears, the authorities plan to implement 
a  new  IT  system  in  the  Single  Social  Security  Fund  (EFKA)  to  substantially 
accelerate the pace of clearing the backlog of pension claims.  

As part of the commitment to complete the rollout of all three pillars of the Social 
Solidarity Income scheme, the authorities have completed the evaluation of the pilot 
of the new delivery system for active labour market policies and have set up initial 
plans to run further pilots for the expansion of the new model. The authorities will 
now  proceed  to  the  scale-up  of  the  pilot  in  additional  geographical  areas  with 
different labour market characteristics, widen the target group and strengthen data 
collection and analysis with a view to drawing lessons for the broader rollout. 

The design of the disabilities benefit framework, a mid-2019 specific commitment, 

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* 

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has  been  agreed.  Following  a  discussion  on  EU  best  practices,  a  new  reform 
approach will be adopted based on assessments of functional disability based upon 
physical  examinations  by  qualified  experts.  Such  assessments  are  widely  used  by 
other Member States with the dual role of assessing benefit eligibility and making 
specific proposals for disability mitigation and rehabilitation. The agreed roadmap 
for the implementation of the new design of the commitment will start with a pilot 
project from January 2021. 

Social  welfare.  Review  the  system  of  subsidies  for  local  public 
transport by end-2019. 

The  evaluation  study  has  been  delayed  by  the  Coronavirus  outbreak,  but  reform 
legislation is expected to be completed in any case by end September 2020. 

Financial stability. Greece will continue to implement reforms aimed 
at restoring the health of the banking system, including non-performing 
loans resolution efforts by ensuring the continued effectiveness of the 
relevant legal framework (i.e. household and corporate insolvency, out-
of-court  workout,  non-performing  loans  sales,  e-auctions)  and  taking 
all necessary actions to this effect.  

The  Coronavirus  pandemic  has  diverted  resources  at  all  levels  of  the  public 
administration,  limiting  progress  and  resulting  in  delays  in  the  advancement  of 
financial  sector  reforms.  Nevertheless,  the  authorities  remain  committed  to 
harmonising the insolvency framework and to improving the existing tools for the 
resolution  of  non-performing  loans.  This  is  welcome  as  with  the  Coronavirus 
pandemic  unfolding,  an  efficient  insolvency  framework  is  increasingly  important. 
The  actions  outlined  below  are  monitored  and  assessed  as  part  of  a  continuous 
commitment in the area of financial policy. 

The authorities have advanced with the preparation of a new Insolvency Code. It is 
expected to be adopted by the end of June and enter into force on 1 January 2021. 
While  a  full  assessment  will  only  be  possible  once  a  stable  text  is  available,  the 
current draft provides a welcome modernisation and unification of insolvency law, 
based  on  international  best  practices.  A  key  requirement  for  the  effective 
application of the Code will be a sound processing and enforcement framework, in 
terms of both legislation and practical implementation capacity. The draft Code also 
contains a proposal for a sale-and-leaseback scheme, whereby the primary residence 
of eligible borrowers could be bought by a state-owned entity and leased back to the 
debtor, with the possibility of repurchases, while vulnerable eligible borrowers will 
be  entitled  to  a  subsidy  on  the  rent  of  the  leased-back  property.  While  similar 

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schemes  exist  in  other  countries  (such  as  Ireland),  the  proposal  risks  creating  a 
significant involvement of the public sector in the real estate market as well as fiscal 
risks,  calling  for  great  prudence  in  advancing  along  these  lines.  The  scheme  as 
currently  proposed  would  also  raise  issues  around  enforceability,  targeting  of 
scope/beneficiaries, and potential overlaps with other instruments. 

The  authorities  legislated  a  three-month  extension  of  the  Primary  Residence 
Protection  scheme,  which  was  due  to  expire  in  April,  to  the  end  of  July.  The 
decision  was  taken  despite  the  limited  appeal  of  the  scheme  and  reflected  the 
difficulties  faced  by  the  applicants  to  timely  apply  due  to  the  outbreak  of  the 
pandemic. No modification was introduced with respect to the loans covered by the 
scheme  or  to  the  eligibility  criteria.  The  authorities  have  also  announced  their 
intention to extend the application deadline for the Out-of-Court Workout until the 
end of July.  

In  order  to  alleviate  the  impact  on  social  groups  financially  affected  by  the 
Coronavirus  pandemic,  the  authorities  announced  a  temporary  instalment  subsidy 
for  mortgage,  consumer  and  business  loans  secured  by  a  primary  residence.  The 
scheme will be open for applications for one month from 1 July 2020 and will be 
available  only  to  debtors  affected  by  the  pandemic.  A  pre-requisite  to  the 
participation  in  the  scheme  will  be  that  the  concerned  loans  are  restructured  in 
agreement between the banks and debtors. The restructuring offer will be extended 
by  the  banks  on  a  discretionary  basis.  Given  the  wide  perimeter  of  the  eligible 
loans,  it  will  be  essential  to  include  strong  safeguards  to  ensure  that  only  viable 
loans are restructured and the negative impacts on payment discipline are mitigated.  

The  authorities  submitted  an  action  plan  and  a  corresponding  legislative  proposal 
for  accelerating  the  clearance  of  the  household  insolvency  backlog,  which  has 
increased further as a result of the suspension of court proceedings. The authorities 
committed  to  adopting  the  provisions  required  for  its  implementation  by  end-
May 2020, while asserting that an electronic platform for the replacement of distant 

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hearing  dates  by  more  timely  ones  can  be  operational  within  45  days  from  the 
adoption of legislation.  

The authorities are taking steps that are considered feasible at the current juncture to 
implement  the  four-year  action  plan  for  the  clearance  of  the  backlog  of  called 
guarantees,  which  remains  considerable.  Examination  and  expected  payments  of 
claims for the first quarter of 2020 is proceeding according to plan, while the set-up 
of  an  e-file  repository  was  improved  through  secondary  legislation  in  early  May. 
The  redeployment  of  staff  and  other  resources  has  started,  but  the  processing  of 
claims  has  slowed  in  view  of  the  constraints  imposed  by  the  pandemic.  The 
authorities intend to speed up to the extent possible the processing of claims in the 
second  half  of  2020  compared  to  the  targets,  while  examining  ways  to  further 
frontload  the  payment  schedule  until  2023.  An  acceleration  of  the  processing  of 
claims already this year would support the liquidity of the banking sector. 

The  conduct  of  e-auctions  has  halted  as  a  result  of  the  closure  of  the  courts  and 
notarial offices but work is ongoing on improving the process going forward. The 
authorities  presented  an  outline  of  amendments  to  the  Code  of  Civil  Procedure  to 
address procedural obstacles and impediments, as well as proposals for enhancing 
the  user-friendliness  of  the  e-auctions  platform.  The  necessary  legal  amendments 
will  be  elaborated  by  the  law-drafting  committee  for  the  ongoing  revision  of  the 
Code  of  Civil  Procedure  which  is  due  to  conclude  its  work,  accompanied  by  an 
explanatory report, by end-September 2020, rather than by end-March as originally 
foreseen. 

5 

Labour  market.  Implement  action  plan  on  undeclared  work  by  end-
2019.  

The authorities have completed the implementation of the 2017-2019 action plan to 
fight undeclared work and will now implement a follow-up plan. A road map for the 
follow-up action plan is expected to be adopted shortly. 

* 

Labour markets, product markets and competitiveness.  

The pandemic has started to have a significant impact on the labour market, and the 
authorities  are taking  a  range  of  measures to  minimise job losses and  longer-term 

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economic damage. 

Commission Staff Working Document -  

Chapter  - Annex 

6 

Justice. In the context of implementing the Three-Year Action Plan on 
Justice, implement the electronic filing of legal documents throughout 
the Courts, having completed the tendering procedure by end-2019. 

In  light  of  the  Coronavirus  pandemic,  the  authorities  have  decided  in  agreement 
with  the  social  partners  to  postpone  the  update  of  the  minimum  wage  from 
June 2020 to January 2021. 

The  authorities  continue  working  towards  improving  economic  framework 
conditions  and  boosting  competitiveness,  despite  the  shifting  priorities  and 
difficulties faced due to the Coronavirus outbreak. 

With  a  view  to  further  improving  the  business  environment,  the  authorities  are 
pursuing  complementary  actions  to  cut  red  tape,  help  establish  clear  rules  for 
government-to-business  interactions,  and  increase  the  predictability  of  economic 
transactions. 

As part of the project to strengthen e-justice, some progress has been recorded in the 
transition to mandatory electronic filing and processing of legal documents in civil 
and  penal  jurisdictions  and  in  the  electronic  issuance  of  court  certificates  and 
decisions. While electronic filing has been made  mandatory for the administrative 
branch  of  the  judiciary  as  of  1 January  2021,  it  remains  optional  and  is  only 
partially available in civil and penal jurisdictions. A precondition for the generalised 
and  mandatory  electronic filing  is the  acquisition  of certified  digital  signatures by 
judges,  administrative  court  staff  and  legal  professionals,  and  the  authorities  have 
committed to take facilitating measures to this end. 

Investment licensing. Complete the investment licensing reform, and 
to this end fully deploy the relevant ICT (end-2019). 

The  tender  for  the  IT  system  to  support  the  investment  licensing  reform,  is  being 
delayed by court decisions.  

Energy.  With  a  view  to  completing  reforms  in  the  energy  sector, 
implement the measures agreed as part of the joint assessment on the 

Discussions  continue  on  the  specifics  of  the  anti-trust  remedy,  with  the  aim  of 
presenting  a  market-testable  proposal,  a  key  step  in  finally  implementing  the 
remedy and closing this end-2020 commitment. The goal is for a structural remedy 

7 

8 

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Commitment 

NOME auction system. 

* 

HCAP.  The  Strategic  Plan  of  HCAP  will  be  implemented  on  a 
continuous basis. 

Commission Staff Working Document -  

Chapter  - Annex 

State of play and next steps 

to  be  able to increase competition at all levels  of  the  market  and  not to  be  overly 
biased  towards  a  specific user  profile, thus  meeting  the  anti-trust  concern  brought 
about  by  the  Public  Power  Company’s  continued  exclusive  access  to  baseload 
power  sources.  This  key  commitment,  proposed  as  an  alternative  to  the  failed 
divestiture of two of the company’s lignite plants, will be important in opening up 
the market to competition and encouraging new investment during Greece’s energy 
transition. 

situation  has 

the  Coronavirus 

stabilised.  Regarding 

Inevitably,  the  Coronavirus  pandemic  has  affected  the  functioning  of  the  Hellenic 
Corporation  of  Assets  and  Participations (HCAP)  and  its  portfolio  companies  and 
has led to adjustments and/or change of its priorities as well as of the schedule of 
part  of  Greece’s  commitments.  While  the  authorities  continue  their  strong 
engagement  with  the  Corporation,  the  adoption  of  updated  Ministerial  Guidance, 
which is needed for the continued implementation of Corporation’s strategic plan (a 
continuous commitment), as well as its planned update to its business plan, will be 
delayed  until 
the 
implementation  of  the  Coordination  Mechanism,  the  mandates  of  the  respective 
state-owned enterprises were approved by the Cabinet Committee on 12 March, but 
the  finalisation  of  a  statement  of  commitments  regarding  each  enterprise  is  not 
advisable at this juncture, again due to the uncertainty created by the Coronavirus. 
The  Corporation  continued  improving  corporate  governance  in  state-owned 
enterprises through board reviews and appointments. A key challenge relates to the 
significant operational and financial issues at Hellenic Post. The pandemic will also 
limit  improvements  in  the  performance  of  the  Corporation’s  real  estate  portfolio 
during  2020,  though  operational  improvements  should  remain  feasible.  The 
Corporations’ current priority is ensuring continued operation of public enterprises 
in  key  sectors,  and  health  and  safety  of  staff.  In  this  context,  the  uninterrupted 
provision  of  electricity,  water  and  postal  services  is  paramount,  as  is  the 
safeguarding  of  business  continuity  in  the  public  transport  systems  and  central 
markets  in  Athens  and  Thessaloniki.  The  negative  economic  repercussions  of  the 
Coronavirus pandemic are expected to be particularly severe for the Athens Urban 

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9 

Privatisation. The Asset Development Plan will be implemented on a 
continuous basis.  

With  a  view  to  swiftly  attracting  investment  to  support  a  sustained 
economic recovery, complete by end-2019 the transactions on Egnatia, 
DEPA commercial, regional ports of Alexandroupoli and Kavala, AIA 
shares, EYDAP and EYATH. 

Transport Organisation and the Hellenic Post. 

The  momentum  in  the  privatisation  process  observed  over  the  previous  months 
could  not  be  maintained  due  to  the  Coronavirus  outbreak.  The  pandemic  is 
impacting the implementation of the privatisation programme in many ways, inter 
alia  through  difficulties  in  engaging  with  potential  investors,  impacts  on  asset 
valuations, reduced administrative capacity to implement necessary actions, and the 
interruption of construction works. 

Despite the overall negative commercial environment caused by the pandemic, the 
Hellenic Republic Asset Development Fund is advancing with maturing actions on 
its  transactions,  and  the  authorities  are  supportive  and  are  taking  the  required 
actions on their side. This will make possible the launching of the next steps in the 
respective  transactions,  at  a  time  that  the  situation  normalises.  At  this  stage,  the 
situation regarding the ongoing transactions is as follows: 

Hellinikon (a specific 2018 commitment): Despite the continued strong engagement 
of  the  authorities  to  complete  the  conditions  precedent  to  allow  the  transfer  of 
shares  to  the  preferred  investor  (Lamda),  the  financial  closing  is  delayed  by 
complications in the tender process for the award of the casino licence. Following 
the dismissal of a first appeal, the excluded bidder lodged a petition for annulment 
along with interim relief measures before the Council of State. The Council of State 
rejected the petition for interim relief measures on 7 May 2020. This opens the way 
for a continuation of the tender process though its finalisation will need to await the 
Council of State decision on the merit of the petition for annulment. The authorities 
are pursuing steps to address the remaining pending issues.  

Marina of Alimos concession (a mid-2019 specific commitment): the Cabinet Act 
authorising the signature of the concession agreement was published in the Official 
Gazette  on  7 April  2020  and  the  concession  agreement  was  signed  by  all 
stakeholders  on  13 May  2020.  The  financial  closing  of  the  transaction  is  set  to 

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follow within 120 days of the signature of the concession agreement.  

Hellenic  Petroleum  (a  mid-2019  specific  commitment):  The  authorities  are  yet  to 
decide  on  the  approach  to  be  followed  after  the  failure  of  the  first  tender  in  mid-
2019.  The  Fund  is  considering  all  options.  However,  following  the  recent 
significant  fall  in  the  capitalisation  value  of  the  company,  the  Fund  considered 
appropriate to delay further the launching of the transaction to a later point of time.  

Sale of 30% of Athens International Airport (an end-2019 specific commitment): At 
end-January 2020, nine investment parties were considered qualified to proceed to 
the binding offers phase. However, due to the impact of the pandemic, the deadline 
for the submission of binding offers had to be adjusted and the process will resume 
once the situation improves. 

Public Gas Corporation – DEPA Commercial (an end-2019 specific commitment) – 
DEPA  Infrastructure  (a  mid-2021  specific  commitment):  Good  progress  was 
achieved  with  both  tenders  attracting  strong  investment  interest.  Nine  interested 
parties  submitted  Expressions  of  Interest  in  each  of  the  two  international  tenders. 
Their  evaluation  is  underway  but  the  launch  of  the  binding  offers  phase  for  both 
transactions will be delayed due to the Coronavirus outbreak. 

Egnatia:  The  authorities  have  stressed  their  commitment  to  proceed  with  the 
transaction  and  took  a  number  of  actions  in  April  and  beginning  of  May  2020, 
including  the  signing  of  a  Joint  Ministerial  Decision  on  key  elements  of  the 
concession  agreement  and  further  administrative  steps.  Meanwhile  the  authorities 
and Egnatia S.A. are expected to proceed with the implementation of all remaining 
pending actions related to the specification of works for bridges to qualify as safe, 
the  licencing  of  the  tunnels,  the  completion  of  the  construction  of  all  toll  stations 
and resolution by Egnatia S.A. of the open issues related to the four motorist service 
stations contracts that have been inactive since 2011.  

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10 

Public  administration.  Complete  the  integrated  HR  Management 
System (digital organigram for all public entities and link with single 
payment authority) by end-2019. 

Regional Ports: Following a long period of delays, good progress has been achieved 
over  the  last  months,  with  the  Fund  given  the  flexibility  of  designing  the 
transactions  on  a  case-by-case  basis  and  the  initiation  of  preparatory  work  on 
tenders  for  four  ports.  However,  due  to  the  unfavourable  environment,  it  was 
considered reasonable to delay the launching of the transactions.  

two-thirds  of 

Overall,  good  progress  has  been  made  in  developing  a  Human  Resources 
Management  System,  including  completion  of  a  significant  number  of  digital 
job  descriptions.  Until  mid-March,  government  entities 
organigrams  and 
total  personnel  had  completed  digital 
representing  around 
organigrams, with a link between the job description and jobholder established for 
75%  of  occupied  posts.  The  EU-funded  tender  on  Human  Resources  System 
Support Services is expected to be launched by June 2020, while the upgrade of the 
census database is progressing as an interim solution. The mobility cycle for 2020 
has been launched in accordance with new legislation aiming to further improve this 
reform,  notably  by  strengthening  the  link  between  the  mobility  scheme  and  the 
annual recruitment planning. The performance assessment cycle for 2019 has been 
delayed  due  to  the  pandemic,  but  the  authorities  are  moving  ahead  with  plans  to 
strengthen  the  assessment  framework  and  link  it  with  the  annual  action  plans  of 
each Ministry and the selection process of managers. 

Progress with the implementation of mid-2020 commitments to the Eurogroup (Eurogroup annex 22 June 2018)  

Commitment 

State of play and next steps 

1 

Tax  policy.  Greece  will  undertake,  by  mid-2020,  a  nationwide 
valuation  exercise  of  property  tax  value  based  on  market  values  and 
will update property tax values for ENFIA and other taxes fully in line 
with market values by mid-2020. 

In  the  face  of  the  quickly  developing  Coronavirus  pandemic,  the  authorities  were 
unable  to  finalise the  on-going  nationwide  property  tax  valuation  exercise  in time 
for the current year’s tax assessment cycle. This will postpone the implementation 
of the wider property tax reform to 2021 and have a small deficit-increasing fiscal 
effect  of  approximately  €150 million  on  2020  revenues.  The  authorities  have 
committed  to  reschedule  the  exercise  to  autumn  with  the  objective  of  aligning 

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property tax values to market prices by January 2021. 

Commission Staff Working Document -  

Chapter  - Annex 

2 

Social safety nets. The set-up of the single pension fund EFKA will be 
completed by mid-2020. 

3 

Health care. Greece will ensure the rollout of the primary health care 
system,  in  particular  by  opening  all  240  primary  health  care  units  by 
mid-2020. 

4 

Health  care.  Achieve  a  share  of  centralised  procurement  in  total 
hospital expenditure of 30% in mid-2020. 

The  authorities  have  updated  their  action  plan  to  finalise  the  setup  of  the  Single 
Social  Security  Fund  (EFKA).  The  aim  of  the  plan  is  a  comprehensive  digital 
transformation  by  the  end  of  2020  leading  to  a  new  operational  and  institutional 
setup.  The  major  organisational  measures  to  be  completed  by  end-June  2020 
concern the merging of the Supplementary Pension Fund (ETEAEP) into the Single 
Social Security Fund and the creation and operationalisation of the department for 
Public  Sector  Pensions  within  it.  The  remaining  organisational  reforms  are  the 
creation of local subsidiaries for farmers and self-employed, which have seen delays 
due to the Coronavirus outbreak but are planned to be completed four months after 
operations resume.  

The roll-out of primary health care had to be suspended given the outbreak of the 
Coronavirus  pandemic.  The  authorities  are  working  on  new  tools  to  protect  the 
population,  such  as  telemedicine,  and  have  expanded  the  bed  capacity  through 
agreements  with  the  private  sector.  They  have  also  doubled  down  on  efforts  to 
attract medical staff, especially doctors. The roll out of the reform will resume after 
the  current  emergency,  while  existing  primary  care  units  are  already  deployed  to 
respond to the pandemic.  

Centralised procurement is ongoing with a focus on the urgent needs of the health 
system. Central governance of regional procurement is delivering more efficiency, 
which  could  be  further  supported  by  the  re-activation  of  the  Price  Observatory. 
While draft legislation to convert the new central body for health procurement into a 
private legal entity is still under development, the current emergency is trial-testing 
some elements of the new system.  

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Justice. In the context of implementing the Three-Year Action Plan on 
Justice, phase II of the establishment of the e-justice system (OSDDY-
PP) will be completed by mid-2020. 

On  15 April  2020  the  authorities  published  the  long  overdue  call  for  bids  for  the 
second phase of the Integrated Judicial Case Management System. The bids are set 
to be submitted by 26 May 2020 and the competition for the award of the contract 
will take place on 1 June 2020. The delivery of the contractual project is planned to 
be completed within 36 months from the signature of the agreement. 

Investment  licensing.  Greece  will  finalise  inspection  legislation  by 
mid-2020. 

Work  on  the  implementation  of  the  inspections  framework  law  is  progressing 
though with some delays, to some extent attributable to the Coronavirus outbreak. 

Investment  licensing.  Greece  will  finalise  the  simplification  of 
investment licensing procedures in the agreed remaining sectors (mid-
2020). 

Investment  licensing.  Greece  will  revise  the  nuisance  classification 
(mid-2021, the authorities aim to complete this action by mid-2020). 

Cadastre.  Greece  will  fully  establish  the  cadastral  agency  and 
complete 45% of cadastral mapping by mid-2020. 

Work  on  further  simplification  of  procedures  is  progressing  though  with  some 
delays, to some extent attributable to the Coronavirus outbreak. From a governance 
perspective, further strengthening inter-ministerial coordination will be instrumental 
in ensuring sustained implementation of the investment licensing reform across all 
sectors. 

The authorities aim at concluding the revision of the nuisance classification by mid-
2020,  well  ahead  of  the  mid-2021  specific  commitment  deadline.  Moreover,  the 
authorities adopted legislation to improve the environmental permit process, and are 
working  on  secondary  legislation  for  the  certification  of  external  inspectors  and 
environmental assessors, due for finalisation by mid-2020. 

The  Coronavirus  outbreak  has  affected  the  cadastre  project,  and  there  is  a  risk  of 
further delays of the recently updated roadmap if the containment measures persists. 
A number of workstreams, such as senior management appointments, preparation of 
the  corporate  strategy  of  the  Hellenic  Cadastre,  technical  specifications  for  the 
archive digitalization strategy and award of the final five contracts are progressing. 
The recruitment of specialised staff remains a challenge and a legal amendment to 
facilitate the process was adopted in May. The opening of regional cadastral offices 
has been suspended and will resume once the situation normalises.  

The  public  presentation  of  all  remaining  forest  maps  scheduled  to  start  on 

5 

6 

7 

* 

8 

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9 

Energy.  The  Target  Model  will  be  fully  launched  by  mid-2019 
(rescheduled to mid-2020). 

10  Legal codification. In view of enhancing legal certainty and access to 
law  through  legal  codification,  the  Labour  Law  Code  and  Code  of 
Labour Regulatory Provisions will be adopted by mid-2020. 

January 2020  and  to  be  gradually  completed  by  June 2020  has  been  frozen,  for 
reasons  not  related  to  the  Coronavirus  outbreak.  This  is  a  matter  of  concern,  as 
delays in the uploading of the maps risk have an impact on the completion of the 
cadastral mapping as a whole.  

The Coronavirus outbreak has had an impact on the Greek energy sector, with lower 
oil  and  gas  prices,  with  social  distancing  measures  affecting  demand  patterns  and 
certain  technical  projects; it  has also  caused a  liquidity  problem  for  market  actors 
given a slowdown in payment of bills. One result of this is that the target model ‘go-
live’  will  be  delayed,  due  to  issues  with  implementing  a  technical  project  for  the 
balancing market, related to contractors’ difficulties in deploying staff as a result of 
the  containment  measures.  Nevertheless,  Greece  made  progress  on  several  fronts, 
notably  launching  the  forward  market  for  electricity.  The  exacerbation  of  non-
payment  of  bills in  the  consumer  market  has  threatened  a liquidity  crisis  amongst 
energy providers, and so far the authorities have responded with measures that aim 
to  ease  this  pressure  without  distorting  the  market.  In  the  mid-term,  Greece’s 
timeline  for  decommissioning  lignite  plants  remains  intact  for  now,  and  Greece 
signalled  its  intentions  to  put  maximum  efforts  into  this  project.  The  Renewable 
Energy Sources Special Account has also come under a particular strain as a result 
of lower energy and EU emissions trading prices.  

The  authorities  are  seeking  to  progress  with  ongoing  work  on  legal  codification, 
despite  current  disruptions.  The  Central  Codification  Committee  has  been  re-
established  and  is  expected  to  have  a  key  role  in  pushing  ahead  with  the  legal 
codification project. Due to the Coronavirus outbreak, the authorities have slightly 
delayed their plans to adopt a new codification law for the Labour Law Code and 
Code  of  Labour  Regulatory  Provisions,  but  are  committed  to  adopting  the  new 
codification law by September 2020. The tender for the flagship project to set up the 
national  gateway  for  legal  codification  (a  mid-2022  specific  commitment)  is 
expected to be launched shortly. 

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The implementation of the Executive State Law is progressing. First, the authorities 
have  adopted  a  detailed  legislative  methodology  manual  and  a  template  for  a 
comprehensive  impact  assessment,  which  were  prepared  with  technical  support 
provided by the European Commission, and constitute key tools to enforce the good 
law-making provisions that came into effect in January 2020. Second, according to 
preliminary  findings,  the  delegation  of  signature  powers  to  the  non-political  level 
that came into effect in February 2020 is being applied efficiently across the central 
administration. This entails a major reform at the core of the public administration, 
and it is estimated that approximately 80% of all decisions taken in each ministry 
are to be signed off at administrative level. 

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Complementary commitments undertaken by Greek authorities in May 2020  

Complementary commitment 

1 

2 

3 

4 

5 

6 

7 

8 

9 

Better regulation. Achieve improvements in the regulatory framework for doing business in the areas of construction permits, obtaining access to electricity, 
registering  property,  resolving  insolvency,  accessing  credit,  protecting  minority  investors,  contracting  with  the  government,  enforcing  contracts,  starting  a 
business, paying taxes, and trading across borders by mid-2021. 

The first deliverable, concerning the identification of short-term actions to be implemented by June 2020, has been completed. 

Labour law. Improve and modernize the framework for individual labour law, including tackling the issues of highly restrictive overtime rules, unnecessary 
sectoral differentiation, white collar/blue collar rules, and take account of flexible and home working, as well as implement these measures through secondary 
legislation, by September 2020. 

Justice. Introduce an action plan for the creation of specialized court chambers for specific categories of cases to improve the delivery of justice, particularly 
in areas of high economic impact, and introduce the adequate legislation by mid-2020. 

Justice. Enact the new Code of Judicial Staff and present a timetable for the adoption of the New Code for the Organization of Justice and the Status of 
Officers of the Courts by May 2020. 

Justice. Present an action plan for the Creation of a specialized ‘JustStat’ unit for data collection and processing to measure and improve the performance of 
the judicial system by mid-2020; introduce the relevant legislation by June 2020. 

Justice. Present an action plan for the implementation of mediation legislation by mid-2020. 

Public  administration.  Strengthen  the  efficiency  of  the  personnel  selection  system  through  improving  the  capacity  of  the  Supreme  Council  for  Civil 
Personnel Selection (ASEP), including in the areas of competition procedures, scoring classification  procedures, temporary staff hiring procedures, and the 
Council’s organisation by end-2022.  

Public administration. Strengthen the hiring control of the public sector through setting an annual ceiling of temporary staff by end-2020, which will be 
applied from 2021. 

Transport. Adopt and implement the National Transport Master Plan and establish a priority list of projects for railways by June 2020.  

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Complementary commitment 

10  Transport.  Revise  the  legal  framework  for  approving  the  sustainable  urban  mobility  plans  according  to  best  European  practices  by  September 2020. 

Following this revision, report on the progress of the elaboration of sustainable urban mobility plans for the main urban centres by October 2020. 

11   Management  of  public  real  estate.  Draw  up  a  holistic  and  coherent  strategy  aiming  to  optimize  the  protection,  management  and  investment-oriented 
exploitation  of  public  real  estate,  including  all  organizations  involved  with  public  real  estate  management,  without  prejudice  to  their  mandates,  by 
September 2020. 

12 

13 

Strategic  project  pipeline.  Fully  develop  a  Strategic  Project  Pipeline  of  large  infrastructure  projects  with  the  objective  to  better  coordinate  and  monitor 
future public expenditures and maximize complementarities between private, public and EU funded projects by January 2021. 

Project preparation facility. Develop and fully operationalize an improved support and delivery mechanism for project preparation and implementation to 
ensure efficiency and quality of both public sector infrastructure projects as well as Public Private Partnerships by March 2021. 

14 

Public procurement. Adopt a new public procurement strategy for 2021–2025 by end 2020. 

15  E-Health. Develop an electronic Medical Health Record to streamline the use of existing electronic medical record applications and update as necessary the 

design and use of agreed electronic medical record standard across public (and private) healthcare institutions by end-2020. 

16  E-Health. Extend the application of the electronic prescription project (2nd phase), including through therapeutic protocols, back-end integrations, artificial 
intelligence driven inquiries, necessary interconnection with information systems, and enabling electronic request and access to medicine for all outpatients 
with chronic diseases by end-2020. 

17  E-Health. Enable the provision of remote health care through the expansion of the capacity of the existing telemedicine network by end-2020. 

18  Health care strategy. Develop a National strategic policy framework for healthcare by end-2020. 

19   Health  care  planning.  Map  health  and  long-term  care  needs  with  available  human  and  technical  resources,  and  take  measures  to  ensure  the  efficiency, 

sustainability, accessibility and affordability of health and long-term care services, as well as promote community-based services, by end 2020. 

20  Education. Enhance the autonomy of higher education by strengthening the accountability and transparency framework and through the introduction of the 

University Council by end-2020. 

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21  Education. Improve vocational education through the establishment of the National System of Vocational Education and Training by end-2020. 

22  Education.  Introduce  internal  school-unit  evaluations,  institutionalize  external  assessment  of  schools,  and  design  new  curricula  for  all  subjects  across  all 

school levels by end-2021. 

23  E-governance.  Develop  the  single  digital  portal  (gov.gr)  to  integrate  all  electronic  transactions  for  citizens  and  businesses  with  the  state  and  related 
information, unify the legal framework on digital policy, and safeguard business continuity by ensuring sufficiency of digital infrastructure mid-2021. 

24  E-governance. Implement the National Programme for Process Simplification in key policy areas and promote the interoperability of registries, data and IT 

systems to ease the administrative burden for businesses and citizens by end-2021. 

25  Digitisation of geospatial data. Develop a State Infrastructures Registry to encapsulate technical and geospatial information about all public infrastructure 

projects to enable better planning and management of these projects, including for construction and maintenance purposes by end-2021. 

26  Digitisation of geospatial data. Develop an Integrated Geospatial Data Mapping tool (Single Digital Map) to increase transparency to investors concerning 

land use rules across Greece and reduce unpredictability in relation to investment licensing decisions by end-2021. 

The first deliverable, concerning the adoption of secondary legislation to define roles and responsibilities of different Ministries and modalities of interaction 
on this project, has been completed through the issuance of a joint ministerial decision (YPEN/DESEDP/31224/333 (OJ B-1173/06.04.2020)). 

101