COMMUNICATION FROM THE COMMISSION Enhanced Surveillance update - Greece, September 2020
Date: 2020-09-23
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Euro Group (euro area), Greece, coronavirus disease, epidemic, gross domestic product, macroeconomics, multilateral surveillance, public debt, stability programme, structural adjustment

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.9.2020  COM(2020) 618 final  COMMUNICATION FROM THE COMMISSION Enhanced Surveillance update - Greece, September 2020 {COM(2020) 618 final} - {SWD(2020) 208 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 
programmes  are  safeguarded.  In 
the 
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). 

that  context,  enhanced  surveillance  monitors 

This  is  the  seventh  enhanced  surveillance  report  for  Greece.  The  report  is  based  on  the 
findings  of  a  mission  held  remotely  on  13-14 July  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-Programme  Monitoring 
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.  The  current  report  assesses  the  implementation  of  Greece’s 
commitments  to  the  Eurogroup  regarding  reform  completion  up  to  mid-2020.  This  report  is 
not linked to a release of the next set of policy-contingent debt measures, which – in line with 
the agreed biannual schedule – could take place on the basis of the eighth report. The eighth 
report is expected to be published in November.  

framework,  while 

(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)  2020/1142  of  29 July  2020  on  the  prolongation  of  enhanced 

surveillance for Greece, OJ L 248, 31.7.2020, pp. 20-23. 

(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 2 July to 10 July 2020. 

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OVERALL ASSESSMENT 

The  Greek  government  has  to  date  managed  to  contain  the  spread  of  the  coronavirus 
outbreak and mobilised a large amount of measures to limit its socio-economic costs, but 
the  pandemic  is  still  expected  to  take  a  strong  toll  on  the  economy.  Following  the  first 
wave  of  containment  measures  that  lasted  until  May,  the  authorities  have  adjusted  the 
strictness of the measures applicable to different sectors in line with the development of the 
pandemic. They have mobilised a large set of support measures and reacted promptly to actual 
developments,  through  scaling  up  or  amending  the  measures  already  in  place  or  putting  in 
place new support mechanisms for specific sectors, as the pandemic unfolded. Nonetheless, 
Greece  still  has  the  highest  unemployment  rate  in  the  EU  and  its  economy  is  likely  to  be 
affected more than some other Member States, in view of the large tourism sector and, more 
generally, the large share of services and small and medium-sized enterprises.  

In  spite  of  the  adverse  circumstances  caused  by  the  pandemic,  Greece  has  made 
significant  progress  on  a  number  of  major  reforms  over  the  past  few  months,  most 
notably  the  finalisation  of  the  long-awaited  legislative  proposal  to  completely  overhaul 
the  insolvency  legislation.  The  authorities  have  also  introduced  a  new,  broader  temporary 
short-time  work  scheme,  providing  flexibility  to  companies  to  adjust  working  hours  and 
compensation  to  workers  for  the  hours  not  worked.  The  Commission,  on  behalf  of  the  EU, 
will  provide  support  to  this  and  other  emergency  measures  under  the  new  European 
instrument  for  temporary  support  to  mitigate  unemployment  risks  in  an  emergency 
(SURE) (5), for a total  amount of €2.7 billion. All  these steps are timely, as the coronavirus 
outbreak implies new challenges for both financial sector and the labour market, which render 
the role of efficient adjustment mechanisms crucial.  

Furthermore, good progress has been made also in the fields of:  

  Investment  licencing  reform,  with  the  abolition  of  the  obsolete  nuisance  classification 
system  and  the  re-classification  of  economic  activities  based  on  environmental  criteria 
harmonised  with  EU  legislation,  which  is  expected  to  materially  ease  the  burden  on  the 
industrial sector;  

  Energy policy, with  the continued decommissioning of lignite plants  and progress  on the 

Target Model, though the go-live date was delayed; and, 

  Public  administration,  where  an  important  initiative  to  strengthen  the  capacity  of  the 
independent  authority  in  charge  of  the  selection  of  public  officials  has  reached  a  final 
adoption  stage,  and  the  open  appointment  process  for  senior  management  in  the  public 
sector will be further extended.  

The  government  has  also  made  good  progress  on  other  reforms,  which  are  not 
specifically  related  to  Eurogroup  commitments  but  are  expected  to  have  a  significant 
impact  on  the  business  environment  and  investor  sentiment.  This  includes  an  ambitious 
reform of vocational education and advances on digital governance. A new growth strategy, 
which  should  be  finalised  shortly,  is  expected  to  present  a  set  of  ambitious  measures  to 
support economic recovery and sustainable growth going forward. Moreover, the authorities 
have  started  to  put  in  place  the  agreed  measures  to  speed  up  the  implementation  of  public 
investments,  which will be instrumental also  in  supporting a quick take-up of the EU funds 
that  will  become  available  under  the  new  Multiannual  Financial  Framework  and  the  Next 

(5)  Council Regulation (EU) 2020/672 of 19 May 2020. 

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Generation  EU.  In  particular,  the  significant  allocation  of  funds  from  the  Recovery  and 
Resilience Facility that Greece is expected to receive, highlights the importance of proceeding 
swiftly  with  key  enabling  reforms,  including  the  Strategic  Project  Pipeline  and  the  Project 
Preparation  Facility,  the  public  procurement  reform  and  further  strengthening  of  the  anti-
corruption framework.  

Notwithstanding  the  good  progress,  a  number  of  policy  areas  have  been  significantly 
affected  by  the  coronavirus  outbreak,  adding  in  some  cases  to  previous  delays.  The 
pandemic and related containment measures have led to unprecedented economic disruptions, 
which  warranted  an  immediate  adjustment  of  priorities.  The  coronavirus  outbreak  severely 
affected  reform  implementation  capacity,  especially  in  areas  relying  on  labour-intensive 
processes, work of committees, and legislative or judiciary actions. As a result, progress with 
previously  initiated  reforms  has  temporarily  stalled  in  a  number  of  areas,  notably  in  arrears 
clearance, public revenue administration, health care, the cadastre project and the privatisation 
agenda,  in  some  of  these  adding  to  previous  implementation  difficulties.  Despite  good 
progress with a number of legislative initiatives, the authorities are also yet to complete some 
of the reforms related to the financial sector. 

This  report  concludes  that,  in  spite  of  the  adverse  circumstances  caused  by  the 
pandemic,  which  have  unavoidably  led  to  delays  in  the  implementation  of  several 
actions, Greece has progressed well with the implementation of its reform commitments. 
It is welcome that progress on the implementation of all commitments has restarted, although 
the delays due to the pandemic have inevitably led to rescheduling some of the commitments 
to a later point in the future. The authorities are encouraged to continue to mobilise resources 
with a view to taking all necessary steps to achieve its due specific comments in time for the 
eighth enhanced surveillance report, to be issued in November and for which a disbursement 
of  the  next  set  of  policy-contingent  debt  measures  is  foreseen.  This  requires  continuous 
engagement  of  the  Greek  authorities,  in  particular  in  the  areas  of  arrears,  health  care, 
privatisation and the financial sector, where further actions are needed. 

MACROECONOMIC DEVELOPMENTS 

The coronavirus pandemic and measures to contain it are expected to take a strong toll 
on the Greek economy. Necessary strict containment measures imposed from the last week 
of March until end-May are expected to have had their strongest impact on economic activity 
in the second quarter of this year. Sectors strongly hit by the pandemic, such as tourism and 
transports  represent  a  significant  share  of  Greek  exports  and  total  value  added.  The 
unemployment  rate  increased  to  17%  in  May,  up  from  15.9%  in  February,  interrupting  a 
downward  trend  in  place  since  end-2013.  Support  measures  have  helped  to  keep 
unemployment  in  check  so  far,  but  signs  point  towards  a  “frozen”  labour  market.  Lower 
households’  disposable  income  and  corporate  profits  along  with  changes  in  consumer 
behaviour and the overall uncertainty are expected to weigh on domestic demand. Consumer 
prices are expected to decrease in 2020 and mildly increase in 2021 along with the recovery. 
Overall, economic activity in 2020 is expected to remain well below 2019 levels and to fully 
recover only in 2022, after a partial bounce-back in 2021, with GDP growth rates reaching -
9% in 2020, and 6% in 2021. 

Government  support  measures  have  helped  protect  the  economy  against  widespread 
bankruptcies and job losses. The mix of government support through a lowering of the tax 
burden  with  €3.1 billion  (1.9%  of  GDP),  protection  of  jobs  and  incomes  with  €4.1 billion 
(2.4% of GDP), and easing liquidity constraints with €5.9 billion (3.5% of GDP) is a balanced 

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approach and is expected to be instrumental in maintaining the economic fabric and thus help 
the economy recover. 

Uncertainty  regarding  the  development  of  the  pandemic  and  thus  its  economic  impact 
remain  extraordinarily  high.  The  uncertainty  does  not  only  concern  the  pandemic  and  its 
spread  within  Greece  and  globally,  but  also  the  future  measures  that  might  be  necessary  to 
contain  the  spread  of  the  virus,  and  the  longer  lasting  economic  effects  due  to  restrictions, 
changed  consumer  behaviour,  possible  bankruptcies  and  difficulties  for  those  who  have 
recently  became  unemployed  to  re-join  the  labour  market.  A  quick  uptake  of  the  new  EU 
support  programmes,  most  notably  the  Recovery  and  Resilience  Facility,  would  be  key  to 
counterbalance  these  effects  and  provide  the  needed  support  to  reforms,  investments  and 
growth.  The  assessment  is  also  taking  place  against  the  background  of  considerable  geo-
political tensions and growing migration flows, which add to the uncertainty. 

FISCAL DEVELOPMENTS AND OUTLOOK  

The fiscal outlook for 2020 has deteriorated since the last report. Taking into account the 
European Commission’s 2020 summer interim forecast and the main measures adopted since 
May  2020  to  mitigate  the  consequences  of  the  pandemic,  the  primary  deficit  is  currently 
expected at around 5.8% of GDP in 2020. These projections do not yet include the impact of 
the Council of State’s pension ruling from 14 July, neither the pending ruling of the Court of 
Auditors, the total cost of which is currently estimated at 0.8% of GDP. A full update of the 
fiscal forecast will be prepared in the context of the assessment of the 2021 Draft Budgetary 
Plan. 

The  authorities  have  prolonged  the  application  of  some  of  the  earlier  measures  for  a 
number  of  additional months  and  adopted  further  temporary  measures  to  address  the 
coronavirus  crisis.  In  view  of  the  full  take-up  by  July  2020  of  the  foreseen  €2 billion 
envelope of repayable advances to companies, the government decided to extend the measure 
and open the platform for a third round of applications, due in September, with an expected 
envelope of €1 billion, and a further round may follow by the end of the year. Furthermore, 
tax and instalment deferrals have become eligible to be repaid in up to 24 instalments, starting 
from  January  2021.  In  addition,  since  May  2020,  the  authorities  adopted  a  new  set  of 
measures,  including:  (1)  the  right  to  reduce  advance  payments  for  corporate  or  personal 
income taxes in case of a given drop in turn-over for companies and self-employed (expected 
fiscal  impact  of  0.9%  of  GDP  in  2020);  (2)  a  short-time  work  scheme  and  other  measures 
aimed at sustaining employment (expected fiscal cost of 0.6% of GDP in 2020); (3) measures 
aimed at mitigating the impact on tourism through dedicated social tourism programmes and 
an  extended  advertising  campaign;  (4)  a  temporary  decrease  in  value-added  tax  rates  for 
transportation, beverages, tourism packages and cinema tickets from 24% to 13%; and (5) the 
introduction of a temporary instalment subsidy scheme for mortgage, consumer and business 
loans secured by a primary residence for debtors with mortgages on main residences that have 
been  financially  affected  by  the  coronavirus  pandemic.  Overall,  the  estimated  fiscal  cost  of 
these additional measures is 1.8% of GDP in 2020. Additional temporary measures to support 
the recovery next year were announced on 12 September and will be assessed in the context 
of the assessment of the 2021 Draft Budgetary Plan. 

The authorities have also extended the previously taken measures that provide liquidity 
support to households and firms. The envelope for co-financing loans to small and medium-
sized  enterprises  by  the  Hellenic  Development  Bank  has  been  increased  by  €588 million, 
totalling  €838 million.  Furthermore,  the  deadline  for  the  payment  of  personal  income  tax, 

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corporate income tax and the single property tax has been  extended (with no impact  on the 
accrual fiscal balance though). 

The authorities have restarted work towards completing the nationwide reassessment of 
property  values,  which  serve  as  base  for  the  single  property  tax  (ENFIA),  a  mid-2020 
specific  commitment  whose  finalisation  has  now  been  rescheduled  to  mid-2021.  The 
inevitable delays occurred earlier in the year due to the coronavirus lockdown. The work of 
data collection and quality assessment, leading to the final determination of prices for existing 
value  zones  is  expected  to  be  completed  by  the  end  of  the  year.  This  year’s  ENFIA  single 
property tax assessments will thus mainly be based on the previous property tax values. The 
further expansion of the existing value zone system across the entire country will need to be 
addressed in the course of next year with a rescheduled deadline of mid-2021.  

The  uncertainty  around  the  fiscal  forecast  remains  substantial.  The  evolution  of  the 
pandemic  and  related  containment  measures  induce  a  substantial  uncertainty  around 
macroeconomic  and,  hence,  fiscal  developments.  Apart  from  the  coronavirus  pandemic 
unfolding since March, Greece is also grappling with renewed migration pressures and geo-
political tensions, which may give rise to additional funding needs. The worsened economic 
environment  creates  additional  risks  related  to  state  guarantees.  In  addition,  public  finances 
continue  to  face  risks  with  respect  to  the  ongoing  litigation  against  the  Public  Real  Estate 
Company, with the question of the validity of the recent arbitral award still pending before the 
Athens Court of Appeal; the payment of public service obligations to the Hellenic Post, which 
may  materialise  in  the  near  future;  the  pending  ruling  of  the  Court  of  Auditors  on  the 
retroactive  compensation  of  public-sector  pensioners  as  well  as  the  Council  of  State  ruling 
related  to  supplementary  pensions  and  seasonal  bonuses  (see  below).  On  the  positive  side, 
Greece  is  expected  to  greatly  benefit  from  new  facilities  including  the  Recovery  and 
Resilience  Facility  that  aims  to  support  investments  and  reforms  in  the  EU  over  the  next 
programming period, and is expected to support growth and public finances going forward.  

PUBLIC REVENUE ADMINISTRATION 

Staffing levels at the Independent Authority for Public Revenue continued to increase at 
a  modest  pace,  although  remaining  well  below  the  targets  (specific  commitment), 
whereas  limited  progress  has  been  made  on  the  overarching  human  resources  reform. 
Staffing levels at the end of the second quarter stood at 11 916, compared to 12 500 set as the 
target  by  end  of  2019.  Moreover,  the  authorities  have  adopted  legal  provisions  that  have 
resulted  in  staff  from  the  Independent  Authority  being  transferred  to  other  bodies,  thus 
making the achievement of the set staffing targets even more difficult. The completion of the 
human resources reform, expected to greatly facilitate the Independent Authority’s capacity to 
attract  and maintain the  high  calibre staff it needs, hinges  on the adoption of the wage  grid 
legislation.  The  European  institutions  encouraged  the  authorities  to  adopt  it  during  the  next 
review period. 

Mixed  progress  has  been  made  in  the  areas  of  the  Independent  Authority’s  IT 
framework  and  its  headquarters,  with  further  key  steps  expected  to  be  adopted  in  the 
coming months.  A roadmap for the  IT framework has  been prepared and the rollout of the 
myDATA  platform  for  electronic  bookkeeping  and  other  web  services  offered  by  the 
Independent  Authority  is  expected  to  be  completed  by  October  2020.  Planning  is  moving 
ahead  on  the  relocation  of  the  headquarters  of  the  Independent  Authority  into  one  single 
location. The tender for the construction of a new building is expected to be launched by the 
first quarter of 2021. 

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A  draft  law  to  strengthen  the  anti-smuggling  framework,  including  provisions  to 
strengthen  the  operational  capacity  of  the  Operational  Coordination  Centre  has  been 
prepared and is expected to be adopted by October 2020. The capacity of the Operational 
Coordination Centre, which coordinates anti-smuggling efforts, will be strengthened through 
the introduction of a new selection process for officials that extends the secondment period up 
to six years, while the structure remains firmly embedded within the Independent Authority. It 
will  be  important  to  swiftly adopt  the  primary  and  secondary  legislation  as  well  as  ensure 
sufficient  sourcing  of  the  Independent  Authority,  in  order  to  allow  it  to  carry  out  its  role 
efficiently.  

A  temporary  committee  for  settling  tax  debt  disputes  has  been  established  under  the 
competence  of  the  Ministry  of  Finance.  According  to  the  adopted  provisions,  the 
committee’s mandate ends by July 2021. Although the settlements to be agreed are expected 
to alleviate the burden on the judicial system, it will be important that the mandate of the new 
committee is not extended, as it might risk establishing a parallel system to the Directorate for 
Settlement of Disputes, which is part of the Independent Authority.  

The pandemic has affected public debt collection so far to a limited extent. Regarding tax 
debt  collection,  the  results  for  the  second  quarter  are  yet  to  be  published,  but  according  to 
preliminary  monthly  results  for  the  period  January  to  May  2020,  it  seems  that  the  payment 
culture  was  overall  not  significantly  disrupted.  In  contrast  to  the  previous  periods,  the  Joint 
Centre for the Collection of Social Security Debt did not meet its targets, which were set prior 
to the coronavirus pandemic.  

PUBLIC FINANCE MANAGEMENT 

The  coronavirus  outbreak  has  affected  the  pace  of  clearance  of  arrears,  adding  to 
previous  implementation  difficulties.  In  June  2020,  the  stock  of  arrears  amounted  to 
€1.5 billion, that is to say €667 million above the targets set in the clearance plan adopted in 
October  2019.  These  developments  only  partially  reflect  disruptions  in  labour-intensive 
processes caused by the pandemic. Among the major drivers is an unexpected increase in the 
stock of unprocessed pension claims, which increases the amounts to be cleared by mid-2021. 
The  authorities  committed  to  update  their  plan  by  end-October  2020,  with  detailed 
information  regarding  the  clearance  of  the  additional  pension  backlog.  Nevertheless,  some 
crucial structural measures – including the automation of the processing and awarding of the 
new pensions claims as well as the digitalisation of the Single Social Security Fund (e-EFKA) 
–  are  reported  to  be  broadly  on  track.  In  addition,  the  authorities  are  adopting  and 
implementing a set of additional corrective measures in several subsectors to offset delays and 
bring the implementation of the clearance plan back on track. These efforts focus in particular 
on  the  areas  of  pensions,  health  care  and  extra-budgetary  funds  as  well  as  on  improving  IT 
tools  for  monitoring.  The  authorities  expect  that  the  impact  of  these  measures  would  be 
visible in August data, which will be assessed in the next enhanced surveillance report.  

Structural  reforms  recommended  by  the  Hellenic  Court  of  Auditors  are  underway  to 
improve  the  payment  system,  a  mid-2021  specific  commitment.  Challenges  remain 
regarding  the  digitalisation  or  the  central  procurement  system  of  the  health  sector.  The 
authorities are finalising a new law, which will cover all relevant aspects of internal control 
across  the  public  administration  in  a  single  piece  of  legislation  and  is  a  significant  step 
forward.  In  addition,  the  authorities  are  designing  a  new  accounting  IT  framework  with  a 
view to improving payment processes.  

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The authorities have continued to take the necessary steps for the full establishment of a 
Treasury Single Account to enhance cash monitoring while progress on cash forecasting 
has suffered delays due to the coronavirus pandemic, a mid-2020 specific commitment. 
The Treasury Single Account system is operational and the entities that remain outside of the 
scheme are not significant in terms of total liquidity. The Ministry of Finance will perform an 
assessment  of  the  entities’  compliance  with  the  liquidity  buffer  rules  by  end-October  2020, 
which  would  effectively  complete  this  part  of  the  specific  commitment.  The  authorities  are 
encouraged to set up dedicated tools for the close monitoring of entities deemed to be at risk. 
The  substitution  of  paper  orders  by  electronic  ones  has  continued  to  progress.  By  contrast, 
progress  on  the  currently  running  cash-forecasting  pilot  has  suffered  delays  due  to  the 
coronavirus pandemic and will be reassessed in the next report  

The  Chart  of  Accounts  reform,  including  mid-2021  and  mid-2022  commitments,  is 
broadly  on  track,  but  its  implementation  in  the  Public  Investment  Budget  remains  a 
challenge. The procurement of the new IT system supporting the Chart of Account reform is 
on-going and the authorities have taken further steps to support progress on this reform. Work 
is underway on the functional classification of the Chart of Accounts, in accordance with the 
performance  budgeting  framework.  Progress  is  also  being  made  in  the  implementation  of 
Chart  of  Account  classifications  in  the  execution  phase  of  the  Public  Investment  Budget, 
whilst  a  less  detailed  classification  currently  remains  in  place  for  the  budget  preparation 
phase. The authorities committed to explore potential avenues for improvements with the help 
of technical support that will be provided by the European Commission.  

The authorities are preparing a legislative amendment to address the most urgent issues 
in  public  procurement  and  have  taken  initial steps  towards  the  adoption  a  new  public 
procurement  strategy  for  2021-2025  that  would  contribute  to  a  more  sustainable  and 
efficient use of public resources. The coronavirus greatly affected the initial timeline of the 
adoption of the law, which is planned to be adopted by end-October. It addresses a number of 
important  issues  in  the  legal  framework  for  public  procurement.  Its  full  and  timely 
implementation  is  key  given  that  public  procurement  will  also  play  an  essential  role  in  the 
efficient  management  of  funds under the  Recovery  and Resilience  Facility. To this end, the 
authorities  are  encouraged  to  adopt  an  action  plan  for  the  implementation  of  the  new 
framework. A committee was created under the Hellenic Single Public Procurement Authority 
that  is  working  with  the  support  of  the  General  Secretariat  for  Coordination  on  the  new 
strategy. A timeline has been established for the finalisation of the strategic and action plans 
by February 2021.  

The  authorities  have  started  implementing  agreed  measures  to  address  the  recurrent 
under-execution of the investment budget observed in past years. The characteristics and 
role of the Strategic Project Pipeline as well as a timetable for its implementation were agreed 
in  July  2020.  It  will  be  set  up  as  an  independent  unit  coordinated  by  the  Presidency  of  the 
Government  and  will  deal  with  priority  infrastructure  projects  worth  over  €10 million.  The 
Project Preparation Facility will help the preparation and implementation of these projects. Its 
placement and details  are currently being worked out.  It  will be important  to  ensure that its 
placement  safeguards  the  rights  and  competencies  of  established  independent  institutions. 
These measures, including the steps to improve the monitoring and forecasting of the public 
investment budget, aim to make the best use of available resources and accelerate the drawing 
of EU funds and are also  key to  ensure an efficient  take up of the Recovery  and Resilience 
Facility. While their implementation will provide help only in the medium-term, the execution 
of the public investment budget in this and the coming years will also benefit from increased 
spending of EU funds as the current programming period is reaching maturity and the fact that 

7 

 
 
some  of  the  measures  taken  in  response  to  the  pandemic  are  funded  from  the  public 
investment budget.  

The  2019  action  plan  to  enhance  the  monitoring  and  forecasting  of  the  Public 
Investment  Budget  is  being  implemented  as  scheduled.  A  more  frequent  and  enhanced 
exchange of data between the responsible ministries is already in place and other actions are 
being implemented as planned. Although the coronavirus outbreak resulted in minor delays, 
the authorities are planning to absorb any delay within the original timeline.  

SOVEREIGN FINANCING 

The  Greek  government  bond  yields  and  the  yield  spreads  declined  close  to  post-crisis 
lows.  The  yield  spreads  over  the  German  Bund  on  the  long-term  bonds  have  declined  by 
around  250  basis  points  since  early  May  2020  and  stabilised  below  1 percentage  point  in 
August for the 5-year tenure. Benefiting from the favourable financing conditions, supported 
by the Eurosystem’s purchases of Greek government securities, the Public Debt Management 
Agency issued a 10-year bond in June 2020. This bond auction was successfully reopened in 
September 2020. 

The favourable financing conditions and large cash reserves provide cushion to absorb 
financing  risks,  which  remain  considerable.  The  financing  needs  of  the  budget  have 
increased  markedly  since  the  last  report,  on  the  back  of  the  deteriorated  macroeconomic 
environment,  measures  taken  to  contain  the  economic  cost  of  the  pandemic,  as  well  as  the 
payment  of  compensations  to  pensioners  (see  below).  The  cash  reserves  of  the  general 
government  remain  considerable,  having  stood  above  €31 billion  at  the  end  of  June. 
Preserving a sufficient cash buffer, along with the development of a growth strategy, will be 
instrumental in supporting investor sentiment.  

SOCIAL WELFARE 

The  authorities  are  making  progress  in  completing  the  setup  of  the  Single  Social 
Security  Fund  (EFKA),  a  mid-2020  specific  commitment.  Among  others,  the  digital 
transformation of the Fund into ‘e-EFKA’ is expected to be implemented by end-2020. The 
first stage of merging the public sector and supplementary pension functions has already been 
implemented and the physical move of employees, initially delayed by the pandemic, should 
be completed by the end of the year. Therefore, the commitment is rescheduled to end-2020. 
The  follow-up  steps,  including  the  establishment  of  certain  regional  offices,  should  be 
completed  by  mid-2021.  The  digital  processing  of  pension  applications  is  currently  under  a 
pilot  phase  but  the  authorities  are  confident  that  the  target  of  30%  digitally  processed  main 
pension applications by end-June 2020 has been met. 

The recent Council of State ruling entitles those pensioners, who had filed a claim, to a 
compensation for the 2012 pension cuts for the period of June 2015 to May 2016. While 
the publication of the court  decision in  full detail  may take a number of  weeks, it has been 
announced  that  the  compensation  covers  an  11-month  period  starting  from  the  time  of 
publication of the previous Council of State ruling in June 2015 until the implementation of 
the 2016 reform in May 2016. The government has decided to pre-empt possible future legal 
challenges  and  to  compensate  all  private-sector  pensioners  for  cuts  on  their  main  pensions, 
irrespective  of  whether  they  had  filed  a  claim  or  not,  at  a  cost  of  0.5%  of  GDP.  The 
government  has  also  pledged  to  compensate  public  sector  pensioners  once  a  parallel  case 
discussed in front of the Court of Auditors is completed, which would raise the total cost of 
the  compensation  to  0.8%  of  GDP.  The  need  to  cover  also  the  past  cuts  in  supplementary 

8 

 
 
pensions  and  seasonal  bonuses  will  be  clarified  once  the  detailed  ruling  of  the  Court  is 
published. The compensations are one-off payments and do not affect the current functioning 
of the pension system  or future pension expenditure. Regarding another recent  ruling of the 
Court of Auditors granting early retirement rights to male civil servants with young children, 
the authorities expect that the effects of this ruling will be small. 

To  respond  to  the  coronavirus  outbreak  in  spring  2020,  the  authorities  have 
substantially  strengthened the health-care system to deal  with  the pandemic, including 
through  a  wider  use  of  digital  tools.  This  included  increasing  the  availability  of  intensive 
care  beds  and  recruiting  about  five  thousand  additional  staff  members,  both  doctors  and 
nurses, and advances on telemedicine. Thanks to the early implementation of these measures, 
Greece successfully managed to contain the spread of the virus during the first wave. Greece 
also deployed a number of digital tools, which could be utilised after the end of the pandemic 
as well. 

The  redesign  of  the  primary  health-care  system,  a  mid-2020  specific  commitment,  will 
take  a  longer  time  to  be  implemented,  to  reflect  changes  in  the  delivery  of  some  of  its 
main elements and due to inevitable delays caused by the need to manage the response 
to  the  pandemic.  Legislative  changes  are  still  at  a  drafting  stage  but  their  adoption  is 
expected by spring 2021. The reform, which started in 2018, aims to set up a comprehensive 
system of primary health care with a compulsory registration of the whole population with a 
family  doctor,  who  would  become  the  first  point  of  contact  for  the  patient  and  implement 
compulsory gatekeeping. Based on available information, most of the elements of the reform 
are planned to be redesigned, and the roll-out of the system is suspended until a new delivery 
model  is  defined.  The  authorities  are  encouraged  to  speed  up  the  implementation  of 
compulsory registration and gatekeeping, which – as agreed – should remain core elements of 
any  new  system  as  they  are  key  for  a  successful  establishment  of  a  robust  and  well-
functioning  system  of  primary  health  care.  They  help  ensure  equal  access  and  protect  the 
population  from  supply-induced  demand  and  its  avoidable  financial  burden,  which  is  a 
growing source of concern in the current system. The authorities plan to resume the rollout of 
the  primary  health  care  network  no  earlier  than  spring  2021,  given  the  short-term  need  to 
focus the efforts on the response to the current challenge to increase the available number of 
family doctors contracted by Public Health Fund. The reform became all the more relevant in 
light of the coronavirus crisis, given the key role of the primary health care units, including 
the  newly  and  swiftly  deployed  mobile  units  (KOMYs),  in  supporting  the  response  to  the 
pandemic so far.  

Centralised  procurement,  a  mid-2020  specific  commitment,  is  already  being  partly 
implemented  and  the  overall  set  up  of  the  National  Health  Authority  for  Health 
Procurements is  progressing, but yet to be completed also  due to delays caused by the 
pandemic. Centralised tenders are currently mostly implemented at regional level; some are 
being  finalised  also  at  central  level,  though,  for  a  large  part,  this  concerns  those  that  were 
launched under the previous system. Draft legislation to define the new legal framework for 
the Authority was finalised and is planned for adoption by the end of the year. The authorities 
also shared an operational plan for procurements to be launched in 2020, according to which 
the  target  of  40%  of  centrally  procured  total  hospital  expenditure,  a  mid-2022  specific 
commitment, remains achievable and the authorities’ aim is to reach 30% by the first quarter 
of 2021. The European institutions encouraged the authorities to further support the reform by 
the reactivation, as from January 2021, of the Price Observatory, a monitoring tool intended to 
increase  transparency  and  efficiency.  At  present,  recruiting  the  necessary  skills  for  the 

9 

 
 
Authority is still challenging, but this may be facilitated by the new legal framework that is 
going to be legislated in the coming months.  

Regarding healthcare spending, the rising clawback amounts and delays in its collection 
are a  cause of concern. Strengthening and consistent implementation  of the previously 
adopted structural measures would support efficiency and access to quality health care. 
To illustrate, the 2019 clawback for pharmaceuticals is 36% higher than in 2018 and almost 
65% higher than in  2017. Collection of clawback for private health-care providers for 2018 
and  2019  is  expected  to  start  by  November  2020.  The  European  institutions  encourage  the 
authorities  to  adopt  the  necessary  legislation  to  finalise  the  legislative  and  administrative 
procedures necessary for the start of the collection by October 2020 – in order to preserve the 
fiscal credibility of the clawback – and to review the current definition of the clawback with a 
view  to  introducing  a  risk-sharing  component  and  enhancing  the  incentives  to  avoid  the 
creation  of  new  clawbacks  and  curb  supply-induced  demand,  thus  reducing  high  out-of-
pocket payments.  

The  design  of  the  ‘labour  market  reintegration’  pillar  of  the  Social  Solidarity  Income 
(third  pillar)  is  being  adapted  in  view  of  the  coronavirus  crisis,  and  the  nationwide 
implementation of the  new framework, an end-2019 specific commitment, is  scheduled 
for autumn 2020, contingent on health-related developments. During 2019, a pilot project 
to  ensure  the  provision  of  social  support  and  labour  market  activation  services  was 
implemented  in  32  municipalities  across  the  country.  The  findings  of  the  pilot  project  have 
been  evaluated  in  view  of  its  national  implementation  in  2020.  However,  due  to  the 
coronavirus  outbreak,  there  was  a  need  to  adapt  the  business  processes  of  the  public 
employment  service  (OAED)  to  the  new  situation  and,  in  turn,  to  adjust  the  terms  of  the 
national rollout of the new framework. The rollout should be launched in autumn 2020. 

Regarding  the  review  of  the  system  of  subsidies  for  local  public  transport,  a  mid-2020 
specific commitment, the revised primary legislation for the new system was adopted in 
July  2020.  Secondary legislation, to  be adopted  in  September 2020, is  under preparation to 
allow a regular and objectively-based reimbursement of subsidised public transport tickets to 
operators in Athens and Thessaloniki. 

The  reform  of  the  disabilities  benefit  framework  is  progressing  according  to  its 
previously agreed redesign, a mid-2019 specific commitment that will take longer to be 
completed. An agreed policy paper is expected in September 2020 and a pilot project should 
be  launched  in  early  2021.  The  electronic  system  for  processing  the  applications  is  now 
available  in  three  regions,  but  the  operation  of  the  disability  assessment  centres  has  been 
affected by the pandemic. 

FINANCIAL SECTOR DEVELOPMENTS 

The  financial  sector  has  weathered  the  first  impacts  of  the  coronavirus  pandemic 
relatively  well, on the back of the authorities’ and EU-wide efforts to sustain access  to 
finance  for  affected  businesses.  Liquidity  on  financial  markets  as  well  as  provision  of 
funding to the economy has been maintained and banks were able to keep the cost of funding 
manageable  despite  the  increase  in  the  cost  of  long-term  unsecured  funding.  This  has  been 
facilitated  by  the  easing  of  conditions  for  Eurosystem  targeted  longer-term  refinancing 
operations  and  a  temporary  easing  of  collateral  requirements  for  Eurosystem  credit 
operations, in particular the waiver to accept Greek sovereign debt instruments as collateral. 
Data as of July 2020 show that the recovery in bank credit to non-financial corporations has 

10 

 
 
even gained pace, while that to small, non-incorporated firms has also started to turn rapidly 
positive, moderating the continued contraction of bank credit to households. This reflects both 
the  efforts  by  the  companies  to  build  up  liquidity  buffers  and  the  start  of  disbursements  of 
emergency support measures. Greek companies benefited from two schemes implemented by 
the Hellenic Development Bank, i.e. a guarantee scheme and an interest subsidy scheme for 
new  corporate  loans,  which  attracted  strong  demand.  Moreover,  viable  companies,  mostly 
small and medium-sized enterprises, have benefitted from direct interest subsidies to existing 
performing  loans.  These  schemes  are  expected  to  provide  support  to  lending  growth  to 
businesses over the coming months.  

The loan moratorium measures put in place, coupled with the flexibility announced by 
the supervisory authority, imply  that the impact of the pandemic on the quality of the 
banks’  loan  books  will  be  limited  this  year.  More  than  10%  of  the  banks’  total  loan 
portfolio  has  benefitted  from  the  moratoria,  which  are  currently  in  place  until  the 
31 December. The four systemic banks have significantly increased the impairments booked 
in  their  first  quarter  results  of  2020,  but  the  full  extent  of  the  provisioning  needs  will  only 
become  evident  after  the  moratoria  expire,  which  may  imply  downside  risks  for  2021. 
Increased  provisioning  may  put  under  pressure  the  already  weak  profitability  outlook  for 
Greek banks.  

Low profitability coupled with the cost of upcoming securitisations may pose challenges 
for  the  banks’  capital  position  in  the  near  future.  Banks’  average  common  equity  tier  1 
ratio fell from 15.9% at the end of 2019 to 14.6% in the first quarter of 2020, but remained in 
line  with  capital  requirements.  The  decrease  was  mainly  due  to  the  implementation  of 
prudential  transitional  rules  applied  in  the  first  quarter  of  each  year.  Going  forward,  the 
banks’ capital position will need to accommodate further planned regulatory changes and the 
upcoming securitisations of non-performing loans in the medium-term. The quality of banks’ 
capital remains low, due to the high amount of deferred tax credits, while the sovereign-bank 
nexus may continue to increase over the coming months. 

Although  the  stock  of  non-performing  loans  continued  to  decline  in  the  beginning  of 
2020,  the  potential  negative  impact  of  the  coronavirus  crisis  on  asset  quality  will  only 
start  becoming  evident  after  the  expiry  of  the  moratoria.  The  stock  of  non-performing 
loans of Greek banks has continued its downward path in the first quarter of 2020, with their 
ratio  dropping  to  39.6%  in  March  2020  and  expected  to  drop  even  further  in  the  second 
quarter,  once  the  positive  impact  of  the  first  securitisation  under  the  Hercules  scheme (6) 
formally  takes effect.  Nonetheless,  the banks’ non-performing loans reduction strategies  are 
affected  by  the  pandemic  and  the  banks’  internal  capacity  for  viably  restructuring  loans 
remains low.  

The  actions  outlined  below  are  monitored  and  assessed  as  part  of  the  continuous 
commitment in the area of financial policy: 

  The authorities intend to shortly submit a bill to Parliament that will lead to a major 
overhaul of the insolvency framework. The new insolvency code integrates the corporate 
and personal insolvency regimes and transposes EU legislation on preventive restructuring 

(6)  The  transaction  involved  the  securitization  of  a  €7.5 billion  portfolio  consisting  mainly  of  non-performing 
exposures. It made use of €2.4 billion of state guarantees out of the total €12 billion envelope available under 
the Hercules scheme. The scheme, which is open and voluntary for all banks, runs over an 18-month period 
from  October  2019.  Two  other  systemic  banks  are  moving  on  with  preparations  to  facilitate  their  planned 
securitizations under the scheme, with an aim to conclude them by the first quarter of 2021. 

11 

 
 
                                                 
frameworks.  Its  overall  aim  is  to  accelerate  debt  discharge,  allow  for  a  faster 
reimbursement of creditors, as well as preserve viable businesses by means of preventive 
restructuring frameworks. Inspired by international best practices, it is expected to increase 
the effectiveness of restructuring through the simplification of procedural requirements and 
the use of an electronic platform. The code will enter into force on 1 January 2021 and will 
require the adoption of a significant amount of secondary legislation, which will determine 
some  aspects  of  this  reform,  and  the  completion  of  the  IT  platform,  both  of  which  are 
underway.  

  At  the  same  time,  the  authorities  allowed  the  expiry  of  the  Primary  Residence 
Protection  scheme  and  the  Out  of  Court  Workout  scheme,  while  setting  up 
alternative social protection  schemes for vulnerable debtors.  The regimes  in  question 
duly expired on 31 July 2020 and 30 April 2020 respectively. In parallel with the overhaul 
of  the  insolvency  framework,  the  government  also  introduces  new  social  policy  tools  to 
support  vulnerable  debtors.  In  the  context  of  the  pre-bankruptcy  proceedings,  vulnerable 
debtors, who have a loan linked to their primary residence and have suffered a sudden loss 
of  income  will  be  eligible  for  a  temporary  subsidy,  which  should  further  support  the 
reduction  of  non-performing  loans  and  avoid  the  accumulation  of  new  ones.  To  address 
moral  hazard  concerns,  the  subsidy  will  be  available  to  both  performing  and  non-
performing  vulnerable  debtors  under  the  conditions  set  in  the  law,  with  the  exception  of 
those  non-performing  debtors  with  loans  which  have  been  denounced  for  more  than  one 
year. Moreover, the code introduces a special sale-and-leaseback regime allowing eligible 
distressed debtors to remain in their primary residence as tenants, who may further benefit 
from a subsidy to facilitate the payment of the rent. This arrangement extends the existing 
rental subsidy and will be implemented through a private-sector entity. The private sector 
agency  may  benefit  from  a  state  guarantee  to  support  its  access  to  funding,  if  deemed 
necessary. 

  The  authorities  will  also  submit  shortly  to  Parliament  measures  that  are  aimed  at 
accelerating the clearance of the household insolvency backlog, which has increased 
further as a result of the suspension of court proceedings during the pandemic. Most 
notably, they intend to introduce an automatic rescheduling of distant hearings through an 
electronic platform as well as procedural simplifications; moreover, an electronic platform 
for  eligibility  control  and  filtering  out  strategic  defaulters  is  available  to  institutional 
creditors but the results in reducing the backlog have so far been limited. In the meantime, 
the  backlog  of  cases  has  further  increased  due  to  the  suspension  of  court  proceedings 
following  the  coronavirus  outbreak.  Although  the  pandemic  has  negatively  affected  the 
provision of data on the evolution of the backlog in the second quarter of 2020, the recent 
creation  of  a  Justice  Statistics  Unit  in  the  Ministry  of  Justice  could  facilitate  the 
aggregation, processing and uniform presentation of reliable data through the use of IT. 

  The  authorities  intend  to  adopt  a  number  of  measures  aiming  at  enhancing  the 
functionality  and  user-friendliness  of  the  e-auctions  platform  and  facilitating  the 
relevant processes. The measures are expected to be adopted in October 2020 and include 
the obligation for auction officials to upload a copy of the valuation report and photographs 
of the property on the e-auctions website. Other measures will be introduced as part of the 
revision of the Code of Civil Procedure (see below). The conduct of e-auctions, which had 
been halted as a result of the closure of courts and notarial offices due to the coronavirus 
pandemic  resumed  on  1 September  but  the  intention  is  to  suspend  them  for  vulnerable 

12 

 
 
debtors until the end of December 2020 in view of the entry into force of the insolvency 
legislation and the associated social policy measures in January 2021.  

  Regarding the clearance of the backlog of called state guarantees, the authorities are 
taking actions towards fully offsetting any pandemic-related delays, while committing 
to further frontload the overall processing and payment schedule. The authorities have 
upgraded the clearance targets for the second half of 2020, more than fully counteracting 
the  delay  encountered  in  the  first  half  of  the  year,  while  at  the  same  time  increasing  the 
overall  2020  target  by  33%.  The  authorities  are  also  proceeding  as  planned  with  all  the 
necessary  structural  improvements,  including  a  revised  ministerial  decision  on  the 
electronic file repository, interoperability with local tax offices, and the relocation of staff.  

  Work  on  the  adoption  of  targeted  amendments  to  the  Code  of  Civil  Procedure  is 
ongoing.  The  law-drafting  committee  is  expected  to  submit  a  draft  of  the  legislation  by 
end-January 2021, in view of the adoption of the revised code by end-February 2021, with 
a projected entry into force in September 2021. The amendments will inter alia address the 
issues related to price adjustment requests for e-auctions. 

  A  targeted  adjustment  of  the  primary  legislation  on  deferred  tax  credits  to  ensure 
operational  effectiveness  has  been  submitted  to  Parliament  and  is  expected  to  be 
adopted shortly. The aim is to safeguard the loss-absorbing capacity of the banks’ capital 
in all cases. Further technical and procedural aspects related to the process of deferred tax 
credits’  use,  particularly  in  resolution,  will  be  clarified  via  secondary  legislation  when 
appropriate. 

The  Hellenic  Financial  Stability  Fund  intensified  its  efforts  to  support  the  systemic 
banks in meeting their non-performing-loan reduction and business enhancement goals 
in  the  current,  pandemic-stricken  environment.  On  the  basis  of  the  Fund’s  proposal,  the 
authorities amended its governing law in order to protect the ownership rights of the Fund in 
case  of  corporate  transformations  of  the  systemic  banks (7)  related  to  the  ongoing 
securitisations transactions.  

LABOUR MARKET  

The  authorities  introduced  in  June  2020  a  new,  broader  temporary  short-time  work 
scheme (SYNERGASIA), providing flexibility to companies to adjust working hours and 
compensation  to  workers  for  the  hours  not  worked.  This  scheme  is  expected  to  play  an 
important  role  in  allowing  the  labour  market  to  adjust  to  the  shock  caused  by  coronavirus 
outbreak. The scheme, estimated to cost €440 million, is eligible for financing under the new 
European instrument for temporary support to mitigate unemployment risks in an emergency 
(SURE),  under  which  the  Commission  has  proposed  to  allocate  to  Greece  a  total  of 
€2.7 billion of financial assistance. 

In  the  context  of  the  process  of  labour  law  codification,  some  aspects  of  the  existing 
labour legislation are being reviewed and modernised. These include the establishment of 
a new framework regulating new forms of work (such as platform work, sharing economy), 
the 
and  changes  disentangling 

inspection  and  conciliation 

line  with 

tasks 

the 

in 

(7)  This  legal  amendment  became  necessary  in  order  to  eliminate  any  legal  uncertainty  whether  the  Fund  can 
fully make use of its statutory rights in entities created following a corporate transformation of banks, which 
was necessary to facilitate certain large-scale securitizations of non-performing loans. 

13 

 
 
                                                 
recommendations  of  the  International  Labour  Office.  Labour  legislation  is  expected  to  be 
submitted to Parliament in October 2020 and its codification to follow in November 2020.  

The  authorities  continue  to  pursue  their  comprehensive  education  policy  plans  with  a 
public school reform adopted in June 2020 and substantial progress made on vocational 
education  and  training.  The  Upgrading  Public  Schools  bill  aims,  among  others,  at 
promoting soft skills, digital literacy, foreign language learning and the evaluation of school 
units. At the same time, the comprehensive vocational education and training reform, which is 
currently being developed, aims at enhancing the quality of education offered, increasing the 
percentage of students choosing this path and better linking vocational education and lifelong 
learning with labour market needs. The reform, prepared in consultation with social partners, 
envisages  the  creation  of  professional  lyceums,  new  curricula,  and  better  labour  market 
diagnostics. An important element of the reform is also the accreditation and quality control 
of  the  institutes  that  provide  continuous  education.  The  authorities  are  also  improving  the 
framework for apprenticeships as part of the reform. 

PRODUCT MARKETS AND COMPETITIVENESS 

The  authorities  continue  working  on  major  initiatives  improving  economic  framework 
conditions,  with  a  view  to  enhancing  competitiveness  and  underpinning  economic 
recovery  following  the  coronavirus  outbreak.  To  this  end,  they  aim  to  finalise  the  new 
growth  strategy  shortly,  introducing  reform  measures  in  key  policy  areas  to  boost  private 
sector productivity and achieve sustainable growth.  

The investment licensing reform is progressing well, despite some delays. The authorities 
successfully  completed  the  commitment  to  revise/abolish  the  nuisance  classification,  well 
ahead of the mid-2021 specific commitment deadline. Furthermore: 

  The implementation of the inspections framework law, a mid-2020 specific commitment, 
steadily  progresses  with  respect  to  the  agreed  priority  areas,  even  though  some  work 
remains to be completed. The European institutions encouraged the authorities to develop a 
timeline  for  completing  this  work,  including  the  adoption  of  all  necessary  enabling 
legislation,  by  the  time  of  the  next  report.  The  authorities  committed  to  extend  the 
framework to four remaining domains by end-2021. Its full deployment would be a major 
step, as it would reduce the necessity for ex-ante controls without compromising health and 
safety standards.  

  The  simplification  of  the  investment  licencing  procedures,  a  mid-2020  specific 
commitment,  is  progressing,  albeit  with  some  delays.  The  authorities  adopted  primary 
legislation for the simplification of the primary production sector and secondary legislation 
is  expected  shortly.  Proposals  for  simplification  of  most  remaining  sectors  have  been 
delivered,  and  primary  legislation  is  expected  to  be  adopted  shortly.  The  authorities  are 
encouraged  by  the  time  of  the  next  report  to  develop  a  timeline  for  the  adoption  of  all 
necessary secondary legislation on all sectors, as well as for the simplification of the few 
remaining activities. 

  Finally, the deployment  of the  IT system to  support  the investment  licensing framework, 
an  end-2019  specific  commitment,  is  delayed  due  to  complications  in  the  tendering 
process. Nonetheless, in absence of further appeals at courts, the authorities expect to sign 
the contract shortly.  

14 

 
 
The implementation of key business  environment reforms initiated under the financial 
assistance  programmes  continues,  albeit  with  some  delays  in  certain  areas  due  to  the 
coronavirus outbreak. Work progresses on setting up the framework for the certification of 
external  environmental  assessors,  which  has  been  pending  since  the  European  Stability 
Mechanism  programme,  and  for  the  certification  of  external  inspectors,  even  though  the 
necessary secondary legislation has not been adopted yet. The authorities are also reviewing 
licensing  provisions  on  thematic  tourism  and  the  milk  market,  which  is  highly  welcome. 
Enhanced coordination and monitoring, in addition to actions promoting greater visibility of 
the investment licencing reform, would support ongoing implementation. 

A  new  strategy  for  promoting  Greece’s  export  potential  and  inward  foreign  direct 
investment is about to be published. The strategy aims at identifying key sectors and export 
markets, effectively coordinating relevant institutions, and ensuring outreach to stakeholders. 
Further  progress  hinges  on  the  adoption  of  legislation  clarifying  the  role  of  the  Ministry  of 
Foreign  Affairs,  and  on  the  setting  up  of  necessary  operational  structures  in  specific  areas. 
The launch of the tender for an integrated Single Window system for imports and exports has 
been postponed to end-September due to the pandemic.  

The  authorities  are  gradually  progressing  with  additional  measures  to  further  ease 
doing business. Registration through the electronic one-stop shop has been made mandatory 
for  private  companies,  whilst  the  framework  for  the  protection  of  minority  investors  was 
strengthened  through  a  number  of  safeguards  concerning  the  selection,  appointment  and 
evaluation of board members, and increased disclosure requirements. 

Implementation  of  the  recently  updated  roadmap  towards  completion  of  the  cadastre 
project has restarted, following delays due to the coronavirus outbreak. Appointments of 
senior  managers  are  expected  to  be  completed  shortly,  the  preparation  of  the  Corporate 
Strategy is progressing and the tender for the digitisation of cadastre archives is expected to 
be launched by the end of the year. The collection of land rights has been completed for 82% 
of the country and the cadastral mapping has been completed for the 33% of the rights, below 
the  mid-2020  specific  commitment  to  complete  45%  of  rights.  By  October  2020,  the 
cadastral  mapping  completion  is  expected  to  reach  35%.  The  authorities  are  preparing 
legislation  to  impose  penalties  to  citizens  who  fail  to  declare  their  properties  within  the 
applicable timeframe, and the award of the final five cadastral mapping contracts delayed due 
to  judicial  proceedings  is  progressing.  While  staffing  of  the  Hellenic  Cadastre  is  now 
adequate, more time will be needed to establish cadastral offices and branches following the 
pandemic. By end October 2020, six additional mortgage offices are expected to be abolished 
and one cadastral office (for Thrace) will open.  

The public presentation of all remaining forest maps, scheduled to be completed by mid-
2020, has been delayed due to adoption of legislation addressing land use issues arising 
from Court of State’s decisions. This may delay the completion of the cadastral mapping as 
a  whole,  now  due  by  May  2022,  for  a  number  of  months.  The  European  institutions 
encouraged  the  authorities  to  proceed  with  the  uploading  and  ratification  of  the  remaining 
forest  maps  (53%  of  the  country  has  already  ratified  maps),  while  in  parallel  addressing 
problematic areas. The authorities confirmed that for the completed areas that will not be the 
subject  of changes,  the ratification of the  forest  maps would not  be reversed. All  remaining 
maps will be uploaded by December 2020.  

The Greek government has  continued to engage constructively on a set of proposals to 
remedy  the  anti-trust  case  and  deliver  on  an  end-2020  specific  commitment.  The 

15 

 
 
proposals  should  eventually  be  submitted  for  a  market  test  by  the  European  Commission,  a 
step in view of implementing the remedy and closing the case. Improvements are still being 
discussed  to  the  proposal  to  grant  the  Public  Power  Corporation’s  competitors  access  to  a 
certain share of its baseload generation, including in terms of ensuring a transparent selection 
process,  access  to  the  mechanism  by  smaller  players  and  a  detailed  implementation 
mechanism. 

The  final  date  for  the  go-live  of  the  Target  Model  for  electricity,  a  mid-2020  specific 
commitment, was announced by the energy regulator as 1  November. This  followed an 
assessment of the dry-run period to test the market, which concluded a small delay from the 
originally planned date of 17 September would be necessary. The European Institutions will 
report on the long-awaited go-live of the Target Model in the next report. The launch of the 
Target  Model’s  three  related  markets  (day-ahead,  intra-day,  and  balancing),  and  their 
interplay  with  the  already-running  forward  market,  is  a  huge  step  in  setting  up  a  modern 
energy  market  and  will  pave  the  way  for  Greece  to  couple  with  neighbouring  electricity 
markets in the near future.  

Progress continued also on other areas of Greece’s energy policy. Importantly, Greece has 
adopted an ambitious bill to promote electro-mobility, which will help meet the goals laid out 
in Greece’s National Energy and Climate Plan. A draft of the Master Plan to implement the 
transition away from lignite-based generation is ready for public consultation. The deficit in 
the  Renewable  Energy  Source’s  Special  Account,  worsened  as  a  result  of  the  coronavirus 
outbreak, remains a concern for the future. Work began on the Crete-Greece interconnector, 
which  will  be  a  major  part  of  the  country’s  longstanding  goal  of  connecting  islands  to  the 
mainland.  

Regarding  the  transport  sector,  the  authorities  have  prepared  a  pipeline  of  railway 
projects in order to remedy the delays encountered on the implementation of the 2014-
20  transport  and  environment  operational  programme.  The  responsible  European 
authorities  will  review  the  pipeline.  Modernisation  of  Greece’s  public  railway  companies 
would support further EU investment in the sector. The National Transport Master Plan has 
been completed and approved by the Ministry of Infrastructure and Transport. 

HELLENIC CORPORATION OF ASSETS AND PARTICIPATIONS AND PRIVATISATION 

The pandemic has brought new challenges for the Corporation but its work in key areas 
covered by the Eurogroup commitments has continued. Despite the difficulties caused by 
the  pandemic,  the  implementation  of  the  strategic  plan,  a  continuous  commitment,  is 
ongoing and a draft business plan for 2020-2022 was prepared in August and approved by the 
Board of the Corporation. Key performance indicators, which monitor the implementation of 
the  strategic  plan,  have  recently  been  adjusted  to  take  into  account  the  impact  of  the 
pandemic,  along  with  setting  their  values  for  2021  and  2022.  A  review  of  boards  of  state-
owned  enterprises,  a  mid-2019  specific  commitment,  is  ongoing  and  close  to  being 
completed. The Corporation’s real estate portfolio, held by the Public Real Estate Company, 
has  made  incremental  progress  but  remains  behind  expectations,  while  the  Real  Estate 
Company  faces  significant  legal  challenges.  The  transfer  of  the  Olympic  Athletic  Centre, 
which was a specific end-2018 commitment, proves to be very complex but continues with a 
series of administrative and procurement steps.  

The authorities have continued their support for the Corporation. This included support 
for key state-owned enterprises where the negative repercussions of the pandemic have been 

16 

 
 
most severe (in particular the Athens Urban Transport Organisation and the Hellenic Post), as 
well as  support for the corporate turnaround plan of the Hellenic Post.  The authorities have 
engaged with the European institutions as part of drafting the updated Ministerial Guidance, 
now  expected  in  the  third  quarter  of  2020,  where  the  authorities  intend  to  clarify  their 
expectations  for  the  financial  performance  of  the  Corporation’s  portfolio  of  assets.  The 
authorities  have  chosen  the  Corporation  as  the  home  for  a  new  5G-focused  venture  capital 
fund and engaged thoroughly with the European institutions on its structure, which provides 
for completely independent management in line with the Corporation’s governance principles. 
It will be important to ensure that the Corporation’s rights and competencies are safeguarded 
with respect to placing further new structures or entities under its supervision. Moreover, in 
the  context  of  the Coordination  Mechanism,  the  authorities  stated  their  intention  to  proceed 
with  the  preparation  of  performance  contracts  setting  out  public  service  obligations  for  a 
limited set of state-owned enterprises. 

Progress  with  the  transactions  included  in  the  Asset  Development  Plan  of  the  Hellenic 
Republic  Asset  Development  Fund  (TAIPED)  has  been  affected  by  the  coronavirus 
outbreak  but  has  resumed  for  most  of  them  as  from  June.  Delays  in  the  envisaged 
timeline of the ongoing transactions, while material, have been limited also thanks to the fact 
that the Fund was proceeding with  the maturing  of the transactions during the pandemic. A 
regular  update  of  the  Asset  Development  Plan  was  approved  by  the  Government  on  10 
September. Progress with due specific commitments for transactions is as follows: 

  Hellinikon:  The  authorities  remain  strongly  engaged  and  undertake  necessary  efforts  to 
complete the prerequisites for the financial closing of the transaction, having launched the 
demolition of current buildings on the site, on the 3rd of July. The relocation of the public 
users is  almost  completed with  only a few  arrangements  to  be made for users  staying on 
site  and  the  partition  of  the  Hellinikon  site  agreed  in  February  2020  is  currently  being 
enshrined in  a binding document. The financial closing of the transaction is  still pending 
the  resolution  of  legal  cases  against  the  casino  licence  tender  process  and  other  judicial 
cases,  concerning administrative acts,  set for discussion in  September  and October 2020. 
Part of the casino  case has already been settled in favour of the state but another case is 
still ongoing; the authorities expect a final decision soon.  

  Marina  of  Alimos  concession:  Following  the  signing  of  the  concession  agreement  in 
May, the financial closing of the transaction should have taken place within 120 days. The 
Board  of  the  Fund  extended  on  3 September  the  120  days  for  another  50  days  (until 
30 October 2020) to allow adequate time for the completion of the transaction. 

  Hellenic Petroleum: Following the failure of the first tender in mid-2019 and considering 
the  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 in time. 

  Sale  of  30%  of  Athens  International  Airport:  The  tendering  process  was  proceeding 
well prior to the coronavirus outbreak, with nine investment parties qualified to proceed to 
the Binding Offers Phase. However, the deadline for the submission of binding offers was 
delayed  due  to  the  impact  of  the  pandemic  on  the  air  transport  sector.  The  Fund  will 
determine next steps once the situation improves, likely not before 2021.  

  Public  Gas  Corporation  (DEPA):  The  tenders  for  DEPA  Infrastructure  and  DEPA 
Commercial, launched in December 2019 and January 2020 respectively, attracted strong 

17 

 
 
investment interest. In June 2020, the Board of the Fund decided to proceed to the binding 
offers phase for both transactions. 

  Egnatia: The privatisation process continued, although with mixed progress. Some of the 
open issues have been resolved, such as the uncertainty on the construction of the motorist 
service stations and  the  rehabilitation cost of bridges  classified as unsafe. However, very 
limited  progress  has  been  made  over  the  last  three  months  on  the  completion  of  the 
construction of the remaining toll stations and the required works so that the remaining 14 
tunnels  can  be  licensed.  The  European  institutions  encourage  the  authorities  to 
significantly advance on these areas by the time of the next report.  

  Regional  Ports:  Following  a  delay  due  to  the  pandemic,  the  Fund  decided  in  June  to 
proceed  with  the  launching  of  the  tender  process  for  the  sale  of  shares  for  the  ports  of 
Alexandroupolis and Igoumenitsa and the sub-concession of a multi-purpose terminal for 
the port of Kavala.  

PUBLIC ADMINISTRATION AND DIGITAL GOVERNANCE 

The appointment of senior management positions in the public sector continues and the 
delegation  of  competencies  from  the  political  to  non-political  level  is  being  applied 
efficiently.  Following  the  appointments  of  13  Permanent  Secretaries  posts,  the  selection 
process  to  appoint  the  last  post  at  the  Ministry  of  Migration  and  Asylum  is  expected  to  be 
completed  shortly.  The  selection  process  for  director  posts  at  ministries  are  expected  to  be 
resumed  shortly  with  the  selection  boards  now  including  the  recently  appointed  Permanent 
Secretary. Draft provisions to set up a uniform selection process for senior management posts 
at public sector entities, have been prepared and are expected to be adopted in September and 
come into effect in October 2020. Clarity about the selection process for managers involved in 
the management of the EU structural funds, which has encountered severe delays, is expected 
to  be  established  ahead  of  the  new  programming  period  for  EU  funds  (2021-2027).  The 
delegation of competencies from the political to non-political level, a major novelty brought 
about the 2019 Executive State Law, is being applied efficiently since its entry into force in 
February 2020 and the authorities are considering delegating additional competencies.  

Good  progress  has  been  made  during  this  review  period  in  developing  the  Human 
Resources  Management  System,  which  is  an  end-2019  specific  commitment  that  is 
expected  to  be  completed  by  end-2020.  This  exercise  includes  the  development  of  digital 
organigrams  and  job  descriptions  across  the  general  government.  The  process  has  been 
affected by the confinement measures due to the pandemic but overall good progress has been 
made. Until August 2020, over 1 500 general government entities had completed their digital 
organigram, representing around 80% of all entities and 85% of personnel, including most of 
the large entities. A majority of the remaining larger entities are set to be completed by end-
October  2020.  The  link  between  a  job  description  and  a  jobholder  has  been  established  for 
around  75%  of  posts  and  the  authorities  plan  to  establish  this  link  for  all  posts  for  general 
government entities by the end of 2020. 

A capacity-enhancing reform of the Supreme Council for Civil Personnel Selection is set 
to be adopted in November. The reform puts in place a coherent and uniform procedure for 
recruitment.  The  authorities  are  also  carrying  out  a  comprehensive  review  of  the  mobility 
scheme. In this regard, a recent provision (8), which allowed for up to 80 public officials to be 

(8)  OJ A 148/31.07.2020, Article 86. 

18 

 
 
                                                 
seconded  outside  the  mobility  scheme,  raises  concerns  as  it  risks  setting  a  precedent  for 
creating ad hoc hiring procedures.  

The  coronavirus  pandemic  has  slightly delayed  the  adoption  of  the  re-codified  Labour 
Law Code and Code of Labour Regulatory Provisions, a mid-2020 specific commitment. 
The authorities plan to adopt the laws by November 2020. The codification process is used as 
an opportunity to review and modernise some areas of the labour legislation, including new 
forms of work and the role of the labour inspectorate, which is most welcome (see above).  

Regarding  legal  codification,  the  Central  Codification  Committee,  following  its  re-
establishment  in  May  2020,  is  making  progress  on  a  number  of  fronts.  It  finalised  and 
published  the  manual  for  legal  codification  in  July  and  prepared  a  draft  annual  codification 
plan for 2021. The plan is expected to be approved in September. The European institutions 
encouraged the authorities to include in the plan the legislative framework of party financing. 
The tender for the national gateway for legal codification, a mid-2022 specific commitment, 
was launched in June 2020 and contract signature is expected by the end of the year. 

Hiring  of  permanent  personnel  has  been  delayed  due  to  the  pandemic,  while  the 
envisaged  reduction  of  temporary  posts  following  their  conversion  to  permanent 
positions  is  yet  to  materialise.  Most  of  the  new  hirings  of  permanent  staff  aim  at 
strengthening  the  public  health  system,  military  schools  and  the  Independent  Authority  for 
Public Revenue. Hirings of permanent staff in 2020 will nevertheless be approximately 40% 
below  plan,  while  the  number  of  temporary  staff  remained  stable  in  the  first  half  of  2020 
compared  with  a  year  ago.  The  envisaged  reduction  of  temporary  positions,  following  their 
conversion to permanent staff, is expected to take place by end-September 2020, at least for 
the  education  personnel  hired  on  permanent  contracts.  The  European  institutions  encourage 
the authorities to implement the expected reduction of the remaining temporary posts during 
the next review period. In parallel, the authorities are carrying out a comprehensive analysis 
of  temporary  staff,  which  is  expected  to  be  completed  by  October  2020,  with  a  view  to 
removing posts of a permanent nature and plan to set an annual ceiling on temporary staff by 
end of the year.  

The  inter-ministerial  committee  mandated  to  strengthen  central  control  over  the  wage 
grid and hiring procedures has set up three working groups. They are expected to focus 
on establishing an accurate overview of all salary and hiring provisions, in order for the inter-
ministerial committee to present proposals on how to reduce deviations from the unified wage 
grid and hiring procedures.  

The ambitious digital transformation of the public administration and the economy as a 
whole  remains  a  key  priority  for  the  authorities.  To  underpin  these  efforts,  they  aim  to 
publish  the  new  comprehensive  national  digital  strategy  (‘Digital  Bible’)  for  public 
consultation shortly. The strategy is expected to lay down a pipeline of some 300 projects and 
set  out  a  portfolio  management  system  to  monitor  their  implementation.  The  focus  is  on 
digital  upskilling,  digitalising  transactions,  enhancing  the  interoperability  and  robustness  of 
public  IT  systems,  and  addressing  connectivity  gaps.  The  authorities  also  delivered  an 
innovative  proposal  for  developing  the  ecosystem  for  the  industrial  application  of  5G 
technologies (see above). 

A number of projects is already underway. The authorities have completed the set up for 
the  National  Programme  for  Process  Simplification,  which  aims  to  ease  the  administrative 
burden for citizens and businesses. The public portal gov.gr offers by now some 610 services, 

19 

 
 
more than 110 more  since the last  review, and some 40 new services are in  the pipeline. A 
new Code of Digital Governance to create a comprehensive legal framework on digital policy 
is expected to be adopted shortly. Digital infrastructure and connectivity issues are also being 
addressed. Last but not least, the authorities have completed the first steps for the digitisation 
of geospatial data.  

JUSTICE AND ANTICORRUPTION 

Work  on  the  transition  to  mandatory  electronic  filing  and  processing  of  documents  is 
ongoing.  The  authorities  drafted  a  list  of  digitalisation  initiatives.  The  tasks  due  for 
completion  by  the  end  of  September  2020  include  the  consolidation  of  a  number  of 
insolvency-related  certificates  and  the  issuance  of  electronic  criminal  record  and  divorce 
certificates. In parallel, efforts are underway to implement a mechanism for the distribution of 
digital  signatures,  which  will  significantly  enhance  the  efficient  and  speedy  conduct  of 
notifications and increase legal certainty.  

The tender procedure for the second phase of the Integrated Judicial Case Management 
System,  a  mid-2020  specific  commitment,  is  now  scheduled  to  be  completed  by 
December 2020.  The procedure was extended due to  disruptions caused by the coronavirus 
pandemic. Following the submission of bids, the authorities are in the process of evaluating 
the offers. Completion of the project is foreseen within 36 months from the signature of the 
contract. 

The authorities adopted legislation for the creation of specialised chambers in civil and 
administrative courts and are proceeding with a number of other important initiatives, 
with a view to increasing the effectiveness and efficiency of justice. The creation of special 
chambers  in  civil  jurisdictions  in  Athens  and  Thessaloniki  would  allow  dealing,  among 
others,  with  cases  of  major  economic  significance.  The  legislation  allows  the  creation  of 
special  chambers  also  in  bigger  administrative  courts,  and  in  certain  Magistrate’s  courts  as 
regards  household  insolvency  cases.  A  full  report  on  the  application  of  said  legislation  is 
expected by end-October 2020. The authorities also adopted the Code of Procedure before the 
Court  of  Audit  and  are  proceeding  with  the  adoption  of  the  Code  of  Judicial  Staff  and  the 
Code on the Status of Judges and the Organisation of Courts, all of them introducing revisions 
that  should  contribute  to  enhancing  the  function  of  justice  and  the  success  of  other  justice 
reforms. Mandatory mediation is fully in force as of 1 July 2020 and an action plan detailing 
the  deployment  of  relevant  activities  is  due  by  November  2020.  Last  but  not  least,  the 
authorities adopted legislation for the creation of the ‘JustStat’ unit for collection of statistical 
data in June 2020 and plan to draft the relevant secondary legislation by December 2020. 

The  National  Anticorruption  Plan  is  showing  encouraging  results.  A  recent  significant 
step  concerns  the  operationalisation  of  the  National  Coordinating  Body  for  Audit  and 
Accountability  (ESOEL)  in  June  2020,  tasked  with  activities  coordinating  the  fight  against 
corruption  under  the  auspices  of  the  National  Authority  for  Transparency.  Sectoral  anti-
corruption plans are being developed in the health and public procurement sectors, which will 
contribute to the efficient management of funds, including from the Recovery and Resilience 
Facility. The National Authority for Transparency strengthened the awareness-raising pillar of 
its portfolio and has made progress on improving public internal control systems, the national 
integrity  system  and  regulation  of  lobbying  activities.  The  Authority  should  become  fully 
operational  by  November  2020.  The  authorities  have  set  up  a  committee  to  oversee  the 
implementation of recommendations of the Group of States against Corruption (GRECO) but 
the project is likely to fall behind schedule following the outbreak of the pandemic.  

20 

 
 
The report on political party financing for the year 2018 has been made public and, for 
the first time, triggered imposition of fines to nine political parties. This is a major move 
forward  towards  increasing  transparency  in  the  political  sphere.  The  report  delivered 
detailed  information  on  the  misappropriation  that  were  investigated.  The  work  of  the 
committee  for  2019,  which  was  a  multiple  election  year,  has  been  delayed  due  to  the 
coronavirus pandemic and should begin by October 2020. 

21