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  COM(2020) 529 final  COMMUNICATION FROM THE COMMISSION Enhanced Surveillance update - Greece, May 2020 {SWD(2020) 91 final}  
 
 
BACKGROUND 

Economic  developments  and  policies  in  Greece  are  monitored  under  the  European 
Semester  for  economic  policy  co-ordination  and  under  the  enhanced  surveillance 
framework  according  to  Regulation  (EU)  No 472/2013 (1).  The  implementation  of 
enhanced  surveillance  for  Greece (2)  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.  

Enhanced  surveillance  provides  a  comprehensive  framework  for  monitoring  economic 
developments  and  the  pursuit  of  policies  needed  to  ensure  a  sustainable  economic 
recovery. It allows for a regular assessment of recent economic and financial developments in 
Greece,  as  well  as  for  monitoring  sovereign  financing  conditions  and  updates  of  the  debt 
sustainability analysis. Enhanced surveillance also provides the framework for assessing the 
general  commitment  given  by  Greece  to  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 
the 
programmes  are  safeguarded.  In 
implementation of 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 product markets, 
(v)  Hellenic  Corporation  of  Assets  and  Participations  and  privatisation,  and  (vi)  the 
modernisation of public administration (3). Ten due specific commitments are assessed in this 
report alongside follow-up actions to previous commitments.  

that  context,  enhanced  surveillance  monitors 

This  is  the  sixth  enhanced  surveillance  report  for  Greece.  It  is  issued  alongside  the 
country-specific  recommendations  for  Greece  under  the  European  Semester  and  the 
assessment  of  Greece’s  2020  Stability  Programme.  The  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.  

This report could serve as a basis for the Eurogroup to decide on the release of the next 
set  of  policy-contingent  debt  measures  worth  EUR 748 million.  These  measures  were 
agreed  with  the  Eurogroup  on  22  June  2018  and  include  the  transfer  of  income  equivalent 

(1)  Regulation  (EU)  No 472/2013  of  the  European  Parliament  and  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 L140, 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)  ECB staff participated in the review mission 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.  The  review  mission  was  preceded  by  a  technical  mission,  also  held 
remotely, from 26 March to 7 April 2020. 

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amounts  stemming  from  central  banks’  holdings  of  Greek  government  bonds  under  the 
Securities Markets Programme and the Agreement on Net Financial Assets and a waiver for 
the  step-up  interest  margin  for  certain  loans  provided  by  the  European  Financial  Stability 
Facility.  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). 

OVERALL ASSESSMENT 

The  outbreak  of  the  Coronavirus  has  fundamentally  altered  the  social  and  economic 
reality in Greece, as in most other Member States. The Greek government reacted quickly 
and started implementing measures aimed at containing the spread of the Coronavirus already 
at  the  end  of  February.  Similar  to  other  Member  States,  the  containment  measures  have 
severely  restricted  economic  activity  and  affected,  directly  or  indirectly,  a  large  part  of  the 
labour force.  

The authorities have adjusted their policy priorities in a responsible way, mobilising a 
large  amount  of  income  support  and  liquidity  measures  promptly  while  remaining 
committed to sustain reforms that will support the recovery once the pandemic-related 
disruptions  subside.  As  an  immediate  response,  a  broad  range  of  fiscal  measures  were 
adopted to support households’ income and businesses faced with a fallout in demand, and to 
inject liquidity to the economy, including through tax deferrals and guarantees for commercial 
banks to support the provision of new loans. The government has also substantially increased 
funding to the healthcare system and is modernising labour legislation to facilitate short-time 
work schemes.  

Greece will  also  benefit from support provided at EU level.  The European Central  Bank 
announced a EUR 750 billion Pandemic Emergency Purchase Programme, which will include 
Greek  sovereign  bonds,  and  decided  to  temporarily  ease  the  Eurosystem’s  collateral 
requirements as well as to relax certain regulatory requirements for the banking sector, with 
the  aim  to  support  availability  of  credit.  Greece  is  also  benefitting  from  the  Commission’s 
initiative to make the best use of the European Structural and Investment Funds to respond to 
the  pandemic  (the  Coronavirus  Response  Investment  Initiative),  the  planned  temporary 
Support to mitigate Unemployment Risks in an Emergency (SURE), and the support from the 
European  Investment  Bank  to  mitigate  the  impact  on  investment.  Support  to  migration 
management  will  be  available  through  the  Action  Plan  for  immediate  measures  to  support 
Greece and via the EU Civil Protection Mechanism. 

To bolster the reform momentum and help restart a sustainable economic recovery after 
the  Coronavirus  outbreak,  the  Greek  authorities  have  undertaken  a  number  of 
complementary  commitments  in  several  policy  areas.  These  initiatives  complement  the 
authorities’ existing efforts to address remaining structural weaknesses and will be conducive 
to  the  better  functioning  of  the  public  administration  and  to  improving  the  business 
environment.  The  complementary  commitments  include  actions  in  the  following  areas:  (i) 
improving the regulatory framework for doing business; (ii) improving and modernizing the 
framework for individual labour law; (iii) improving the functioning of the justice system; (iv) 
enhancing  the  capacity  of  the  Supreme  Council  for  Civil  Personnel  Selection  and 
strengthening  control  over  hiring  of  temporary  staff;  (v)  adopting  and  implementing  the 

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

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National  Transport  Master  Plan,  as  well  as  revising  the  legal  framework  for  approving  the 
sustainable  urban  mobility  plans  and  proceeding  with  the  elaboration  of  sustainable  urban 
mobility plans for the main urban centres; (vi) preparing a holistic strategy for the protection, 
management  and  investment-oriented  exploitation  of  Greek  public  real  estate;  (vii)  fully 
developing a Strategic Project Pipeline of large infrastructure projects; (viii) developing and 
fully  operationalising  an  improved  support  and  delivery  mechanism  –  a  Project  Preparation 
Facility  -  for  project  preparation  and  implementation  of  public  sector  infrastructure  projects 
and  Public  Private  Partnerships;  (ix)  adopting  a  new  public  procurement  strategy  for  2021– 
2025; (x) introducing and extending the scope of e-health projects; (xi) developing a national 
strategic  policy  framework  for  healthcare;  (xii)  improving  health  care  planning  through  the 
mapping  of  health  and  long-term  care  needs  with  available  resources;  (xiii)  improving  the 
education system through reforms  in  higher and  vocational  education, and the setting up  an 
evaluation  system;  (xiv)  implementing  digital  projects  to  promote  e-governance;  and  (xv) 
implementing projects to digitise geospatial data. 

This  report  concludes  that,  considering  the  extraordinary  circumstances  posed  by  the 
Coronavirus outbreak, Greece has taken the necessary actions to achieve its due specific 
reform commitments. The pandemic has led to unprecedented economic disruption and has 
warranted  an  emergency  policy  response  by  the  national  authorities,  supported  by  EU-wide 
initiatives.  In  addition  to  directing  resources  to  the  implementation  of  immediate  priorities, 
the containment measures necessary to tackle the Coronavirus outbreak had the side effect of 
severely  affecting  reform  implementation  capacity,  especially  in  areas  relying  on  labour-
intensive processes but  also  those dependent  on the functioning of inter-ministerial  working 
groups or legislative or judiciary actions. The close engagement of the Greek authorities with 
the institutions is welcome and the necessity to prioritise policies focusing on the immediate 
needs to tackle the health and economic impacts of the Coronavirus outbreak fully recognised. 
It is also welcome that the Greek authorities continue their efforts to pursue ongoing reforms 
where  possible  and  decided  to  proceed  with  a  set  of  complementary  policy  commitments. 
Looking ahead, mobilising resources to step up efforts in areas affected by previous delays, 
including  financial  sector  reforms,  will  be  important  to  underpin  confidence  and  support  a 
sustainable  recovery.  The  Greek  authorities  are  simultaneously  progressing  with  their  mid-
2020 commitments, which, together with follow-up actions on previous commitments, will be 
assessed in the second half of the year.  

MACROECONOMIC DEVELOPMENTS 

The  economic  impact  of  containment  measures  affects  Greece  through  multiple 
channels.  Similar  to  other  Member  States,  the  closure  of  all  non-essential  businesses  and 
labour supply problems due to containment measures requiring staff to stay at home weigh on 
the supply of goods and services. As the same time, demand has been negatively affected by 
the  corresponding  fallout  in  incomes,  which  are  only  partly  cushioned  by  the  authorities’ 
emergency  measures,  as  well  as  by  the  limited  consumption  possibilities.  Moreover,  the 
increased uncertainty as well as lower liquidity and provision of credit is likely to take a toll 
on investment. 

Tourism and shipping services – two very important sectors for Greece’s economy – are 
expected to be hit particularly hard. Tourism will inevitably suffer from travel restrictions 
in Greece and from abroad and the fallout in bookings that would otherwise would have been 
made in spring for the summer season will make the effect of the pandemic more persistent 
than in other sectors. The flourishing professional tourism sector is also likely to be severely 
affected,  as  it  relies  on  conferences  attended  by  a  large  number  of  participants.  Shipping, 

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another  important  export  industry,  will  suffer  from  the  decline  in  global  trade  expected  in 
2020. 

Unemployment is expected to increase in 2020 and the economic crisis may also reverse 
the recent improvements in poverty rates. While measures supporting short-time work and 
unpaid  leave  for  the  duration  of  the  containment  measures  will  help  cushion  the  shock,  the 
unemployment rate according to the Commission 2020 spring forecast is projected at around 
20%, up from 17.3% in 2019, erasing the gains from the previous three years. The particularly 
large  share  of  self-employed  and  of  micro  enterprises  in  Greece  and  the  high  number  of 
seasonal  workers,  leave  households  exposed  to  a  protracted  period  of  low  incomes,  which 
could lead to a marked increase in the share of people at risk of poverty or social exclusion in 
2020 and beyond. At 31% in 2019, this share was already well above the euro area average of 
21% but had been on a declining trend. 

Extremely  low oil prices and the downward pressure on wages will weigh on inflation. 
Downward pressure is expected to come from the fallout in incomes especially in the service 
sector. At the same time, the drop in  oil prices  will partly  counterbalance the  effect  on  real 
incomes. 

Overall, based on the Commission 2020 spring forecast, Greece’s real GDP is projected 
to  fall  by  about  10%  in  2020  and  to  recover  fairly  strongly  in  2021.  The  forecast  is 
subject to a high degree of uncertainty. The projection is conditional on a gradual lifting of 
the  containment  measures  starting  mid-May,  which  would  limit  the  decline  in  economic 
activity to the second quarter in most industries and to the third quarter in the tourism-related 
sectors. Longer travel restrictions, reaching into the second half of the year, would represent a 
downside risk in view of its impact on the tourism sector. The policy measures are expected to 
cushion  the  depth  of  the  recession  and  buttress  a  marked  rebound  in  GDP  in  2021.  The 
projection  is  subject  to  a  large  degree  of  uncertainty  as  to  the  duration  of  containment 
measures, the progress of the pandemic as well as the effect of the shock on potential output, 
household savings and banks’ asset quality. 

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  global  financial  crisis  a  decade  ago.  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  EUR  34  billion,  which  is  an  important  asset  in  view  of  the 
fallout of revenues and extraordinary spending to tackle the crisis.  

Greece  reached  its  primary  surplus  target  of  3.5%  in  2019,  meeting  the  target  for  the 
fifth  year  in  a  row.  The  headline  balance  reached  1.5%  of  GDP,  well  above  the  euro  area 
average of -0.8% GDP.  

To  protect  the  economy  and  in  line  with  the  co-ordinated  response  agreed  by  the 
Eurogroup, the authorities adopted  a large set of fiscal measures. The package of fiscal 
measures  includes  a  special  unemployment  scheme  for  wage  earners,  self-employed  and 
individual businesses affected by the crisis, the payment of repayable advances to companies 
with  a  significant  reduction  in  turnover  due  to  the  crisis,  the  payment  of  social  security 

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contributions of employees whose labour contracts have been suspended, an interest subsidy 
on  loans  for  small  and  medium-sized  enterprises  and  higher  health  care  expenditure.  Other 
fiscal  measures include  a suspension  of settlement  of debts  on social  security contributions, 
discounts for a timely payment of tax obligations and social security contributions, temporary 
economic  support  to  certain  liberal  professions  and  the  primary  sector,  and  a  number  of 
smaller measures.  

Apart from the Coronavirus pandemic unfolding since March, Greece is also grappling 
with  renewed  migration  pressures.  Greece  has  recorded  a  46%  increase  in  migrants’ 
arrivals  in  2019  and  the  inflows  have  further  strengthened  in  the  first  quarter  of  2020.  To 
support and acknowledge Greece’s efforts to manage the migration crisis, the EU pledged to 
provide  Greece  EUR 700 million  emergency  support.  The  migration-related  expenses  that 
were  not  financed  through  EU-funds  and  therefore  excluded  from  the  primary  balance 
monitored  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 include wages of 
police officers assigned to the management of the migration crisis.  

The  updated  forecast  of  the  European  institutions  (6)  expects  the  primary  balance  to 
turn  to  a  deficit  in  2020,  before  returning  to  a  surplus  in  2021,  but  the  uncertainty  is 
extraordinarily  high.  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 
final cost of the measures adopted to tackle the crisis as well as their phasing out, and the full 
effects  of  automatic  stabilisers  on  public  finances  are  also  subject  to  uncertainty.  As  the 
measures  will  be  phased  out  and  the  economy  will  start  recovering,  the  primary  balance  is 
expected to turn back into a surplus in 2021. In view of the extraordinarily high uncertainty, 
the present assessment will be updated in autumn.  

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 or 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. 

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  cases  referred  to  in  the  5th  enhanced  surveillance  report  against  the  Public  Real  Estate 
Company,  where  the  question  of  the  validity  of  recent  arbitral  awards  is  pending  before  a 

(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 

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Court  of  Appeal.  Further  fiscal  risks  concern  the  restructuring  cost  of  the  Hellenic  Post 
including a possible payment of the remaining public service obligation for 2013-2020. 

PUBLIC INVESTMENT 

Unlocking  the  full  potential  of  public  investment  remains  a  priority  and  also  a  key 
requirement for a speedy recovery after the Coronavirus outbreak. General government 
investment in 2019 fell short of the initial plans by 1.2% of GDP, similarly to previous years. 
As the underspending was matched by lower drawing of EU funds in 2019, its net impact on 
the primary balance was broadly neutral. However, the recurrent undershooting of investment 
expenditure raises concerns in view of the country’s large investment needs, making it vital to 
make  the  best  use  of  EU  funds  and,  ultimately,  deliver  the  needed  stimulus  for  restarting 
growth. 

The Greek authorities have decided to take a number of important steps for addressing 
the  underlying  weaknesses.  They  have  established  a  road  map  towards  a  swift 
implementation  of  the  National  Development  Programme  adopted  in  2019.  In  addition,  the 
authorities  have  agreed  to  establish  a  project  preparation  facility  and  develop  a  pipeline  of 
new projects. These measures are expected to speed up the preparation and implementation of 
projects. The pipeline of strategic projects is planned to be fully developed by January 2021 
and the project preparation facility made operational in March 2021. The authorities are also 
encouraged to improve the predictability and coordination of archaeological and expropriation 
procedures based on a review of earlier reforms.  

The implementation of the November 2019 action  plan to enhance the  monitoring and 
forecasting of the Public Investment Budget is on track. The investment budget is prepared 
and  executed  independently  from  the  non-investment  part  (‘ordinary’)  state  budget,  which 
requires high standards of transparency and information flows. Greece has adopted a detailed 
action plan to remedy weaknesses in this respect in November 2019, with an implementation 
timeline  until  2021.  The  implementation  of  the  action  plan  is  overall  on  track  and  the 
authorities expect the possible delays due to the Coronavirus outbreak to be minor.  

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.  The  Greek  authorities  indicated  their 
intention  to  use  the  next  available  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 further followed up 
in  autumn  2020,  in  the  context  of  progress  made  on  improving  planning  and  execution  of 
public investments referenced above. 

TAXATION AND PUBLIC REVENUE ADMINISTRATION 

In the face of the quickly developing Coronavirus pandemic, 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. This will postpone the 
implementation of the wider property tax reform to 2021 and have a small deficit-increasing 
fiscal  effect  of  approximately  EUR 150 million  on  2020  revenues.  The  authorities  have 
committed  to  reschedule  the  exercise  to  autumn  with  the  objective  of  aligning  property  tax 
values to market prices by January 2021. 

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The Independent Authority for Public Revenue has been at the centre of the authorities’ 
efforts  implemented  to  date  to  combat  the  economic  impact  of  the  Coronavirus 
pandemic. The Independent Authority has administered the deferrals of taxes and instalments 
on tax debts, hosted a platform for the implementation of the refundable advances and issued 
electronic  residency  certificates  to  facilitate  the  movement  of  persons  residing  on  islands 
following the imposition of the containment measures. 

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  for  the  previous  year,  while  the  proportion  of  fresh  audit  cases  has 
increased. 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. 

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  the  timeline  for  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  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  authorities  are  taking  steps  to  strengthen  the  operational  capacity  of  the 
Operational  Coordination  Centre  that  coordinates  anti-smuggling  efforts,  and  made 
progress  on  a  number  of  projects  improving  tax  collection  and  compliance.  The  draft 
provisions  aiming  to  enhance  the  Centre’s  capacity  and  governance  are  expected  to  be 
adopted  by  end  of  May  2020.  The  authorities  are  planning  to  revise  the  customs  law  to, 
among  others,  advance  the  use  of  intelligence  methods  in  anti-smuggling  operations.  The 
electronic invoicing system is expected to be launched as planned in July 2020 and the Model 
Collection  Office,  which  has  received  technical  support  provided  through  the  European 
Commission,  approaches  completion  but  the  needed  personnel  is  yet  to  be  identified  and 
transferred. 

The  Joint  Centre  for  the  Collection  of  Social  Security  Debt  continued  to  meet  its  debt 
collection  targets  in  the  first  quarter  of  2020.  Moreover,  legislation  outlining  the 
classification of uncollectable debt, which has been pending for some time, has been adopted 
and is consistent with the classification of uncollectable tax debt.  

PUBLIC FINANCE MANAGEMENT 

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  EUR 1.3 billion,  EUR 69 million  above 
the  December  2019  level  and  EUR 340  million  above  the  clearance  target. The  authorities 

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were  not  in  a  position  to  deliver  complete  aggregate  data  for  the  period  after  January  and 
reported that the stock of arrears in some subsectors may see a temporary rise as a result of 
disruptions to the associated labour-intensive processes. Nevertheless, 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.  The  authorities 
reported improvements in the centralised procurement in the healthcare sector, implemented a 
majority of the Hellenic Court of Auditors’ recommendations and are strengthening internal 
controls.  

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).  The  Public  Debt  Management  Agency,  the  Ministry  of  Finance  and 
the Bank of Greece are therefore able to monitor almost in real time a great part of the cash 
balances and flows of the general government. The pilot project on cash forecasting covering 
the majority of state’s cash reserves will be implemented according to the March 2020 draft 
strategy. The pilot project will be gradually fine-tuned and extended to entities with budgeted 
expenses above EUR 50 million in January 2021, which is considered a satisfactory threshold 
given the pilot itself already covers entities holding 70% of the total state cash reserves.  

The implementation of the Chart of Account reform is broadly on track (mid-2021 and 
mid-2022  commitments),  but  its  implementation  in  the  Public  Investment  Budget 
remains a  challenge. The Coronavirus pandemic caused delays in  the procurement  process 
for the new  IT system supporting the reform  but the overall timeline of the project  remains 
unchanged. The authorities are designing a functional classification for the Chart of Account 
to  ensure  consistency  with  the  performance  budgeting  framework.  Progress  is  also  being 
made in the implementation of Chart of Account classifications in the budget execution of the 
Public  Investment  Budget,  whilst  a  less  detailed  classification  currently  remains  for  the 
budget preparation. The authorities will look to make further improvements through technical 
support by the European Commission.  

The authorities committed to adopt a new public procurement strategy for 2021-2025 by 
the end of 2020 contributing to a more sustainable and efficient use of public resources 
(a  complementary  commitment).  A  well-functioning  public  procurement  system  is  a  key 
element in the investments process that will be crucial for the recovery after the Coronavirus 
outbreak. Addressing the weaknesses in the procurement process could help rationalise public 
spending,  boost  growth  and  guarantee  a  competitive  business  environment.  The  authorities 
agreed to review the legal framework and implementation in consistency with the relevant EU 
legislation.  

SOVEREIGN FINANCING 

Greece’s  debt  servicing  needs  are  low  in  the  coming  years.  Since  the  onset  of  the 
pandemic, Greece has successfully issued both treasury bills and long-term bonds, indicating 
sustained access to market financing. Greece’s debt servicing costs in 2020 and 2021 are low 
and mostly reflect the refinancing of short-term bonds. Following a long period of a decline, 
spreads  over  the  German  government  bonds  have  started  to  increase  as  the  crisis  unfolded, 
reaching  a  high  of  around  400  basis  points  on  a  10-year  maturity  mid-March,  with  high 
volatility. Following the announcement of the Pandemic Emergency Purchase Program of the 

8 

 
 
European  Central  Bank  and  the  inclusion  of  the  Greek  government  bonds  in  this  program, 
volatility  subsided,  and  the  spread  declined  by  around  200  basis  points.  However,  spreads 
have slowly increased further, reaching levels that were 130 basis points higher at the end of 
April than the February lows. 

The considerable cash reserves provide cushion to absorb liquidity shocks but a further 
intensification of the crisis may lead to non-trivial increases in financing needs. The cash 
reserves of the general government reached around EUR 34 billion at the end of March 2020, 
of  which  around  EUR  26  billion  belong  to  the  state  and  the  rest  to  general  government 
entities.  Given  the  limited  debt  financing  needs,  the  cash  reserves  are  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. The main risk 
would  be  a  continued  economic  standstill  lasting  well  beyond  May,  which  may  require 
additional use of the cash buffer in the early summer months.  

SOCIAL WELFARE 

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 
non-essential shops and putting limits on non-essential movement early on, Greece prioritised 
public health and patients’ safety. 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. 

Structural reforms already implemented and additional funding of EUR 200 million are 
supporting the health system response to Coronavirus but more financial resources may 
be needed in the short term. Previously adopted measures designed to deliver an effective, 
accessible, efficient and resilient healthcare system, such as introducing universal healthcare 
coverage,  a  comprehensive  primary  care  network  and  centralised  procurement,  are  proving 
key in the response to the pandemic, as they ensure unhindered access to health care services 
and appropriate supply and stocks of resources.  

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.  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 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,  a  mid-2020  specific  commitment,  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 

9 

 
 
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.  

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

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, an end-2019 commitment, and 
have  set  up  initial plans  to  run further  pilots  for  the  expansion  of  the  new  model.  The 
evaluation  of  the  pilot  by  the  World  Bank,  in  the  context  of  technical  support  provided 
through  the  European  Commission,  identified  avenues  for  improvement,  e.g.  in  terms  of 
human  resources  capacity,  take-up,  administrative  complexity  and  data  collection.  Taking 
these  lessons  on  board,  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. 

Regarding the review of the system of subsidies for local public transport, the evaluation 
study (an end-2019 specific commitment) has been delayed by the Coronavirus outbreak, but 
reform legislation is expected to be completed in any case by end September 2020.  

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 and has remained resilient. Asset quality is, 
even  without  the  impact  of  the  Coronavirus  pandemic,  still  a  major  challenge,  despite  the 
improvements  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.  

10 

 
 
The  pace  of  reduction  of  non-performing  loans  accelerated  in  2019  but  their  share 
remains high. Their stock reached EUR 68.5 billion (40.6% of customer loans) at end-2019, 
down by EUR 13.3 billion relative to one year before and EUR 38.7 billion below the March 
2016 peak. Given the expected adverse impact of the Coronavirus outbreak on the secondary 
market for non-performing loans, there is even more pressure on their successful restructuring 
through banks’ internal  procedures in  order to  maintain an improving trend in  asset quality. 
The crisis is affecting banks’ non-performing loans reduction strategies, which will need to be 
revised. Implementation of the Hercules scheme is temporarily being postponed, though one 
securitisation transaction is in the process of being finalised. Planned sales of non-performing 
loans  are  also  on  hold,  while  debt  enforcement  measures  have  temporarily  been  suspended, 
inter alia due to court closures. 

The  authorities  are  taking  steps  to  sustain  access  to  finance  for  affected  businesses, 
which  complement  initiatives  at  the  level  of  commercial  banks  and  servicers.  The 
government provided guarantees and direct grants to help maintain employment and liquidity 
in  the  economy,  which  will  also  support  asset  quality  in  the  banking  sector  following  the 
temporary  voluntary  debt  moratoria  applied  by  banks  and  servicers.  The  announced 
supervisory  flexibility  at  European  level  will  contribute  to  bank  lending  capacity.  Looking 
further  ahead,  limiting  –  to  the  extent  possible  –  the  negative  impact  on  asset  quality  and 
continuing  to  address  the  legacy  of  non-performing  loans  will  be  instrumental  in  fostering 
viable lending during the recovery phase. 

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. 
The  new  Code  will  integrate  the  corporate  and  personal  insolvency  regimes.  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 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 

11 

 
 
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  mechanism,  which  is  distinct  from  the  above-described  sale-and-
leaseback  scheme  under  the  insolvency  code,  will  be  available  to  eligible  physical 
persons  and  will  cover  performing  loans,  forborne  non-performing  exposures  and 
other  non-performing  exposures  on  the  basis  of  a  specific  cut-off  date.  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 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.  

The  Hellenic  Financial  Stability  Fund  has  engaged  in  initiatives  to  better  assess  and 
monitor the effects of the Coronavirus pandemic on the financials of the systemic banks. 

12 

 
 
The  outbreak  of  the  pandemic  necessitated  the  Fund  to  strengthen  its  monitoring  –  and 
potentially other – roles within the current legal framework.  

LABOUR MARKET  

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 
economic  damage.  These  include  increased  working  time  flexibility  and  a  special  parental 
leave  following  school  closures;  the  temporary  prohibition  for  employers  to  carry  out 
dismissals, combined with a wage allowance for the employees concerned by a government-
mandated suspension of activities (overall currently up to 1.7 million private sector employees 
and 500 000 self-employed); and the prolongation of unemployment benefits until end-May. 
The authorities are also considering to implement a new, broader temporary short-time work 
scheme, providing more flexibility to companies for adjusting working hours, while workers 
receive partial compensation for the hours not worked. The decision on the precise design and 
timing will be based on the fiscal costs. The scheme is likely to qualify for support from the 
European  Union’s  temporary  Support  to  mitigate  Unemployment  Risks  in  an  Emergency 
(SURE) scheme or other initiatives (European Social Fund). 

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. A road map for the follow-up action plan is expected to be adopted shortly.  

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. According to  a preliminary assessment of the 2019 sizeable minimum wage 
increase  conducted  by  the  World  Bank,  there  is  limited  evidence  that  employment  and 
unemployment in sectors with a high share of minimum wage workers has changed relative to 
sectors employing higher-wage workers, albeit further analysis would be warranted. Looking 
ahead, the Coronavirus outbreak is creating high uncertainty and impeding the timeline of the 
consultation process envisaged in the legal framework. All the actors involved in the process 
have  therefore  requested  the  government  to  postpone  the  minimum  wage  update  to  January 
2021, which is reasonable.  

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 robust and 
sustainable  recovery.  Inevitably  and  appropriately,  significant  resources  have  been  diverted 
towards ensuring business continuity during the pandemic, which has served as a catalyst to 
advance 
to  undertake 
complementary  actions  in  digital  initiatives  to  further  ease  the  administrative  burden  for 
businesses and citizens, as well as increasing transparency to investors over land use rules. As 
regards  economic  diplomacy,  the  immediate  focus  shifted  towards  tackling  the  pandemic, 
while  actions  to  promote  exports,  including  the  preparation  of  a  short-  and  medium-term 
strategy, are progressing. Determined implementation, including through the swift adoption of 
legislation  to  consolidate  responsibilities  within  the  Ministry  of  Foreign  Affairs  and  the 
setting-up of the necessary inter-ministerial governance structures, will be key. 

the  digital  governance  agenda.  The  authorities  committed 

13 

 
 
Work  on  investment  licensing  is  progressing  across  a  number  of  fronts,  despite  delays 
caused  by  factors  mostly  outside  the  authorities’  control,  though  risks  remain. 
Developments  across  specific  commitments  were  uneven.  The  tender  for  the  IT  system  to 
support the investment licensing reform, an end-2019 specific commitment, is being delayed 
by court decisions. Work on the implementation of the inspections framework law and further 
simplification of procedures, two mid-2020 specific commitments, is progressing though with 
some delays, to some extent attributable to the Coronavirus outbreak. At the same time, 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.  From  a  governance  perspective,  further  strengthening  inter-
ministerial  coordination  will  be  instrumental  in  ensuring  sustained  implementation  of  the 
investment licensing reform across all sectors. 

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  by  the  European  Commission,  the  authorities  aim  to  improve 
Greece’s performance in relation  to  the Word Bank’s Doing Business  indicators, while also 
working  towards  identifying  problems  and  improving  relevant  aspects  not  included  in  the 
scope of this project. 

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  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’,  a  mid-
2020  commitment,  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.  

14 

 
 
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  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.  

Greece’s National Energy and Climate Plan is currently under review by the European 
Commission.  This  ambitious  plan  for  lignite  decommissioning  will  require  an  increased 
uptake of renewable energy sources and gas as replacement of power, and a regional plan to 
deal with the socio-economic challenges. The forthcoming licensing law aimed at improving 
the setting  up and development of renewable  energy projects  will contribute to  this. Key to 
the success of the decommissioning plan will be the post-lignite transition in areas particularly 
reliant on the sector. Greece has established an inter-ministerial committee to develop a Just 
Transition Master Plan to steer this project, supported by the EU Just Transition Mechanism. 

Regarding  the  transport  sector,  the  authorities  have  adopted  the  National  Transport 
Master  Plan  and  are  proceeding  to  its  further  specification  at  regional  level.  The 
specification of the National Transport Master Plan is an enabling condition of the upcoming 
structural  funds  programming  period  for  comprehensive  transport  planning  and  will  be 
instrumental  in  introducing  a  pipeline  of  projects  for  the  next  programming  period.  The 
authorities also  took  steps to  improve transport  conditions  supply in  Thessaloniki through a 
concession contract with the Joint Venture for Regional Transport (KTEL), and are preparing 
a strategic plan for its future reform integrating the Thessaloniki metro. 

HELLENIC CORPORATION OF ASSETS AND PARTICIPATIONS AND PRIVATISATION 

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  Coronavirus  situation  has 
stabilised. Regarding 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. Technical work regarding the transfer of the Athens Olympic Athletic Centre 
to the Corporation has continued with the submission of a report by the technical advisor in 
April 2020. 

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 

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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 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 2018 specific 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  marina  of 
Alimos  is  one of the largest  marinas  in  the South-Eastern Mediterranean, located on 
the South-Eastern waterfront of Athens. 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 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 

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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  (an  end-2019  specific  commitment):  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.  

  Regional  Ports  (an  end-2019  specific  commitment):  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.  

PUBLIC ADMINISTRATION 

The  public  administration  has  been  faced  with  a  dual  challenge  in  dealing  with  the 
Coronavirus  pandemic,  as  it  has  spearheaded  the  authorities’  response  while  facing 
sharp  capacity  constraints.  Overall,  the  response  of  the  public  administration  has  allowed 
for  key  services  that  citizens  and  businesses  rely  on  to  continue  largely  uninterrupted.  This 
has been supported by the launch of a number of digital tools during the containment period. 

The  authorities  have  made  progress  with  the  appointment  of  senior  managers  and 
strengthening  the  overall  framework,  though  the  process  has  been  disrupted  by  the 
Coronavirus  pandemic  and  some  concerns  remain.  The  appointments  of  the  13  new 
Permanent  Secretaries  have  been  completed,  while  the  selection  process  for  Directors  has 
been temporarily  paused.  In March 2020, the  authorities adopted legal  provisions extending 
the selection process from central administration also to local level, which is welcome. Draft 
legislation  has  also  been  prepared  to  set  up  a  uniform  selection  process  for  senior 
management  posts  at  public  sector  entities,  which  is  expected  to  come  into  effect  in 
September  2020.  The  central  role  foreseen  for  the  Supreme  Council  for  Civil  Personnel 
Selection  in  the  selection  process  is  welcome.  On  a  more  problematic  note,  the  ongoing 
selection procedures for the structures managing the EU structural funds (National Strategic 
Reference  Framework)  have  not  progressed  and  plans  to  cancel  this  process  and  relaunch  a 
new  one  could  affect  the  stability  and  effective  functioning  of  the  management  and  control 
systems put in place, and the authorities are encouraged to consider alternative options.  

Overall, good progress has been made in developing a Human Resources Management 
System,  including  completion  of  a  significant  number  of  digital  organigrams  and  job 
descriptions  (an  end-2019  specific  commitment).  Until  mid-March,  government  entities 
representing  around two-thirds of total  personnel had completed digital  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. 

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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. 

The  authorities  have  committed  to  strengthen  the  personnel  selection  system  through 
updating the enabling law of the Supreme Council for Civil Personnel Selection’s and to 
increase  its  overall  capacity  (a  complementary  commitment).  The  new  commitment 
entails  a  revised  law  to  be  adopted  by  October  2020  and  a  detailed  action  plan  for  the 
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. 

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 (a mid-
2020  specific  commitment),  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. 

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. 

Hiring  of  permanent  staff  in  2019  was  in  compliance  with  the  staffing  plan,  and  the 
staffing  plan  for  2020  respects  the  1:1  replacement  rule.  At  the  same  time,  given  the 
sharp  increase  of  temporary  staff  since  2018,  the  authorities  have  agreed  to  a  new 
complementary  commitment  to  reinstate  a  ceiling  of  temporary  staff  from  2021 
onwards. While the number of temporary staff has been on a decreasing trend since its peak 
in  mid-2019,  it  remains  well  above  the  level  in  2018  when  Greece  exited  the  ESM 
programme.  The  new  commitment  is  expected  to  contribute  to  the  authorities’  ambition  to 
strengthen the central control of hiring procedures. The recently adopted provision that moves 
specific municipal entities outside the mandate of the Single Payment Authority is a concern. 
In order for the ongoing third and final phase of the remuneration reform, it is important that 
the Single Payment Authority’s mandate remains intact. 

JUSTICE AND ANTICORRUPTION  

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 

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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. The authorities have committed to preparing an action plan by mid-2020 
for  the  deployment  of  electronic  filing  throughout  civil  and  penal  jurisdictions,  mapping 
territorially and thematically the current situation and setting forth a timetable. 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. 

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 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. 

The  last  stage  of  entry  into  force  of  the  mandatory  mediation  framework  has  been 
completed  in  March.  Due  to  the  suspension  of  the  function  of  courts  in  the  context  of  the 
Coronavirus  outbreak,  the  effects  of  the  new  framework  will  be  measurable  only  later  in 
2020. 

The authorities are also proceeding with the initiative of creating  specialized chambers 
in  civil  and  administrative  courts  (a  complementary  commitment).  The  new  chambers 
will  deal  with  specific  categories  of  cases  and  will  be  staffed  by  judges  with  relevant 
professional experience or academic credentials.  

The operational capacity of the National Authority for Transparency is gradually being 
enhanced  with  a  view  to  making  it  fully  operational  by  November  2020.  The  National 
Authority  for  Transparency  closely  monitors  the  implementation  of  the  National  Plan  for 
Anticorruption, which shows good results so far, and collaborates with the Hellenic Court of 
Auditors  on  strengthening  the  internal  control  systems  at  both  central  and  local  level.  The 
Authority  is  also  involved  in  the  oversight  of  political  party  financing  and  controls  of  asset 
declarations.  The  authorities  committed  to  report  shortly  on  the  implementation  of  the 
institutional  framework  on  political  party  financing  to  date.  The  recommendations  of  the 
Group of States against Corruption will be considered by a dedicated committee, which will 
propose any necessary legislative amendments by December 2020. 

19