Recommendation for a COUNCIL RECOMMENDATION on the 2020 National Reform Programme of Greece and delivering a Council opinion on the 2020 Stability Programme of Greece
Date: 2020-05-20
Institutions: European Commission, Secretariat-General
Subjects: Greece, aid to undertakings, economic policy, economic recovery, economic reform, employment aid, epidemic, infectious disease, investment, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 20.5.2020  COM(2020) 508 final  Recommendation for a COUNCIL RECOMMENDATION on the 2020 National Reform Programme of Greece and delivering a Council opinion on the 2020 Stability Programme of Greece  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2020 National Reform Programme of Greece and delivering a Council opinion on 
the 2020 Stability Programme of Greece 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having  regard  to  Regulation  (EU)  No  1176/2011  of  the  European  Parliament  and  of  the 
Council  of  16  November  2011  on  the  prevention  and  correction  of  macroeconomic 
imbalances2, and in particular Article 6(1) thereof,  

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

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On  17  December  2019,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Strategy,  marking  the  start  of  the  2020  European  Semester  for  economic  policy 
coordination. It took due account of the European Pillar of Social Rights, proclaimed 
by the European Parliament, the Council and the Commission on 17 November 2017. 
On  17  December  2019,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the 
Commission also adopted the Alert Mechanism Report, in which it identified Greece 
as one of the Member States for which an in-depth review would be carried out. On 
the  same  date,  the  Commission  also  adopted  a  recommendation  for  a  Council 
recommendation on the economic policy of the euro area. 
The 2020 country report for Greece3 was published on 26 February 2020. It assessed 
Greece’s progress in addressing the country-specific recommendations adopted by the 

OJ L 209, 2.8.1997, p. 1. 
OJ L 306, 23.11.2011, p. 25. 
SWD(2020) 507 final 2. 

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(4) 

(5) 

Council  on  9  July  20194,  the  follow-up  given  to  the  recommendations  adopted  in 
previous years and Greece's progress towards its national Europe 2020 targets. It also 
included  an  in-depth  review  under  Article  5  of  Regulation  (EU)  No  1176/2011,  the 
results of which were also published on 26 February 2020. The Commission’s analysis 
led  it  to  conclude  that  Greece  is  experiencing  excessive  macroeconomic  imbalances. 
In  particular,  the  imbalances  identified  relate  to  the  high  public  debt,  the  high  non-
performing loans on banks’ balance sheets and the external sector, in a context of still 
low potential growth and high unemployment.  

On 11 March 2020, the World Health Organization officially declared the COVID-19 
outbreak  a  global  pandemic.  It  is  a  severe  public  health  emergency  for  citizens, 
societies  and  economies.  It  is  putting  national  health  systems  under  severe  strain, 
disrupting  global  supply  chains,  causing  volatility  in  financial  markets,  triggering 
consumer  demand  shocks  and  having  negative  effects  across  various  sectors.  It  is 
threatening  people’s  jobs,  their  incomes  and  companies’  business.  It  has  delivered  a 
major  economic  shock  that  is  already  having  serious  repercussions  in  the  European 
Union. On 13 March 2020, the Commission adopted a Communication5 calling for a 
coordinated economic response to the crisis, involving all actors at national and Union 
level. 

Several  Member States have declared a state of  emergency or introduced emergency 
measures.  Any  emergency  measures  should  be  strictly  proportionate,  necessary, 
limited in time, and in line with European and international standards. They should be 
subject to democratic oversight and independent judicial review. 

On  20  March  2020,  the  Commission  adopted  a  Communication  on  the  activation  of 
the general escape clause of the Stability and Growth Pact6. The clause, as set out in 
Articles 5(1), 6(3), 9(1) and 10(3) of Regulation  (EC) 1466/97 and Articles 3(5) and 
5(2) of Regulation (EC) 1467/97, facilitates the coordination of budgetary policies in 
times  of  severe  economic  downturn.  In  its  Communication,  the  Commission  shared 
with the Council its view that, given the expected severe economic downturn resulting 
from  the COVID-19 outbreak, the  current  conditions  permit  activation of the clause. 
On  23  March  2020,  the  Ministers  of  Finance  of  the  Member  States  agreed  with  the 
assessment of the Commission. The activation of the general escape clause allows for 
a temporary departure from the adjustment path  towards the medium-term budgetary 
objective,  provided  that  this  does  not  endanger  fiscal  sustainability  in  the  medium 
term. For the corrective arm, the Council may also decide, on a recommendation from 
the Commission,  to  adopt  a revised  fiscal  trajectory. The  general  escape  clause does 
not suspend the procedures of the Stability and Growth Pact. It allows Member States 
to depart from the budgetary requirements that would normally apply while enabling 
the  Commission  and  the  Council  to  undertake  the  necessary  policy  coordination 
measures within the framework of the Pact. 

(6) 

Continued  action  is  required  to  limit  and  control  the  spread  of  the  pandemic, 
strengthen  the  resilience  of  the  national  health  systems,  mitigate  the  socio-economic 
consequences through supportive measures for business and households and to ensure 
adequate  health  and  safety  conditions  at  the  workplace  with  a  view  to  resuming 
economic  activity.  The  Union  should  fully  use  the  various  tools  at  its  disposal  to 
support  Member  States’  efforts  in  those  areas.  In  parallel,  Member  States  and  the 

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OJ C 301, 5.9.2019, p. 117. 
COM(2020) 112 final. 
COM(2020) 123 final. 

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(8) 

(9) 

Union should work together to prepare the measures necessary to get back to a normal 
functioning of our societies and economies and to sustainable growth, integrating inter 
alia  the  green  transition  and  the  digital  transformation,  and  drawing  all  lessons  from 
the crisis. 

The  COVID-19  crisis  has  highlighted  the  flexibility  that  the  single  market  offers  to 
adapt  to  extraordinary  situations.  However,  in  order  to  ensure  a  swift  and  smooth 
transition to the recovery phase and the free movement of goods, services and workers, 
exceptional  measures that prevent  the single market  from  functioning  normally must 
be removed as soon as they are no longer indispensable. The current crisis has shown 
the need for crisis preparedness plans in the health sector, which include in particular 
improved  purchasing  strategies,  diversified  supply  chains  and  strategic  reserves  of 
essential  supplies.  They  are  key  elements  for  developing  broader  crisis  preparedness 
plans. 
The  Union  legislator  has  already  amended  the  relevant  legislative  frameworks7  to 
allow  Member  States  to  mobilise  all  unused  resources  from  the  European  Structural 
and  Investment  Funds  so  they  can  address  the  exceptional  effects  of  the  COVID-19 
pandemic. Those amendments will provide additional flexibility, as well as simplified 
and streamlined procedures. To alleviate cash flow pressures, Member States can also 
benefit  from  a  100%  co-financing  rate  from  the  Union  budget  in  the  2020-2021 
accounting  year. Greece  is  encouraged to  make full use of those possibilities  to  help 
the individuals and sectors most affected by the challenges. 

The  socio-economic  consequences  of  the  pandemic  are  likely  to  be  unevenly 
distributed across Greek regions due to different specialisation patterns, in particular in 
regions  markedly  relying  on  tourism  and  more  generally  on  face-to-face  business  to 
consumers.  This  entails  a  substantial  risk  of  widening  regional  and  territorial 
disparities  within  Greece,  aggravating  the  already  observed  trend  of  widening 
disparities  between  the  capital  city  and  notably  the  insular  and  mountainous  regions 
that  further  intensified  during  the  financial  crisis  years.  Combined  with  the  risk  of  a 
temporary unravelling of the convergence process between Member States, the current 
situation calls for targeted policy responses. 

(10)  On  30  April  2020,  Greece  submitted  its  2020  National  Reform  Programme  and  its 
2020  Stability  Programme.  In  order  to  take  account  of  their  interlinkages,  the  two 
programmes have been assessed at the same time. 

(11)  Greece is currently in the preventive arm of the Stability and Growth Pact and subject 

to the debt rule.  

(12) 

In  its  2020  Stability  Programme,  the  government  plans  the  headline  balance  to 
deteriorate  from  a  surplus  of  1,5%  of  GDP  in  2019  to  a  deficit  of  4,7%  of  GDP  in 
2020. The deficit is projected to decline to 0,2% of GDP in 2021. After decreasing to 

7 
 Regulation (EU) 2020/460 of the European Parliament and of the Council of 30 March 2020 amending 
Regulations  (EU)  No  1301/2013,  (EU)  No  1303/2013  and  (EU)  No  508/2014  as  regards  specific  measures  to 
mobilise  investments  in  the  healthcare  systems  of  Member  States  and  in  other  sectors  of  their  economies  in 
response to the COVID-19 outbreak (Coronavirus Response Investment Initiative) (OJ L 99, 31.3.2020, p. 5) and 
Regulation  (EU)  2020/558  of  the  European  Parliament  and  of  the  Council  of  23  April  2020  amending 
Regulations  (EU)  No  1301/2013  and  (EU)  No  1303/2013 as  regards  specific  measures  to  provide  exceptional 
flexibility for the use of the European Structural and Investments Funds in response to the COVID-19 outbreak 
(OJ L 130, 24.4.2020, p. 1). 

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176,6%  of  GDP  in  2019,  the  general  government  debt-to-GDP  ratio  is  expected  to 
increase  to  188,8%  in  2020  according  to  the  2020  Stability  Programme.  There  are 
country-specific  risks  underlying  the  budgetary  projections,  namely  the  pending 
litigation  and  public  service  obligations.  The  macroeconomic  and  fiscal  outlook  is 
affected by high uncertainty due to the COVID-19 pandemic.   

In response to the COVID-19 pandemic, and as part of a coordinated Union approach, 
Greece has adopted budgetary measures to increase the capacity of its health system, 
contain  the  pandemic,  and  provide  relief  to  those  individuals  and  sectors  that  have 
been  particularly  affected.  According  to  the  2020  Stability  Programme,  those 
budgetary measures amounted to 5,4% of GDP. Those measures include a temporary 
economic  support  to  wage  earners,  self-employed,  individual  businesses  and  certain 
liberal  professions  affected  by  the  pandemic,  payment  of  repayable  advances  to 
companies  with  decreased  turnover,  payment  of  social  security  contributions  for 
employees  whose labour contracts  have been suspended, deferral  of taxes and social 
security contributions including tax instalment schemes for at least three months for all 
companies, self-employed and wage earners affected by the Coronavirus pandemic, an 
interest subsidy on loans to small and medium-sized enterprises and higher health care 
expenditure.  In  addition,  Greece  has  announced  measures  that,  while  not  having  a 
direct  budgetary  impact,  will  contribute  to  support  liquidity  to  businesses.  Those 
measures  include  provision  of  a  cash  collateral  to  support  bank  lending,  distributed 
through  the  Hellenic  Development  Bank.  However,  the  Commission  2020  spring 
forecast  considers  all  tax  deferrals  also  as  liquidity  measures  without  a  negative 
budgetary impact in 2020. Overall, the measures taken by Greece are in line with the 
guidelines  set  out  in  the  Commission  Communication  on  a  coordinated  economic 
response  to  the  COVID-19  outbreak.  The  full  implementation  of  those  measures, 
followed  by  a  refocusing  of  fiscal  policies  towards  achieving  prudent  medium-term 
fiscal  positions  when  economic  conditions  allow,  will  contribute  to  preserving  fiscal 
sustainability in the medium term. 

(14)  Based  on  the  Commission  2020  spring  forecast  under  unchanged  policies,  Greece’s 
general government deficit is forecast at 6,4% of GDP in 2020 and 2,1% in 2021. The 
general  government  debt  ratio  is  projected  to  reach  196,4%  of  GDP  in  2020  and 
182,6% in 2021. 

(15)  On 20 May 2020, the Commission issued a report prepared in accordance with Article 
126(3) of the Treaty due to Greece’s non-compliance with the debt rule in 2019 and 
the planned breach of the 3% of GDP deficit threshold in 2020. Overall, the analysis 
suggests  that  the  debt  criterion  as  defined  in  the  Treaty  and  in  Regulation  (EC)  No 
1467/1997 is complied with, while the deficit criterion is not fulfilled. 

(16)  Regarding  the  COVID-19  pandemic,  Greece’s  timely  response  and  enforcement  of 
restrictions  seems  to  be  an  efficient  course  of  action,  judging  from  the  rather  low 
number of confirmed infections so far. However, the economic impact of the COVID-
19 crisis is expected to be severe, as compared with other Member States Greece relies 
heavily on its tourism and transport sectors. In the tourism sector, Greece could lose a 
large  portion  of  receipts  compared  to  2019.  Tourism  is  the  most  important  service 
export of the Greek economy and accounted for 45% of service exports. Furthermore, 
the shipping sector, which accounts for 40% of service exports, is also expected to be 
affected  by  a  drop  in  demand  as  global  trade  slows  down  due  to  the  pandemic. 
Because  of  confinement  measures,  lower  disposable  incomes,  and  increased 
unemployment, domestic demand is expected to contract significantly.  

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(17)  Faced with the COVID-19 outbreak, Greece activated its national pandemic plan and 
rapidly put in place a set of unprecedented measures, including a strict quarantine and 
social distancing especially for those suspected of having had any contact with people 
carrying the virus. The authorities adopted a broad range of measures to mitigate the 
economic and social impact worth up to 10,5% of GDP in 2020. The measures entail 
5%  GDP  of  fiscal  measures  with  a  budgetary  impact  of  3,7%  of  GDP  and  an 
additional  1,9%  GDP  of  temporary  tax  deferrals  and  cash  collateral  for  commercial 
banks, which could provide up to 3,6% of GDP of additional fresh loans.  The public 
health-care sector has received a one-off injection of EUR 273 million that will cover, 
for  example,  the  hiring  of  2,000  additional  healthcare  sector  staff,  the  purchase  of 
health-related equipment and supplies, and reinforced screening.  

(18)  To  effectively  deal  with  the  COVID-19  pandemic,  the  healthcare  system’s  capacity, 
accessibility  and resilience needs to  be improved. Direct  payments for private health 
services,  and  informal  payments  -  which  are  closely  linked  to  inefficient  hospital 
management - are still high. This leads to inequalities. Access is still an issue, and self-
reported  unmet  healthcare  needs  are  among  the  highest  in  the  EU,  with  large 
differences  by  income  groups  and  employment  status.  Co-payments  have  not  been 
sufficiently  means-tested  to  protect  vulnerable  groups.  This  is  exacerbated  by  the 
oversupply and hence the overconsumption of often excessively expensive drugs. To 
tackle  this,  Greece  is  implementing  an  ambitious  primary  care  reform  to  provide 
access  to  essential  quality  services  in  the  short  term,  and  a  comprehensive 
gatekeeping-based  system  for  the  whole  population  in  the  longer  term.  Early 
indications suggest that this is proving to be key to protect citizens and limit the spread 
of the virus, ensuring the full capacity of the system can be employed to treat patients 
according to their needs. A sustainable solution for health spending is yet to be found, 
as  fiscal  sustainability  is  mostly  ensured  by  a  clawback  system  increasingly  under 
pressure because of insufficient structural measures. Despite some encouraging actions 
taken  recently,  centralised  procurement  is  still  weak.  In  2018,  public  spending  on 
health  was  below  the  EU  average,  even  including  the  value  of  the  clawback,  adding 
about  1% of GDP.  Increased efficiency  along  with  additional financial  resources  are 
needed  to  improve  effectiveness,  accessibility  and  overall  resilience  of  the  health 
system. 

(19)  Measures  are  needed  to  mitigate  the  impact  of  the  COVID-19  crisis  on  workers  and 
businesses. According to the Commission forecast, unemployment is expected to rise 
to  19,9%  in  2020  and  recover  to  16,8%  in  2021.  Greece  has  already  introduced  a 
temporary  scheme  alleviating  the  cost  of  labour  for  businesses  whose  operation  has 
been  suspended  or  severely  affected,  while  protecting  employment  contracts  and 
providing  income  support  to  the  affected  workers.  However,  implementation  of  a 
comprehensive short-time work scheme would provide a more sustainable and flexible 
solution and authorities have taken steps in that direction. Such a scheme would allow 
businesses  to  apply  a  reduction  of  working  hours  in  a  modulated  manner, 
corresponding  to  the  degree  in  which  their  activities  have  been  restricted,  while 
preserving  operation  of  the  industries,  and  preventing  temporary  layoffs  from 
becoming structural. Expanding  flexible working  arrangements, such  as  teleworking, 
which  have  been  so  far  limited  in  Greece  compared  to  other  Member  States,  would 
also  help  preserve  economic  activity  and  jobs  during  confinement  and  social 
distancing. 

(20)  The COVID-19 crisis risks exacerbating once again the social situation of large parts 
of the population and increasing income inequality. Before the pandemic outbreak, the 

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share of the Greek population at risk of poverty or social exclusion was still one of the 
highest  in  the  EU,  with  children  and  working-age  people  at  greater  risk  than  older 
people.  In-work  poverty,  access  to  affordable  housing  and  energy  poverty  have  also 
been  significant  concerns.  To  mitigate  the  impact  of  the  crisis,  the  provision  of 
adequate income replacement to all affected workers and the self-employed, including 
those  facing  gaps  in  access  to  social  protection,  will  be  crucial.  It  will  also  be 
important  to  support  the  most  vulnerable  people,  including  those  inactive  and 
undeclared  workers,  by  strengthening  social  safety  nets.  With  more  people  likely  to 
fall back on the basic safety nets, it will be important to improve the adequacy of the 
minimum  income  support.  Comprehensive  access  to  social  services  is  necessary  for 
the most deprived and vulnerable groups, including people with disabilities, refugees 
and  asylum  seekers.  In  addition,  long-term  care  services  are  not  sufficiently 
developed.  Greece  should  also  further  promote  access  to  affordable  housing, 
especially for households at risk of poverty, for example by introducing a scheme to 
assist vulnerable homeowners with a mortgage. 

(21)  The COVID-19 crisis has halted the positive labour market developments observed in 
the  past  years,  and  unemployment  is  once  again  set  to  rise.  To  support  a  robust 
recovery of employment in the post-crisis period, Greece needs to complete reforms to 
increase  the  effectiveness  of  policies  to  get  people  into  work,  in  particular  training 
programmes.  Increasing  the  public  employment  service’s  capacity  to  provide 
continuous and individualised support to jobseekers will be key. Greece needs to pay 
particular attention to  young people and women, who are more affected by a lack of 
employment  opportunities.  There  is  also  scope  for  improving  social  dialogue,  by 
supporting  social  partners’  active  and  meaningful  involvement  in  policy-making, 
including in the design and implementation of measures to address the impacts of the 
COVID-19  crisis.  The  government  should  focus  its  efforts  on  improving  basic  skills 
for  all.  Addressing  poor  educational  outcomes,  upgrading  vocational  education  and 
training, and scaling up adult learning will be essential. To reduce skills  mismatches 
and speed up labour market recovery, it is vital to increase quality and labour market 
relevance of education and training.  

(22)  Providing  sustainable  liquidity  support,  including  working  capital,  to  affected 
businesses  –  particularly  small-  and  medium-sized  enterprises  (SMEs)  and  micro 
firms,  notably  through  loans  and  guarantees,  has  rightly  been  a  government  priority 
since  the  start  of  its  response  to  the  COVID-19  outbreak.  Under  the  State  aid 
temporary  framework,  Greece  has  introduced  three  schemes  to  increase  capital 
liquidity of businesses, namely: (i) scheme covering repayable advance payments; (ii) 
a cash collateral scheme to cover bank loans; and (iii) an interest subsidy scheme for 
current loans. It is important that in this process, the banking sector fulfils  - with the 
support  of  the  authorities  –its  intermediary  role  to  maintain  the  necessary  flow  of 
credit, on the basis of appropriate credit risk assessment and prudent credit standards, 
while  accurately  reporting  any  deterioration  in  asset  quality.  Supporting  the  banking 
sector’s  capacity to offer  sustainable debt  restructuring solutions  to  viable borrowers 
affected  by  the  crisis  will  be  crucial  to  safeguard  asset  quality  while  bolstering 
economic recovery. 

(23)  To  foster  the  economic  recovery,  it  will  be  important  to  front-load  mature  public 
investment  projects  and  promote  private  investment,  including  through  relevant 
reforms.  Increasing  growth-enhancing 
in  priority  sectors  will  be 
instrumental in underpinning longer-term growth and reducing regional disparities. In 
2019,  public  investment  fell  short  of  plans  by  more  than  1%  of  GDP,  following  a 

investment 

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similar  underperformance  in  previous  years.  The  authorities  started  to  address  the 
persistent  under-execution  through  establishing  a  “national  development  plan”  to 
strengthen  the  rules  governing  the  development,  management,  financing,  and 
implementation  of supported projects,  and an  action plan to  improve forecasting and 
monitoring of public investments. Given the important role that public investment will 
play in kick-starting the economic recovery after the COVID-19 crisis, it is crucial to 
address  any  remaining  administrative  obstacles  and  establish  a  pipeline  of  new 
projects. Setting up a dedicated project preparation facility could further improve and 
accelerate  public  investments.  A  more  efficient  implementation  of  public  investment 
would further stimulate growth due to the multiplier effect. Greece could also benefit 
from more efficient and sustainable public procurement as an integral part of its efforts 
to  improve  and  rationalize  public  spending,  as  well  as  guarantee  a  competitive 
business  environment.  This  would  require  addressing  identified  deficiencies,  such  as 
the persistent phenomenon of unjustified excessively low tenders, through appropriate 
legislative and administrative measures.  

(24)  Rekindling  Greece’s  economy  will  also  require  tackling  some  long-term  weaknesses 
and  tapping  into  potential  future  opportunities.  Sectors  with  significant  investment 
needs  include  transport  and  logistics,  where  support  is  notably  needed  for  rail,  road 
safety  and  upgrading  intermodal  hubs,  as  well  as  solid  waste  and  urban  wastewater 
management  where  environmentally  sustainable  investments  are  needed.  Greece’s 
transformation  to  a  climate  neutral  economy  will  also  require  sizeable  private  and 
public  investment  over  a  sustained  period.  Planned  investments,  for  instance  small 
scale  projects  in  the  area  of  energy  efficiency,  building  renovations  and  renewable 
energy projects, could be front-loaded and contribute to the post-COVID-19 economic 
recovery.  Preparatory  work  for  medium-term  recovery  measures  can  benefit  from 
investments  planned  under  Member  States’  National  Energy  and  Climate  Plans, 
projects  of  common  interest  lists,  and  infrastructure  development  plans.  Related 
investments  could  include  cross-border  connections  for  importing  and  exporting 
power between neighbouring Member States to ensure the sustainable supply of power 
to  people  and  business  in  Greece,  and  measures  to  ensure  the  just  transition  of  the 
regions  most  affected  by  Greece’s  ambitious  plan  to  move  away  from  lignite-based 
power generation. The programming of the Just Transition Fund for the period 2021-
2027 could help Greece to address some of the challenges posed by the transition to a 
climate  neutral  economy,  in  particular  in  the  territories  covered  by  Annex  D  to  the 
country report8. This would allow Greece to make the best use of that fund.  

(25)  Despite  some  progress  made  in  the  previous  years,  Greece  needs  to  accelerate  its 
efforts to improve its digital performance, including through the deployment of digital 
tools  and  services  in  the  public  administration,  the  justice  system  and  businesses. 
Maintaining  the  momentum  and  locking  in  the  gains  achieved  by  the  launch  of  a 
number of digital  services since the COVID-19  outbreak will be  especially pertinent 
for  the  public  administration  and  the  recovery  phase.  A  strategic  approach  to 
accelerating  the  use  of  digital  technologies  across  all  economic  sectors,  including  in 
the  public  administration,  and  the  interoperability  of  various  information  systems, 
particularly  the  market  surveillance  database  would  help  bridge  the  productivity  gap 
with euro area countries and ease up on administrative burden. Improving availability 
of  very  high  capacity  networks  and  uptake  of  very  high-speed  internet  is  also  a 
priority. As concerns digital skills, Greece remains below the EU average, as in 2019 
only 51% of people aged 16-74 appeared to have at least basic digital skills, compared 

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to  an EU  average of 58%. Digital  upskilling will  allow everyone in  Greece to enjoy 
equal access to e-services, help businesses make effective use of teleworking, and e-
tools, and enable all learners be they at school, university or in adult learning to fully 
participate  in  distance  learning.  People  from  disadvantaged  backgrounds,  including 
refugees and asylum seekers, and those living in remote and rural areas should receive 
particular attention. 

to  address 

to  continue  adopting  measures 

(26)  Following its  successful  completion of the financial assistance programme under the 
European Stability Mechanism in 2018, Greece is subject to enhanced surveillance in 
accordance  with  Regulation  (EU)  No  472/2013.The  activation  of  enhanced 
surveillance  for  Greece9  acknowledges  the  fact  that  over  the  medium  term,  Greece 
needs 
the  potential  sources  of 
macroeconomic imbalances, while implementing structural  reforms  to  support robust 
and sustainable economic growth. Greece made a commitment in the Eurogroup of 22 
June  2018  to  continue  all  key  reforms  adopted  under  the  programme  until  they  are 
fully completed. Greece also committed to implementing specific measures related to 
fiscal  and  fiscal-structural  policies,  social  welfare,  financial  stability,  labour  and 
product markets, privatisation, functioning of the justice system, public administration 
and  anti-corruption.  These  structural  reforms  are  increasingly  important  to  Greece’s 
efforts to restart its economy. The successful implementation and completion of these 
reforms  should significantly help  support Greece’s growth  in  the  medium- and long-
term.  Greece  is  subject  to  quarterly  reporting  on  its  progress  in  implementing  its 
commitments  under  enhanced  surveillance,  where  a  favourable  report  can,  on  semi-
annual basis, pave the way for the release of debt relief measures worth 0,7% of GDP 
per  year. The release of  the first  two instalments  of policy-contingent  debt  measures 
worth EUR 970 million and EUR 767 million was agreed by the Eurogroup in April 
2019  and  December  2019,  respectively.  The  sixth  enhanced  surveillance  report 
assessing  Greece’s  progress  in  implementing  its  commitments  was  published  on  20 
May 2020. 

to  address  medium- 

(27)  While the present recommendations focus on tackling the socio-economic impacts of 
the  pandemic  and  facilitating  the  economic  recovery,  the  2019  country-specific 
recommendations adopted by the Council on 9 July 2019 also covered reforms that are 
essential 
structural  challenges.  Those 
recommendations remain pertinent and will continue to be monitored throughout next 
year’s  European  Semester  annual  cycle.  That  also  applies  to  recommendations 
regarding investment-related economic policies. The latter recommendations should be 
taken  into  account  for  the  strategic  programming  of  cohesion  policy  funding  post-
2020, including for mitigating measures and exit strategies with regard to the current 
crisis. 

long-term 

to 

(28) 

In  particular,  it  is  crucial  in  the  current  situation  to  maintain  the  focus  on  bank 
restructuring to preserve financial stability and free up capacity in the banking sector 
to  enable  financing  the  economic  recovery.  The  banking  sector  has  become  more 
resilient,  resulting  in  the  abolition  of  capital  controls  in  September  2019,  but  legacy 
risks and challenges remain high. These include a still large stock of non-performing 
loans, a capital position in line with capital requirements but faced with an increasing 
capital demand in the short term, as well as a low profitability dependent on lending 
growth.  As  a  result,  Greek  banks  are  particularly  exposed  to  the  risk  of  increases  in 

9 
Commission  Implementing  Decision  (EU)  2018/1192  of  11  July  2018  on  the  activation  of  enhanced 
surveillance for Greece, OJ L 211, 22.8.2018, p. 1, and Commission Implementing Decision (EU) 2019/338 of 
20 February 2019 on the prolongation of enhanced surveillance for Greece, OJ L 60, 28.2.2019, p. 17. 

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funding  costs  and  renewed  deterioration  of  asset  quality  due  to  the  COVID-19 
pandemic.  Fostering  the  continuous  functioning  of  the  secondary  market  for  non-
performing loans, in parallel with new lending and viable long term loan restructurings 
in  accordance with  prudent  credit standards, can play a key  role in  meeting the dual 
goal of mitigating the impact of the outbreak on asset quality while tackling the legacy 
of non-performing loans. The implementation of a reform of the legal framework that 
allows  unconstrained  collateral  enforcement  from  defaulted  borrowers,  can  be  an 
essential step in that direction. 

(29)  The  European  Semester  provides  the  framework  for  continuous  economic  and 
employment  policy  coordination  in  the  Union,  which  can  contribute  to  a  sustainable 
economy.  Member  States  have  taken  stock  of  progress  regarding United  Nations’ 
Sustainable  Development  Goals  (SDGs)  implementation  in  their  2020  National 
Reform  Programmes.  By  ensuring  the  full  implementation  of  the  recommendations 
below, Greece  will  contribute  to  the  progress  towards  the SDGs and  to  the  common 
effort of ensuring competitive sustainability in the Union.  

(30)  Close coordination between economies in the economic and monetary union is key to 
achieve a swift recovery from the economic impact of the COVID-19. Greece should, 
as  a  Member  State  whose  currency  is  the  euro  –  and  taking  into  account  political 
guidance by the Eurogroup – ensure its policies remain consistent with the euro area 
recommendations and coordinated with those of the other euro area Member States. 

(31) 

(32) 

(33) 

In  the  context  of  the  2020  European  Semester,  the  Commission  has  carried  out  a 
comprehensive  analysis  of  Greece’s  economic  policy  and  published  it  in  the  2020 
country  report.  It  has  also  assessed  the  2020  Stability  Programme  and  the  2020 
National  Reform  Programme  and  the  follow-up  given  to  the  recommendations 
addressed  to  Greece  in  previous  years.  It  has  taken  into  account  not  only  their 
relevance  for  sustainable  fiscal  and  socioeconomic  policy  in  Greece,  but  also  their 
compliance with Union rules and guidance, given the need to strengthen the Union’s 
overall  economic  governance  by  providing  Union-level  input  into  future  national 
decisions.  

In  the  light  of  that  assessment,  the  Council  has  examined  the  2020  Stability 
Programme and its opinion10 is reflected in particular in recommendation (1) below.  

In the light of the Commission’s in-depth review and this assessment, the Council has 
examined  the  2020  National  Reform  Programme  and  the  2020  Stability  Programme. 
The present  recommendations  take into account the need to  tackle the pandemic and 
facilitate  the  economic  recovery  as  a  first  necessary  step  to  permit  an  adjustment  of 
imbalances.  Recommendations  directly  addressing  the  macroeconomic  imbalances 
identified by the Commission  under  Article 6 of  Regulation  (EU) No 1176/2011  are 
reflected in recommendations (1), (2), (3) and (4),   

HEREBY RECOMMENDS that Greece take action in 2020 and 2021 to: 

1. 

In  line  with  the  general  escape  clause,  take  all  necessary  measures  to  effectively 
address the pandemic, sustain the economy and support the ensuing recovery. When 
economic  conditions  allow,  pursue  fiscal  policies  aimed  at  achieving  prudent 
medium-term  fiscal  positions  and  ensuring  debt  sustainability,  while  enhancing 

10 

Under Article 5(2) of Council Regulation (EC) No 1466/97. 

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2. 

3. 

4. 

investment.  Strengthen  the  resilience  of  the  health  system  and  ensure  adequate  and 
equal access to healthcare.  

Mitigate the employment and social impacts of the crisis, including by implementing 
measures such as short-time work schemes and ensuring effective activation support.  

Swiftly deploy measures to provide liquidity and continued flow of credit and other 
financing  to  the  economy,  focusing  in  particular  on  small  and  medium-sized 
enterprises most affected by crisis. Front-load mature public investment projects and 
promote private investment to foster the economic recovery. Focus investment on the 
green  and  digital  transition,  in  particular  on  safe  and  sustainable  transport  and 
logistics,  clean  and  efficient  production  and  use  of  energy,  environmental 
infrastructure  and  very-high  capacity  digital  infrastructure  and  skills.  Improve  the 
effectiveness  and  digitalisation  of  the  public  administration  and  promote  digital 
transformation of businesses. 

Continue and complete reforms in line with the post-programme commitments given 
at  the  Eurogroup  of  22  June  2018  to  restart  a  sustainable  economic  recovery, 
following  the  gradual  easing  up  of  constraints  imposed  due  to  the  COVID-19 
outbreak. 

Done at Brussels, 

For the Council 
The President 

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