COMMUNICATION FROM THE COMMISSION Enhanced Surveillance update - Greece, November 2020
Date: 2020-11-18
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Euro Group (euro area), Greece, coronavirus disease, economic recovery, epidemic, gross domestic product, macroeconomics, multilateral surveillance, public debt, stability programme, structural adjustment

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 18.11.2020  COM(2020) 751 final  COMMUNICATION FROM THE COMMISSION Enhanced Surveillance update - Greece, November 2020 {SWD(2020) 751 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). 

that  context,  enhanced  surveillance  monitors 

This  is  the  eighth  enhanced  surveillance  report  for  Greece.  The  report  is  based  on  the 
findings  of  a  mission  held  remotely  on  19-20 October  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 
the  European  Stability  Mechanism 
Post-Programme  Monitoring  framework,  while 
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 could serve as a basis for the Eurogroup to decide on the release of the next 
set  of  policy-contingent  debt  measures  worth  €767 million.  These  measures  were  agreed 
with the Eurogroup on 22 June 2018 and include the transfer of income equivalent 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 

(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 30 September to 8 October 2020. 

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interest  margin for certain loans provided by the  European Financial Stability Facility. The 
third  tranche  of  policy-contingent  debt  measures  was  released  following  the  Eurogroup  on 
11 July  2020,  inter  alia  based  on  the  assessment  of  the  implementation  of  Greece’s 
commitments  for  end-2019  included  in  the  enhanced  surveillance  report  adopted  by  the 
Commission  on 20 May  2020 (5) and  considering  the extraordinary circumstances posed by 
the coronavirus outbreak. 

OVERALL ASSESSMENT 

This report was prepared at a time when most Member States face a resurgence of the 
pandemic. In spite of the recent surge in infections, Greece has to date managed to contain 
the  spread  of  the  coronavirus  comparably  well,  also  thanks  to  a  timely  response  in  regions 
facing  an  increase  in  the  number  of  new  cases.  The  authorities  are  strengthening  the 
preparedness of the health-care system and expanding the testing capacity, while at the same 
time  expanding  and  adapting  the  set  of  fiscal  and  liquidity  measures  aiding  persons  and 
businesses affected by the pandemic. These measures help cushion the social and economic 
cost  of  the  pandemic,  but  according  to  the  Commission  2020  autumn  forecast,  the  Greek 
economy is still expected to suffer one of the largest falls in economic activity in the EU, on 
account of its high exposure to tourism and the large share of small enterprises, which have a 
limited adjustment capacity. The three-week national lockdown announced on 5 November, 
and its potential prolongation depending on the evolution of the pandemic, could weaken the 
near-term outlook more than currently assumed.  

Despite  the  very  challenging  circumstances,  which  necessitated  a  focus  on  more 
immediate  priorities,  Greece  has  significantly  stepped  up  the  pace  of  reform 
implementation  in  the  past  months.  Most  importantly,  the  insolvency  code  has  been 
adopted  in  the  Parliament.  This  is  a  major  reform  of  the  insolvency  framework,  which  is 
expected to facilitate the resolution of key challenges in the financial sector. The authorities 
are currently preparing secondary legislation, which will define important aspects of the new 
framework, and are in parallel developing the infrastructure, both of which are necessary for 
the code’s  effective implementation  as  from  1 January 2021. A long-standing bottleneck to 
the  human  resources  reform  of  the  Independent  Authority  for  Public  Revenues  is  being 
addressed through the agreement to go ahead with its supplementary wage legislation, which 
will  enhance  its  capacity  to  attract  and  maintain  high  calibre  staff.  The  authorities  are  also 
advancing on a number of flagship privatisation transactions, although others are delayed due 
to the pandemic. 

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

  Fiscal-structural reforms, with the completion of the Treasury Single Account system, a 
major  public  procurement  reform  to  be  adopted  by  the  end  of  the  year,  progress  on 
reforms to speed up the implementation of public investments, and positive developments 
on arrears clearance, which will need to be sustained; 

  Public  administration,  with  steady  progress  on  the  modernisation  of  human  resource 
management  and  the  entry  into  force  of  a  uniform  selection  process  for  senior 
management posts at public sector entities. The authorities have also progressed with the 
implementation of their ambitious digital agenda. 

(5)  https://ec.europa.eu/info/publications/enhanced-surveillance-report-greece-may2020_en 

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  Energy,  where  the  launch  of  the  Target  Model  for  the  electricity  market  took  place  on 

1 November 2020, fulfilling a long-standing commitment. 

The  authorities  also  established  clarity  on  the  way  forward  in  areas,  where  full 
completion  of  existing  commitments  was  out  of  reach  due  to  previous  delays  or  the 
impact of the pandemic. The authorities restarted the collection of health expenditure under 
the clawback and agreed to finalise the primary health care legislation by the time of the 10th 
report, while adequately delivering on the principles of the 2017 reform, which has not been 
fully  implemented  yet.  Clear  timelines  have  been  established  also  for  the  investment 
licensing  reforms  monitored  under  enhanced  surveillance,  while  steady  progress  has  been 
seen  on  the  implementation  of  the  road  map  for  the  cadastre  project.  The  authorities  also 
agreed to restart two specific reforms that have been significantly affected by the coronavirus 
outbreak, namely the nationwide reassessment of property tax values and the completion of 
the activation element of the Guaranteed Minimum Income scheme. A final proposal for the 
anti-trust  remedy  related  to  the  Public  Power  Corporation’s  lignite  generation  has  been 
submitted to the Commission and is expected to be market tested as soon as the authorities 
provide  their  final  authorisation.  The  staffing  target  set  for  the  Independent  Authority  for 
Public Revenue is not being met but the authorities confirmed that ongoing hiring procedures 
at the Ministry of Finance would not have an adverse impact on the Authority’s capacity. 

The efficient and appropriate use of funds available under the Recovery and Resilience 
facility could help the Greek economy recover from the current crisis and address the 
challenges it continues to face, despite the progress achieved. Persistent reform efforts to 
address the remaining vulnerabilities are of the essence. The significant funds that Greece is 
entitled  to  receive  via  the  Recovery  and  Resilience  Facility,  if  used  efficiently  and 
appropriately, can support growth, job creation and the twin transitions in the coming years. 
Reforms and investments, as part of the upcoming recovery and resilience plan, are expected 
to  build  on  and  complement  past  and  ongoing  reforms  in  the  context  of  the  enhanced 
surveillance process. 

This  report  concludes  that  in  spite  of  the  adverse  circumstances  caused  by  the 
pandemic,  Greece  has  taken  the  necessary  actions  to  achieve  its  due  specific 
commitments.  The  unprecedented  events  have  led  to  a  sharp  economic  downturn  and  to  a 
standstill, in the first half of the year, on a number of reforms in view of the need to address 
more  immediate  priorities.  Nonetheless,  the  authorities  managed  to  restart  the  work  on  the 
commitments  in  the  past  months  and  delivered  on  a  number  of  fundamental  reforms.  The 
European  institutions  welcome  the  close  and  constructive  engagement  in  all  areas  and 
encourage  the  authorities  to  keep  up  the  momentum  and,  where  necessary,  reinforce  the 
efforts to quickly complete the implementation of recently adopted primary legislation. This 
is  in  particular  the  case  with  the  financial  sector  reforms,  where  a  large  body  of  secondary 
legislation is to be completed and adopted shortly.  

MACROECONOMIC DEVELOPMENTS 

The coronavirus pandemic is taking a strong toll on the Greek economy.  The economy 
contracted by -14.2% in the second quarter of 2020 as economic activity was constrained to 
stop the spread of the pandemic. The services sector was hit particularly hard also during the 
summer  season  due  to  the  importance  of  international  tourism.  While  the  increase  in  the 
unemployment  rate  has  been  relatively  muted  so  far,  partly  on  account  of  the  protection 
schemes put  in  place timely by the authorities,  employment has suffered more markedly in 

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view of the lower demand for seasonal workers. The slack in the economy, as well as falling 
energy prices, are expected to lead to a temporary decrease in consumer prices in 2020. 

As  the  number  of  new coronavirus  cases  continues  to  rise,  the  recovery  is  likely  to be 
somewhat  slower  than  previously  expected.  According  to  the  Commission  2020  Autumn 
Forecast,  real  GDP  is  expected  to  decrease  by  9%  in  2020  and  grow  by  5%  in  2021.  The 
projections  factor in  only  a  gradual  increase in  demand for tourism services, more cautious 
consumer spending, and persisting uncertainty and lower profits in the corporate sector. The 
authorities have adopted a large amount of measures to cushion the economic impact of the 
containment  measures  in  2020  as  well  as  measures  stimulating  aggregate  demand  in  2021. 
These  projections  were  finalised  before  the  announcements  of  the  3-week  lockdown  on 
5 November 2020 and the relevant support measures (6). 

Uncertainty  and  risks  surrounding  the  outlook  are  very  high,  due  to  the  uncertain 
developments  of  the  global  health  crisis.  The  increasing  stringency  of  the  restrictions 
already implemented in  Greece and in  other European countries could  negatively  affect  the 
short  term  outlook.  Additional  restrictions  on  the  movement  of  persons  and  goods  in  the 
coming  months  in  Greece,  but  also  abroad  –  in  view  of  the  importance  of  international 
tourism – remain a substantial source of uncertainty. Further downside risks are represented 
by the heightened  geopolitical  tensions  in  the region  and sustained migration pressures. On 
the upside, the support measures adopted at EU level, including Next Generation EU, could 
significantly support demand in  2021 and strengthen  economic fundamentals and resilience 
going forward. More specifically, the Commission forecast does not incorporate the impact of 
the Recovery and Resilience  Plan as it is  still at an early stage of development. Once fully 
specified,  adopted  and  implemented,  the  reforms  and  investments  implemented  under  the 
Plan are expected to have a positive impact on the growth outlook. 

FISCAL DEVELOPMENTS AND OUTLOOK  

The  fiscal  impact  of  the  economic  downturn  and  the  cost  of  emergency  measures 
adopted  to  address  the  coronavirus  outbreak  are  expected  to  result  in  a  large  fiscal 
deficit this year. The primary balance monitored under enhanced surveillance is forecast to 
reach -4.4% of GDP in 2020. Apart from the shortfall in revenues triggered by the recession, 
the  projection  takes  into  account  the  prolongation  of  measures  already  adopted  by  the 
authorities to cushion the downturn in recent months. These include an increase in the total 
envelope  of  the  ‘repayable  advances’  to  companies  and  extensions  of  existing  support 
measures  for  both  the  unemployed  and  employees  of  companies  affected  by  the  pandemic. 
The forecast  also  takes into  account  a  retroactive payment  to  pensioners  following the July 
2020  Court  of  State  ruling,  for  a  short  period  before  to  the  entry  into  force  of  the  2016 
pension reform. 

Greece’s fiscal policy is expected to continue to support the recovery throughout 2021. 
While most of the measures taken in  2020 have targeted the direct  impact  of the pandemic 
(health care expenses, support for the lock-down period, tax deferrals etc.), authorities have 
also  announced temporary  measures to  more broadly  stimulate demand and employment  in 
2021. These include a three percentage points reduction in social security contributions and a 

(6)  The forecast was prepared taking into account information available up to the cut-off date 22 October 2020. 
found  here: 

More  details 
https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-
forecasts/autumn-2020-economic-forecast_en.  

the  Commission  2020  Autumn  Forecast 

regarding 

can  be 

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suspension of the social solidarity tax for the private sector, and a new temporary recruitment 
subsidy. These measures go in the right direction as to reduce the high tax wedge on labour 
and their temporary nature is consistent with the objective of ensuring sustainability of public 
finances in the medium term. The fiscal policy setting planned for 2021 takes into account the 
continued application of the General Escape Clause in 2021.  

The 2021 Draft Budgetary Plan expects the primary deficit monitored under enhanced 
surveillance in 2021 to reach 1.1% of GDP. The authorities’ projection takes into account 
the new measures,  a special reserve,  which could finance immediate needs that might  arise 
from  the  evolution  of  the  pandemic  and  an  ambitious  7-year  defence-spending  programme. 
The  authorities’  projection  is  more  optimistic  than  the  Commission  2020  autumn  forecast, 
which  expects  a  primary  deficit  of  3.4%  of  GDP  in  2021.  However,  a  large  part  of  the 
difference  is  due  to  methodological  assumptions  on  (a)  the  afore-mentioned  recording  of 
some of the emergency measures, the rules of which were clarified only after the presentation 
of the Draft Budgetary Plan, and (b) the inclusion of the Recovery and Resilience Facility in 
the  authorities’  macroeconomic  scenario (7).  Apart  from  these,  the  Commission  forecast  is 
more cautious regarding the closure of the deficit in the Renewable Energy Source account 
assumed in the Draft Budgetary Plan, as the policy action delivering this improvement is yet 
to  be  specified,  and  takes  a  more  gradual  view  on  the  implementation  of  the  new  defence 
programme. 

Progress towards completion of the nationwide reassessment of property tax values has 
slowed  down;  this  was  a  mid-2020  specific  commitment,  whose  finalisation  has  now 
been  rescheduled  for  mid-2021.  Inevitable  delays  occurred  earlier  in  the  year  due  to  the 
coronavirus  lockdown  and  further  delays  have  taken  place  owing  to  the  quality  assessment 
required by successful appeals to the Council of State. The reassessment and expansion of the 
existing  value  zone  system  is  now  planned  to  be  finalised  in  March  2021,  in  time  for  the 
property tax assessment of August 2021. 

The inherent uncertainty in the current assessment and forecast is substantial: a further 
escalation  of  the  health  crisis  could  trigger  the  need  for  additional  fiscal  measures, 
which  should  be  both  of  a  targeted  and  temporary  nature,  to  contain  the  fallout  and 
bolster the recovery in 2021. Additional risks relate to the activation of state guarantees that 
have recently been issued, which were part of the set of emergency measures. Further risks 
refer to the cost of ongoing litigation cases and remaining public service obligations, which 
could deteriorate the balance when agreed. The uncertainty with respect to the full extent of 
the  retroactive  compensation  for  cuts  in  supplementary  pensions  and  seasonal  bonuses 
introduced by previous pension reforms remains, as the 2020 Council of State ruling has not 
yet been published. Finally, an additional risk stems from the potential additional cost of the 
coverage of individuals without health insurance. On the positive side, Greece is expected to 
greatly  benefit  from  the  Recovery  and  Resilience  Facility,  which  aims  to  support  a 
sustainable  economic  recovery  by  providing  large-scale  financial  support  to  growth-
enhancing reforms and investments. 

(7)  The Commission forecast does not incorporate the impact of the Recovery and Resilience Plans as the full 
implementation is conditional upon their positive assessment by the Commission and endorsement through a 
Council  implementing  decision,  as  well  as  the  achievement  of  milestones  and  targets.  Furthermore,  the 
Commission  forecast does not account  for any expenditure under the Recovery and  Resilience Facility, as 
the Draft Budgetary Plan did not present such projects in sufficient detail. 

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SOVEREIGN FINANCING AND DEBT SUSTAINABILITY ANALYSIS 

Greek  sovereign  yields  remain  low  and  the  government’s  cash  buffer  is  close  to  pre-
crisis levels. The authorities have recently successfully completed the issuance of a 15-year 
bond. The yield spreads of the long-term Greek sovereign bonds remain at historic lows. The 
general  government  cash  reserves  now  stand  at  €34.5 billion  (end  of  September),  with  the 
cash buffer account balance unchanged at €15.7 billion. The overall general government cash 
reserves  would  be  sufficient  to  cover  around  two  years  of  financing  needs  even  without 
further bond issuances.  

The  European  institutions  have  carried  out  a  comprehensive  revision  of  the  debt 
sustainability  framework,  as  announced  in  the  5th  enhanced  surveillance  report.  The 
revised  framework  includes  a  baseline  scenario,  which  is  aligned  with  the  Commission’s 
framework  applied  to  assess  the  debt  sustainability  for  all  Member  States,  and  a  country-
specific scenario analysis. The revision makes use of market-based indicators that are readily 
available  and  well  understood  and  makes  the  assumptions  more  consistent  with  market 
expectations for the short and medium-term. The revision also takes into account long-term 
growth  and  interest  rate  assumptions  from  the  2021  Ageing  Report.  The  scenario  analysis 
captures risks that are particularly relevant for high debt countries like Greece.  

Despite  the  deteriorated  short-term  outlook,  the  baseline  scenario  shows  a  return  to 
declining  debt-to-GDP  ratio.  In  the  short  run,  public  debt  is  projected  to  increase  from 
180.5% of GDP  in  2019 to  over 207% of  GDP in 2020. However,  as the emergency  fiscal 
measures  taken  during  the  pandemic  are  expected  to  be  temporary  and  the  economy  is 
projected to start recovering in 2021, the debt-to-GDP ratio is expected to follow a declining 
trend as from 2021. The government gross financing needs are expected to hover around 15% 
of GDP for the next 20 years, before decreasing to about 13% of GDP by 2060. The results of 
this  baseline  simulation  are  mainly  supported  by  the  assumed  favourable  financing 
conditions, the large share of debt that is financed at low rates by official lenders and the long 
average maturity of the outstanding debt.  

The  two  alternative  scenarios  suggest  that  higher  refinancing  rates  would  deteriorate 
the outlook, and more  so if combined with  low growth, underlining the importance of 
proceeding  with  an  ambitious  growth  agenda.  The  baseline  assumptions  are  subject  to 
uncertainty, which is increasing over the projection horizon. Financing conditions could turn 
out  less  favourable  than  assumed,  in  particular  beyond  the  medium-term.  Under  the  higher 
risk premium scenario, which links risk premia to the level of debt in the medium and long 
run, the debt ratio while on a declining path, remains significantly higher than in the baseline 
projections. The gross financing needs are also higher and remain marginally below 20% of 
GDP in the long term.  In a scenario in which GDP growth is lower than in the baseline, in 
addition to the existence of a higher risk premium, the debt level remains high in the long run 
and gross financing needs exceed 20% of GDP from the mid-2030s, thus signalling residual 
sustainability risks. Under that scenario, growth would remain below that of the euro area in 
the long term, which highlights the importance of delivering on the growth agenda for which 
a  draft  was  prepared  by  the  ‘Pissarides  Commission’  and  published  by  the  authorities  in 
August 2020. The Recovery and Resilience Facility represents an opportunity for increasing 
potential growth through investments and reforms. 

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PUBLIC REVENUE ADMINISTRATION 

The  supplementary  wage  grid  legislation  for  the  Independent  Authority  for  Public 
Revenue, which is a key step towards completing its human resources reform, has been 
published for public consultation and is expected to be adopted by end-November 2020. 
The  reform  is  expected  to  strengthen  the  Independent  Authority’s  ability  to  maintain  and 
attract new high-calibre staff, which at the end of the third quarter remained well below the 
staffing target set for end-2019 (11 947 compared to 12 500). The authorities have confirmed 
that ongoing hiring procedures at the Ministry of Finance will not have a negative impact on 
the Independent Authority’s overall capacity. It is expected that the overall human resources 
reform will become operational by 1 January 2021. 

Further  progress  has  been  reached  to  strengthen  the  anti-smuggling  framework.  The 
draft  law  has  been  published  for  public  consultation  and  is  expected  to  be  adopted  by 
November 2020. The draft law includes provisions to enhance the capacity of the Operational 
Coordination Centre, which coordinates anti-smuggling efforts, and is part of the Independent 
Authority  for  Public  Revenues.  The  adoption  of  these  provisions  are  expected  to  further 
facilitate its staffing. 

Overall,  there  is  good  progress  in  meeting  the  targets  set  on  the  key  performance 
indicators, including on debt collection, while work to further enhance the Independent 
Authority’s  collection  and  audit  capacity  continues.  A  number  of  indicators  has  fared 
better than expected in the current circumstances, partly on account of the discounts provided 
for a timely payments of tax debts that were introduced after the pandemic outbreak.  

The  authorities  have  adopted  a  number  of  specialised  arrangements  to  settle  tax 
liabilities that emerged during the pandemic. These new schemes relate to the tax deferrals 
that  were  put  in  place  at  the  beginning  of  the  pandemic  and  facilitate  the  re-entry  to 
settlement plans for payments that were interrupted during the pandemic, in view of the strict 
penalties  that  would  otherwise  apply  under  the  framework  agreed  in  2019.  In  addition,  a 
‘second  chance’  has  been  created  also  for  settlement  plans  that  had  been  agreed  before  the 
entry into force of the 2019 settlement framework. The scheme is yet to be made operational 
and  is  expected  to  subject  the  debtors  to  appropriate  scrutiny  of  the  reasons  for  their 
termination and compliance history. In relation to the state guarantees that had been called by 
banks and are currently being processed and paid by the state on behalf of the original debtors 
(see the financial section), the authorities have also created a settlement scheme that would 
allow  the  debtors  to  repay  these  to  the  state  in  up  to  120  instalments.  With  a  view  to 
upholding  payment  discipline,  the  authorities  have  clarified  that  the  drop-outs  from  this 
extraordinary  scheme  would  not  be  eligible  to  join  other  settlement  schemes  and  would 
therefore be subject to enforcement. The conduct of these enforcement efforts will be closely 
monitored.  

PUBLIC FINANCE MANAGEMENT AND PUBLIC INVESTMENTS 

The  stock  of  arrears  has  decreased  since  the  last  report  but  sustained  efforts  are 
required to meet the ambitious target for the end of the year. While the stock of arrears 
remains above the levels envisaged in the October 2019 action plan, the slippages created in 
early-2020  also  due  to  the  pandemic  have  been  recovered,  except  for  the  backlog  of 
unprocessed  pension  claims,  where  the  automatic  processing  and  awarding  of  pensions  is 
expected  to  deliver  fully  only  next  year.  The  zero  arrears  target  for  the  end  of  2020  in  all 

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sectors except for pension claims has been confirmed by the authorities, but remains subject 
to  risks,  including  in  relation  to  the  resurgence  of  the  pandemic.  In  view  of  the  unforeseen 
increase in applications for pensions, which was triggered by legal and technical factors, the 
full clearance of pension claims is expected by December 2021.  

importance  of 

While  the  stock  of  arrears  decreases,  new  arrears  continue  to  be  created,  which 
underlines  the 
implementing  the  Hellenic  Court  of  Auditors 
recommendations,  a  mid-2021  specific  commitment,  amongst  which  strengthening  the 
internal control system is key. Reinforcing the internal control system would also be key for 
the  sound  management  of  the  projects  to  be  funded  through  the  Recovery  and  Resilience 
Facility.  A  law  setting  out  the  conceptual  framework  for  internal  control  is  planned  to  be 
adopted by the end of the year. The challenge lies now in achieving the full implementation 
of  its  public  finance  management  component  across  the  public  administration  as  well  as 
ensuring  its  effective  supervision  by  the  Ministry  of  Finance.  The  reform  will  benefit  from 
recent  steps  taken  by  the  Hellenic  Court  of  Auditors  and,  in  the  medium  term,  the 
simplification of the framework for budget execution and the payment procedure, which has 
recently started.  

The mid-2020 specific commitment on establishing the Treasury Single Account system 
has  been  successfully  completed.  The  Treasury  Single  Account  system  is  operational  and 
offers  an  overview  of  the  cash  situation  of  the  state  as  well  as  an  efficient  liquidity-
monitoring tool. The Ministry of Finance has set up a dedicated tool for the monitoring of the 
entities’ cash forecasting, which will be gradually rolled out.  

The  Chart  of  Accounts  reform,  including  mid-2021  and  mid-2022  commitments,  is 
overall on track and its implementation in the Public Investment Budget is starting to 
advance.  Following  the  implementation  of  the  administrative  classification  in  the  ordinary 
budget in 2019, a functional classification of accounts is currently being designed, along with 
the performance budgeting framework. These are welcome and ambitious reforms. The full 
implementation of the Chart of Accounts in the Public Investment Budget is starting to gather 
momentum. The steps taken to ensure its interoperability with the central IT system, due to 
be  completed  by  March  2021,  are  expected  to  substantially  speed  up  the  payment  process. 
This will also significantly reduce the scope for creating arrears. The implementation of other 
measures,  including  the  e-invoicing  application  for  public  procurement  and  upgrading  the 
central payment system for the ordinary budget, are broadly on track.  

The  authorities  plan  to  adopt  a  major  public  procurement  reform  by  the  end  of  the 
year. The reform builds on the experience with implementing the rules put in place in 2016 
and  aims  to  address,  among  others,  the  high  observed  number  of  single  bid  procedures  or 
contracts  awarded  exclusively  based  on  the  lowest  price  offered.  It  also  further  streamlines 
the still lengthy award procedures. The reform is crucial for ensuring a quick absorption of 
available  financial  resources  and  supporting  the  recovery.  In  parallel,  the  authorities  are 
proceeding  with  the  digitalisation  of  the  procedure  and  are  preparing  a  public  procurement 
strategy for 2021-2025, which is expected to support the green transition and strengthen the 
fight against corruption. 

In anticipation of the large amounts of funds that Greece  is  expected to receive under 
the  next  Multiannual  Financial  Framework,  the  authorities  are  putting  in  place  a 
Strategic  Projects  Pipeline  for  the  selection  of  large  infrastructure  projects  and  are 
progressing  with  setting  up  of  a  Project  Preparation  Facility.  The  Strategic  Projects 
Pipeline will facilitate the selection of projects of national importance and will be coordinated 

8 

 
 
at  the  level  of  the  Presidency  of  the  Government,  outside  the  core  structure  of  the  line 
ministries.  The  Project  Preparation  Facility  is  expected  to  accelerate  the  preparation  of 
projects  included  in  the  Strategic  Projects  Pipeline,  to  take  them  efficiently  from  a  concept 
stage  to  an  implementation  stage.  The  Facility  will  is  be  established  within  the  Hellenic 
Republic  Asset  Development  Fund,  where  appropriate  safeguards  will  be  put  in  place  to 
ensure that the Fund will continue to independently exercise its existing core mandate. The 
Facility will be supported by an international financial institution as a strategic partner. The 
action  plan  to  enhance  the  monitoring  and  forecasting  of  the  Public  Investment  Budget  is 
broadly on track.  

SOCIAL WELFARE 

The  authorities  are  making  good  progress  in  finalising  the  organisational  and 
institutional  setup  of  the  Single  Social  Security  Fund  (e-EFKA),  an  end-2020  specific 
commitment.  The  merging  of  the  public  sector  and  supplementary  pension  functions  has 
already  been  implemented  including  the  physical  move  of  offices;  the  remaining  move 
concerns  the  employees  of  the  former  farmers  fund  (OGA),  which  is  expected  to  be  fully 
completed  by  the  end  of  the  year.  The  digital  processing  of  pension  applications  has  also 
progressed according to targets. The pace of processing is expected to slow down until March 
2021 due to data availability issues but should accelerate again thereafter. 

Greece  is  strengthening  the  preparedness  of  the  health-care  system  for  the  current 
health  emergency,  and  the  implementation  of  a  fully-fledged  and  effective  primary 
health  care,  which  is  a  specific  commitment,  is  proving  key  in  that  respect.  More  than 
160 health care centres can now receive patients with coronavirus symptoms and additional 
outpatient clinics have been set up in the area of Athens. The authorities are also enhancing 
the testing capacity and proceeding with new necessary recruitments. Concerning the roll-out 
of  the  primary  health  care  reform,  which  started  in  2018,  the  authorities  plan  to  extend 
patients’  registration  through  the  health  care  centres  in  the  short  term,  while  granting  them 
wider freedom of choice amongst providers. Utilising fully the medical e-record, which is not 
fully operational at present, would be key to countering the risk of duplicate visits and cherry-
picking  by  patients  under  this  framework.  The  gatekeeping  function  will  likely  be 
implemented through incentives, which is a softer tool compared to what was legislated in the 
2017 reform, and would require careful design. The authorities committed to finalise the new 
legal  framework  by  the  time  of  publication  of  the  10th  enhanced  surveillance  report  due  in 
mid-2021. It is welcome that the authorities put on hold the return to the pre-reform mode of 
provision  of  primary  health  care  through  private  doctors  (which  was  based  on  a  ‘fee-for–
service’  system,  paired  with  a  cap  of  200  visits),  which  has  been  proved  to  limit  access  to 
health care for vulnerable patients.  

Clawbacks  are  still  high  but  steps  are  being  taken  to  improve  their  collection  and  to 
curb the generation of new ones. The authorities adopted legislation to enable the collection 
of  the  2019  clawback  for  the  pharmaceuticals  and  to  start  the  collection  of  the  providers’ 
clawback for the years 2018 and 2019. The authorities are making incremental steps to tackle 
the  supply-driven  overconsumption  of  health  services,  which  puts  strain  on  the  health  care 
system  and  increases  the  financial  burden  on  patients,  including  putting  in  place  additional 
therapeutic  protocols  and  stepping  up  the  emphasis  on  price  negotiation.  However,  deeper 
revisions  appear  necessary  to  effectively  counter  supply-induced  demand.  At  present,  the 
authorities are not considering introducing an element of risk sharing in the definition of the 
clawback, which would increase the incentives to implement structural measures. 

9 

 
 
Centralised procurement for health care expenditure, a mid-2022 specific commitment, 
is  moving  forward  despite  the  current  situation.  The  authorities  are  progressing  towards 
the implementation of this target, with an intermediate goal of 30% to be centrally procured 
by  the  first  quarter  of  2021.  The  authorities  have  also  agreed  to  re-activate  the  price 
observatory  from  January  2021  and  to  adopt  the  new  legal  status  of  the  National  Central 
Authority of Health Procurements by the end of 2020.  

The  implementation  of  specific  commitments  on  the  transport  subsidies  and  disability 
benefits  reforms  is  overall  progressing  according  to  the  agreed  timelines,  while  the 
completion  of  the  activation  element  of  the  Social  Solidarity  Income  scheme  needs  to 
restart.  For  what  concerns  transport  subsidies,  a  mid-2020  specific  commitment,  the 
secondary  legislation  to  allow  a  regular  and  objectively-based  reimbursement  of  subsidised 
public  transport  tickets  for  vulnerable  groups  including  disabled  persons  and  members  of 
large  families  has  been  adopted  in  October  2020,  while  the  secondary  legislation  setting 
compensation levels for main transport operators is under preparation. A policy paper for the 
review  of  disability  benefits,  a  2021  specific  commitment,  is  being  finalised  and  a  pilot 
project  is  to  be  launched  in  March  2021.  However,  with  respect  to  the  provision  of  labour 
market  reintegration  services  for  the  beneficiaries  of  the  Guaranteed  Minimum  Income 
scheme, the plans to assess the findings of the 2019 pilot project undertaken in a number of 
municipalities  so  as  to  guide  its  national  implementation  stalled  following  the  coronavirus 
outbreak. The authorities plan to launch the nationwide rollout in April 2021.  

FINANCIAL SECTOR DEVELOPMENTS 

While  the  accommodative  monetary  policy  conditions  have  allowed  Greek  banks  to 
benefit from  favourable  liquidity  conditions,  the  economic  effects  of the  pandemic  are 
expected  to  squeeze  banks’  already  low  profitability  going  forward.  The  temporary 
relaxation  of  collateral  requirements  for  Eurosystem  credit  operations  and  conditions  for 
targeted longer-term refinancing operations have allowed banks to increase their cash buffers. 
This  was  further  supported  by  an  increase  in  deposits  since  March,  driven  mainly  by 
corporates  seeking  to  accumulate  liquidity  amidst  the  pandemic  and  underpinned  by  a  less 
pronounced but steady upward trend in household deposits. In terms of profits, banks’ return 
on equity continued to be one of the lowest in the euro area in the first half of 2020 and it is 
expected to come under additional pressure due to high loan loss provisions, the uncertainty 
related to new corporate lending next year and the mixed impact of ongoing securitisations of 
non-performing  loans,  which  –  beyond  the  positive  effect  on  the  banks’  cost-of-risk  –  will 
weigh  on  their  net  interest  income.  Low  profitability  coupled  with  the  cost  of  upcoming 
securitisations and the gradual phasing out of transitional prudential arrangements may pose 
challenges  for  the  banks’  capital  position  while  reliance  on  state-related  assets  is  set  to 
increase. Banks’ average Common Equity Tier 1 ratio on a consolidated basis stood at 14.7% 
of risk-weighted assets at the end of June 2020, above the minimum capital requirements. 

The  reduction  of  non-performing  loans  continued  in  the  first  half  of  2020,  albeit  at  a 
slower  pace  than  earlier,  and  was  supported  by  bank  moratoria  on  loan  repayments, 
which are set to expire at the end of the year. The non-performing loans ratio continued on 
a gradual downward path and reached 36.7% in June 2020, remaining the highest in the euro 
area.  Debt  payment  moratoria,  coupled  with  the  temporary  supervisory  flexibility  in  place, 
have been instrumental in shielding so far the banks’ balance sheets from the impact of the 
pandemic  on  the  credit  risk  of  their  loan  book.  However,  the  large  share  of  the  banks’ 
performing loans under moratoria points to a significant risk of increased provisioning needs 

10 

 
 
after they expire and a deterioration in the corresponding asset quality ratios, while the banks’ 
internal capacity to viably restructure loans remains a challenge. Banks have started to adjust 
their non-performing loan reduction strategies but  loan loss provisions booked so far might 
only  partially  capture  the  eventual  effect  of  the  pandemic  on  banks’  asset  quality.  A  key 
element  of  the  banks’  strategy  to  tackle  non-performing  loans  remains  to  move  ahead  with 
the securitisations under the Hercules scheme, which are expected to be concluded in the first 
half of 2021. 

The  authorities  successfully  implemented  or  extended  support  measures  to  sustain 
access to finance for coronavirus affected businesses. The Hellenic Development Bank is 
implementing  a  guarantee  scheme  and  an  interest  subsidy  for  new  corporate  loans,  which 
appear to be successful in supporting bank credit to large corporates and, more recently, also 
to small and medium-sized enterprises. As a result, the annual rate of growth in bank credit to 
non-financial corporations reached 8.3% in September 2020, the highest value attained since 
mid-2009.  By  contrast,  lending  to  households  has  continued  to  contract,  albeit  at  a  more 
moderate  pace  relative  to  recent  quarters.  Nominal  lending  rates  continued  their  downward 
trend, stabilising near historical lows for non-financial corporations. 

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

  Following the adoption of the new Insolvency Code, the authorities are preparing the 
secondary legislation and the necessary infrastructure. The code foresees the adoption 
of about 53 administrative decisions, which is a challenging task. In view of the entry into 
force  of  the  Code  in  January  2021,  the  authorities  aim  at  completing  the  process 
incrementally – along with the development of the underlying electronic platform – by the 
end  of  December  2020.  Work  on  the  key  ministerial  decisions  on  the  loan  subsidy,  sale 
and leaseback mechanism and the algorithm for the computation of restructuring proposals 
will  receive  priority  and  the  authorities  committed  to  share  advanced  drafts  with  the 
European institutions  by mid-November. The new insolvency framework is  a major step 
forward  and  its  effectiveness  will  depend  on  the  quality  of  its  implementation.  Close 
monitoring  will  be  required  in  particular  as  regards  the  impact  of  the  new  out-of-court 
workout mechanism, as well as the fiscal and financial effects of the new sale-and-lease-
back scheme and the one-year pre-discharge period foreseen in certain cases. It is crucial 
that the entire legal framework, including secondary legislation, as well as the necessary 
infrastructure are in place in time for the new Insolvency Code’s entry into force, so as to 
ensure the successful operationalisation of the new framework and  avert  any  unintended 
negative effects on the financial sector and payment culture in general. 

  The authorities have adopted a set of new provisions to enable the processing of the 
long-standing backlog of household insolvency cases. The law establishes a fixed time 
schedule for advancing distant hearing dates. The authorities expect that the rescheduling 
and the submission of all relevant documentation will have taken place by the third quarter 
of  2021,  which  would  allow  courts  to  process  all  cases  by  April  2022.  Given  that  the 
implementation  will  depend  on  the  case-processing  capacity  of  individual  courts,  close 
monitoring is  warranted. The success  of these provisions will depend on  the authorities’ 
ability to address staff shortages and overcome infrastructure challenges.  

  The  authorities  have  also  adopted  the  first  set  of  measures  aimed  at  enhancing  the 
functionality and user-friendliness of the e-auctions platform. The measures facilitate 
electronic  sharing  of  relevant  documents  through  the  e-auctions  platform.  Regarding 

11 

 
 
further identified issues, mainly  related to  the mechanism for adjusting the reserve price 
and  the  interoperability  of  the  e-auctions  platform  with  other  state  databases,  the 
authorities  confirmed  that  they  would  be  considered  in  the  context  of  the  Code  of  Civil 
Procedure  review.  The  draft  of  the  revised  Code  will  be  completed  in  early  2021, 
somewhat later than initially foreseen but in time ahead of September 2021, when it is due 
to  enter  into  force.  The  authorities  committed  to  submit  a  progress  report  in  November 
2020. 

  The implementation of the agreed plan for the clearance of called state guarantees is 
on  track,  while  the  backlog  of  called  guarantees  remains  considerable.  The 
examination  and  payment  of  claims  for  the  third  quarter  of  2020  has  accelerated, 
following  the  shortfalls  registered  during  the  lockdown.  Following  the  change  of  the 
relevant  legal  framework  at  the  beginning  of  June,  the  electronic  files  repository  is  now 
operational,  while  interoperability  with  local  tax  offices  is  in  its  testing  phase.  The 
authorities  are  also  recruiting  30 employees,  who  should  become  operational  in 
November.  These  important  steps  are  expected  to  ensure  the  envisaged  significant 
acceleration in the clearance of called guarantees during the remainder of 2020. 

  A  limited  amendment  of  the  primary  legislation  on  deferred  tax  credits  has  been 
voted in September to safeguard the loss-absorbing capacity of the banks’ capital in 
all cases, including resolution. Work is ongoing on further technical aspects in the form 
of secondary legislation, in order to operationalise all aspects of the framework, including 
in the context of resolution and special liquidation. 

The  Hellenic  Financial  Stability  Fund  continued  its  efforts  to  support  the  systemic 
banks in view of the challenges brought about by the pandemic. The Fund supported the 
systemic banks in the preparation of their updated non-performing loan reduction plans and 
their corporate transformations (hive-downs). The Fund also is in the process of revisiting its 
shareholder expectations by taking into consideration the various effects stemming from the 
pandemic.  

LABOUR MARKET  

The  Greek  labour  market  has  proved  particularly  resilient  in  the  wake  of  the 
coronavirus outbreak, but the extended duration of the pandemic poses serious risks to 
employment,  which  necessitates  the  further  strengthening  of  active  labour  market 
programmes. The swift adoption of emergency measures aimed at supporting businesses and 
protecting  jobs  contributed  to  the  observed  labour  market  resilience.  As  the  pandemic 
prevails,  however,  restructuring  in  the  most  affected  sectors  may  become  unavoidable.  A 
well-performing public employment service and an effective system of active labour market 
policies  are  needed  to  support  such  restructuring  processes  and  avoid  a  surge  in 
unemployment.  While  some  active  labour  market  programmes  are  being  strengthened,  the 
overall system continues to suffer from capacity constraints, which, coupled with disruptions 
caused  by  the  pandemic,  have  led  to  delays  with  ongoing  reform  implementation.  In 
particular, there has been limited progress regarding the adoption of a new delivery model of 
policies  and  the  systematic  provision  of  labour  market  reintegration  services  to  Guaranteed 
Minimum Income recipients. 

The  government  has  presented  proposals  to  modernise  several  aspects  of  the  labour 
legislation.  The  legislation,  currently  under  consultation  with  the  social  partners,  foresees 

12 

 
 
substantial  changes  modernising,  amongst  others,  the  rules  concerning  working  time  and 
annual leave, employment protection legislation, dismissals and trade union law. They further 
provide  for  an  extension  of  paternity  and  parental  leave  and  the  institutionalisation  of 
telework, bringing national labour legislation closer to EU best practices. The codification of 
the labour legislation, an end-2020 specific commitment, has been delayed by the pandemic 
but is still expected to be adopted by the end of 2020. 

PRODUCT MARKETS AND COMPETITIVENESS 

The  authorities  are  advancing  with  most  mid-2020  specific  commitments  under 
investment licensing and remain committed to implementing a widened reform agenda. 
The  authorities  are  expected  to  submit  for  public  consultation  by  end-November  a  bill  that 
will simplify licensing procedures in most sectors that have not been reformed thus far, and 
developed a timeline to fully complete the simplification of investment licensing procedures 
in all remaining activities by June 2021. In parallel, they continue to simplify and fine-tune 
areas related to  sectors already  reformed.  In the area of inspections, all starting tools in  the 
three  agreed  priority  areas  are  expected  to  be  swiftly  put  in  action,  in  tandem  with  the  full 
roll-out of training. Remaining elements to ensure effective enforcement and compliance on 
these areas are expected to be fully addressed by April 2021, in parallel to the roll-out of the 
inspections  framework  in  the  remaining  four  areas,  which  is  expected  to  be  completed  by 
end-2021. The successful completion of the remaining work critically depends on the timely 
inputs by all ministries involved and the commitment of all stakeholders. The full deployment 
of  the  relevant  IT  system,  which  is  critical  to  support  the  new  investment  licencing 
framework, continues to be delayed due to legal challenges.  

The  authorities  are  advancing  with  the  implementation  of  key  business  environment 
reforms  initiated  under  the  programmes.  Progress  has  been  made  on  certifications  for 
external environmental assessors and inspectors as well as on the legal framework concerning 
tourism,  with  a  view  to  aligning  it  with  the  principles  of  the  investment  licensing  reform. 
Work  continues  to  further  ease  doing  business.  In  addition  to  notable  improvements  in  the 
frameworks  of  insolvency  and  dispute  resolution,  and  an  upcoming  reform  of  public 
procurement (see above), the authorities improved and accelerated the refund process for the 
value  added  tax.  Key  interventions  scheduled  by  March  2021  aim  to  streamline  and 
accelerate  administrative  processes,  including  those  related  to  building  permits,  business 
start-ups, electricity connections, and registering property. Moreover, with technical support 
from  the  Commission  provided  through  the  World  Bank,  the  authorities  are  designing 
additional  measures  in  key  areas.  The  government  has  also  taken  further  steps  to  reform 
product  markets  and  improve  market  surveillance.  A  bill  submitted  to  Parliament  early 
November aims, among others, at ensuring fairness and transparency for business users in the 
area of e-commerce, while allowing for more effective market surveillance mechanisms and 
control of illegal trade, as well as for an extension of Sunday retail trading to shops and open 
markets under certain conditions. 

Despite progress with setting up a new strategy on promoting trade and foreign direct 
investment,  institutional  arrangements  remain  incomplete,  which  hampers  efforts  to 
increase  extroversion  and  leverage  Greece’s  potential  in  key  sectors  and  export 
markets.  The  new  strategy  of  the  Ministry  of  Foreign  Affairs  expected  to  strengthen  the 
country’s  export  potential  and  facilitate  inward  foreign  direct  investment,  is  yet  to  be 
published.  Putting  in  place  necessary  governance  structures  would  be  key  to  proceeding 
swiftly  with  the  adjustment  of  the  roadmap  to  reflect  new  priorities,  and  pursuing  further 
simplification  efforts,  including  at  pre-customs  level.  Meanwhile,  the  authorities  are 

13 

 
 
progressing  with  digital  initiatives  to  support  e-commerce  and  the  tendering  of  export 
promotion  projects,  notably  of  the  integrated  Single  Window  system  that  will  automate 
imports and exports procedures, which was launched in October. 

The  authorities  have  progressed  in  the  area  of  forest  maps  and  cadastral  mapping. 
Regarding the forest maps, 80% of the remaining ones have been prepared by October 2020 
and will start gradually to be uploaded for public consultation. The authorities committed to 
upload all the remaining maps by December 2020 and the ratification of all forest maps will 
be completed by July 2021. While the original target of 45% coverage of cadastral mapping 
had to be delayed to December 2021 due to the pandemic and other technical difficulties, the 
authorities will submit to Parliament  a bill  with a view to  accelerating the collection of the 
remaining rights, scheduled to be adopted in November 2020. By October 2020, 35% of the 
cadastral  maps  have  been  completed.  The  tender  for  the  digitisation  of  mortgage  deeds  is 
ready to be launched, when financing is secured.  

The  cadastral  agency  is  expected  to  be  fully  operational  by  end-2021,  in  line  with  the 
roadmap for the cadastre project. This is later than envisaged under the original mid-2020 
commitment  and  reflects  delays  encountered  due  to  the  pandemic  but  also  earlier  on.  The 
appointment  of  the  management  team  has  been  completed  and  the  recruitment  of  the 
migration team, a team necessary to implement the transition from the mortgage offices to the 
cadastral offices, is progressing smoothly.  

A major energy market reform was achieved as the Target Model, a mid-2020 specific 
commitment, went live on 1 November, which is a big step towards Greece fulfilling the 
obligations of the EU energy acquis.  The new format of the markets,  with  separated day-
ahead, intra-day and balancing elements  is  expected to  allow for better price discovery and 
wider  participation  and  market  access  of  different  services.  The  new  market  design  is 
compatible  with  other  EU  markets,  allowing  for  the  future  coupling  with  the  neighbouring 
markets of Italy and Bulgaria. Efforts to ensure that distortions in the wholesale market are 
completely  removed,  and  that  the  market  is  effectively  monitored  in  view  of  the  market 
power  of  the  incumbent  and  is  brought  fully  in  line  with  the  EU  energy  acquis  will  be 
important.  

The  authorities  submitted  on  23  October  a  final  proposal  for  an  anti-trust  remedy 
related  to  the  Public  Power  Corporation’s  lignite  generation,  constituting  a  key  step 
towards fulfilling this specific commitment. However, the Commission is still waiting for 
final  authorisation  from  the  authorities  to  start  carrying  out  a  market  test  of  the  proposed 
remedy, so that the measures can be implemented in the market in 2021. The implementation 
of the remedy would fulfil the specific commitment and comply with  a longstanding ruling 
by the EU Courts. Considering the very tight timeline for the implementation of the remedy, 
the  European  Institutions  encourage  the  Greek  authorities  to  cooperate  more  effectively 
during the next reporting period. 

Progress has continued in other areas of the energy policy, while a sustainable approach 
is needed to address the Renewable Energy Sources Account’s structural deficit.  There 
are growing concerns about the balance of the Renewable Energy Sources Account and given 
Greece’s ambitions for increasing renewables’ uptake, it is important to find a predictable and 
robust approach, not reliant on ad-hoc interventions and fully consistent with EU legislation. 
This  includes  safeguarding  the  level  and  conditions  to  renewable  energy  projects  that  have 
been  granted  support.  Greece’s  decommissioning  of  lignite  plants  continues,  and  this  year 
will see several plants taken off line. The authorities have carried out public consultation on 

14 

 
 
the  transition  Master  Plan,  the  basis  for  the  territorial  strategies  and  future  reforms  to  help 
areas affected by the lignite decommissioning by end-2023. 

As  a  first  step  towards  the  reorganisation  of  the  public  railway  companies,  the 
authorities are improving the governance of the steering committee responsible for the 
rationalisation  of  implementation  of  railway  projects.  The  steering  committee  provides 
strategic  supervision  and  guidance  and  coordinates  the  preparation  of  the  action  plan  for 
railways.  A  first  draft  of  the  road  map  for  the  transformation  of  the  two  companies  with 
intermediate steps will be prepared by end December. 

HELLENIC CORPORATION OF ASSETS AND PARTICIPATIONS AND PRIVATISATION 

The  Corporation  released  its  2019  annual  report  and  financial  results  end-September 
2020,  which  showed  a  significant  improvement  in  financial  figures  across  most  of  the 
corporation’s  subsidiaries,  and  in  the  Corporation’s  own  financial  results  for  2019. 
While it is expected that the 2020 results will be affected by the pandemic, the governance 
and  operational  improvements  in  the  Corporation’s  portfolio  of  companies  appear  to  have 
improved their abilities to weather the impact of the pandemic. 

Work related to specific commitments has continued. With regard to the implementation 
of  the  Corporation’s  strategic  plan,  (i)  the  authorities  are  in  the  process  of  updating  the 
Ministerial  Guidance,  which  outlines  the  government’s  general  vision  and  expectations  for 
the  Corporation  and  is  expected  to  be  finalised  by  end-2020.  The  strategic  plan  will  be 
updated  following  the  issuance  of  the  Ministerial  Guidance.  (ii)  The  Corporation  and  the 
state-owned  enterprises  are  carrying  out  the  next  phase  of  the  implementation  of  the 
Coordination Mechanism: the statement of commitments, which will set out the state-owned 
enterprises’  financial,  operational  and  other  objectives  and  are  expected  to  be  finalised  by 
December  2020.  In  addition,  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. The review of the boards of the state-owned enterprises, is close to 
completion  with  only  one  out  of  the  thirteen  state-owned  enterprises’  board  review 
outstanding,  namely  that  of  the  Hellenic  Exhibition  Organisation  (HELEXPO),  expected  to 
be completed by December 2020. The transfer of the Olympic Athletic Centre, which proves 
very complex, is seeing progress despite delays. Preparatory work for the tender has received 
a  further  extension  and  it  is  now  expected  to  be  completed  by  November  2020,  while 
maintenance works are ongoing. 

With a view to setting up the Project Preparation Facility in a way that will maximise its 
contribution to accelerating the absorption of EU funds in Greece, the authorities have 
proposed  mandating  the  Hellenic  Republic  Asset  Development  Fund  to  assume  this 
function. This new mandate for the Fund would represent an increase in both, its headcount 
and its responsibility. It will be important to ensure that adding this mandate to the Fund will 
not affect the Corporation’s ability to carry out its core mandate, nor affect the Corporation’s 
independence.  

Some good progress has been made on a number of transactions included in the Asset 
Development  plan,  while  other  transactions  suffered  delays  partly  caused  by  the 
pandemic. 

  Two  transactions  are  close  to  completion.  The  authorities  continued  their  strong 
engagement  and  efforts  to  complete  the  prerequisites  for  the  financial  closing  of  the 

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Hellinikon transaction. Following the Council of State decision of 18 September, rejecting 
the  petition  for  annulment  in  relation  to  the  ongoing  tender  for  the  award  of  the  casino 
license, the way for the financial closing of the transaction has been established. However, 
there  are  still  some  pending  legal  cases  set  for  discussion  in  November  2020.  Despite 
some  technical  issues,  the  Marina  of  Alimos  concession  is  expected  to  be  financially 
closed before the end of the year.  

  While progress on the pending actions necessary for the Egnatia motorway concession 
has been slower than expected in the past months, the authorities have recently taken 
significant steps towards the conclusion of this transaction.  In particular, a significant 
number of toll stations were completed and put in operation at the beginning of November, 
an additional number is expected to be completed and put in operation before the date of 
the  submission  of  binding  bids  scheduled  for  11  December,  and  the  Ministry  of 
Infrastructure  committed  to  putting  all  the  toll  stations  in  operation  before  the 
commencement of the concession agreement. This is expected to secure revenue streams 
for  the  project  and  demonstrate  the  authorities’  commitment  to  proceed  with  its 
implementation.  Additionally,  some  progress  was  made  over  the  past  two  months  in 
relation to the required works necessary for the licencing of remaining 14 tunnels. Close 
monitoring will continue. 

  Progress  was  made  on  a  number  of  other  ongoing  transactions.  This  includes  the 
transaction  of  the  Public  Gas  Corporation  –  DEPA  Infrastructure,  for  which  the 
Regulatory Authority for Energy provided clarity on the tariffs framework for distribution 
system  operators,  as  well  as  on  the  asset  perimeter  to  ensure  it  remains  a  cohesive  and 
attractive asset. The phase of the invitation for the expression of interest was concluded in 
October for three regional ports and the underground natural gas storage South Kavala, 
attracting strong investors’ interest. 

  Some  transactions  needed  to  be  delayed  following  a  significant  fall  in  the  assets’ 
capitalisation  value  due  to  the  pandemic.  This  is  in  particular  the  case  of  Hellenic 
Petroleum, which had previously already suffered significant delays following the failure 
of  the  first  tender  in  mid-2019,  and  the  Fund  now  considered  appropriate  to  delay  the 
launching of the transaction to a later point in time. Similarly, the  sale of 30% of Athens 
International Airport has been postponed and the Fund will determine next steps once the 
situation improves, likely late in 2021.  

Outside  the  scope  of  the  Asset  Development  Plan  implemented  by  the  Fund,  the 
authorities are working towards  addressing long-standing weaknesses of certain  state-
owned-enterprises.  This  includes  addressing  the  structural  problems  of  the  Hellenic 
Aerospace Industry (HAI), and proceeding with the sale of the assets of the Hellenic Vehicle 
Industry (ELVO), a company placed under special liquidation. The authorities are also taking 
steps to resolve issues that arose in the context of recovery of incompatible State aid as per 
long-standing  Commission  decisions  (sale  of  assets  of  ferronickel  production  company 
Larco, and supporting the Public Real Estate Company (ETAD) in relation to former assets 
of Hellenic Shipyards). 

PUBLIC ADMINISTRATION AND DIGITAL GOVERNANCE 

The  authorities  have  made  further  progress  on  reforms  in  the  public  administration. 
The modernisation of human resource management is progressing well as the vast majority of 

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public sector entities  has  by now completed their digital  organigrams,  an end-2020 specific 
commitment.  Until  end-October,  more  than  80%  of  general  government  entities  had 
completed their digital organigrams and the authorities expect that nearly all entities complete 
this  task  by  end-2020.  The  preparation  of  job  descriptions  and  the  establishment  of  links 
between job description and jobholder is also progressing which will allow for a connection 
to  the  Single  Payment  Authority  by  the  end  of  this  year.  The  depoliticisation  and 
professionalisation of the public administration has continued as a uniform selection process 
for senior management posts at public sector entities has come into effect, which now extends 
to cover a large share of all general government entities. The appointment of all Permanent 
Secretaries  has  been  completed.  The  authorities  have  also  advanced  on  a  number  of  other 
actions due by the end of the year, which include finalisation of a law to further strengthen 
the  Supreme  Council  for  Civil  Personnel  Selection  (which  is  expected  to  be  published  for 
public consultation in November), and the completion of the performance assessment round 
for 2019. 

The authorities are taking steps to control the size of the public sector. The evolution of 
personnel  in  2020,  both  permanent  and  temporary,  remains  in  accordance  with  the  hiring 
plans.  However,  the  expected  reduction  of  temporary  posts  following  their  conversion  to 
permanent positions has been slow and efforts need to be stepped up for the reduction to be 
evident  in  the  staffing  figures  at  end-2020.  The  authorities  are  working  on  establishing  an 
annual  ceiling  on  temporary  staff  by  end-2020.  In  an  effort  to  learn  from  past  lessons,  the 
authorities are documenting deviations from the hiring procedures and the unified wage grid, 
with an initial focus on the period from July 2019, while the previous years would be covered 
in the second stage. 

With a view to enhancing legal certainty and access to law, the authorities are preparing 
the codification of the labour market legislation, an end-2020 specific commitment, and 
identified further areas for codification. The process is distinct from the modernisation of 
some  aspects  of  the  labour  legislation  mentioned  above  and  has  suffered  delays  due  to  the 
pandemic. The new labour law code is expected to be adopted by the end of 2020. The annual 
codification  plan  for  2021,  adopted  by  the  Council  of  Ministers,  includes  an  ambitious 
programme including on spatial and town planning, trading of goods and services, collection 
of public revenue and party financing. 

The  authorities  are  advancing  with  key  reforms  to  improve  Greece’s  digital 
performance, aided by a comprehensive digital strategy which is underway, and a newly 
adopted unified legal framework on digital governance. The new national digital strategy 
(‘Digital Bible’), which is expected to be submitted for public consultation shortly, outlines 
Greece’s  ambitious  digital  transformation  agenda  and  reform  priorities  for  the  next  four 
years. The Code of Digital Governance was adopted on 22 September 2020, and represents a 
key  milestone  for  Greece  concerning  the  transposition  of  the  EU  Directive on  the 
establishment of a European Electronic Communications Code. The authorities aim to present 
shortly an action plan on the steps needed to fully operationalise the new Code.  

Tangible  progress  is  recorded  with  respect  to  the  simplification  and  digitalisation  of 
public  sector  processes  and  data,  the  interoperability  of  public  systems  and  registries, 
digital  upskilling  and  connectivity  issues.  The  work  on  process  simplification  and 
digitalisation  continues  through  the  implementation  of  the  National  Programme  for  Process 
Simplification, notably in the areas of transport and justice. The authorities are on track with 
the implementation of the roadmap for the development of the integrated transactions portal 
(gov.gr).  Work  also  continues  on  promoting  the  interoperability  of  public  registries  and 

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systems  and  the  tender  was  launched  for  the  digitalisation  of  geospatial  data  for  the 
development of the Single Digital Map and the State Infrastructures Registry. Improvements 
in digital skills, connectivity and the take up of new technologies by businesses remain key 
priorities  for  Greece  as  the  authorities  continue  implementing  their  strategy  on  digital 
upskilling,  including  through  the  National  Digital  Academy  and  the  National  Coalition  for 
digital skills and jobs. Connectivity issues are being addressed through the auctioning of the 
5G  pioneer  bands,  scheduled  for  end-2020,  and  the  authorities  expect  to  eventually  reach 
96% 5G coverage, which will require large investment in very-high capacity networks. The 
innovative  scheme  for  a  National  Fund  for  5G  in  Greece  established  through  the  recently 
adopted Code of Digital Governance is expected to play a pivotal role in the development of 
the 5G ecosystem.  

JUSTICE AND ANTICORRUPTION 

Steady  progress  has  been  made  with  the  transition  to  mandatory  electronic  filing  and 
processing  of  documents  throughout  the  Courts  and  work  is  ongoing  regarding  the 
distribution of electronic signatures to judges and members of the legal professions. The 
authorities  committed  to  submit  shortly  an  action  plan  on  e-filing-related  initiatives, 
containing  a  mapping  of  the  current  situation  and  detailing  planned  actions,  including  an 
implementation  timetable.  Next  steps  include  the  adoption  of  legislation,  by  the  end  of 
December  2020.  With  regard  to  the  electronic  issuance  of  court  decisions,  the  authorities 
plan  to  distribute  to  all  courts,  by  the  end  of  January  2021,  a  software  developed  for  this 
purpose  by  the  Piraeus  Court.  Further  progress  has  been  recorded  regarding  the  electronic 
issuance  of  court  certificates.  Following  the  resolution  of  concerns  about  private  data 
protection,  the  authorities  expect  to  complete  the  distribution  of  electronic  signatures  for 
judges and court clerical staff by November 2020. The authorities confirmed that the Ministry 
of Justice stands ready to take legislative initiative as warranted regarding the distribution of 
electronic  signatures  to  the  members  of  legal  professions  in  view  of  the  entry  into  force  of 
mandatory e-filing in administrative jurisdictions in January 2021.  

The  evaluation  of  offers  in  the  context  of  the  tender  for  the  second  phase  of  the 
Integrated  System  for  the  Processing  of  Civil  and  Penal  Cases,  an  end-2020  specific 
commitment,  continues  and  the  authorities  confirmed  their  intention  to  award  the 
contract  to  the  selected  bidder  in  December  2020.  Following  the  submission  of  an 
assessment  of  the  technical  part  of  offers  to  the  Ministry  of  Justice  for  approval,  the 
authorities  foresee  completion  of  the  assessment  of  the  financial  part  of  the  offers  by  end-
November 2020, in time for proceeding as planned with awarding the contract in December 
2020. 

Other reforms in the judicial system have marked steady progress as follows:  

  The  authorities  took  a  number  of  initiatives  to  support  the  function  of  mediation.  The 
Central Committee for Mediation is putting in place a help desk for legal professionals and 
citizens,  to  provide  legal  guidance  and  support  to  stakeholders.  The  authorities  are 
monitoring the take-up of mediation.  

  A progress report detailing the next steps in view of the implementation of the legislation 
on  special  chambers  in  civil  and  administrative  courts  will  be  provided  by  December 
2020. On 1 October 2010, the plenary formation of the Athens Court of appeal  resolved 
unanimously to form two special chambers to deal with cases in the fields of competition, 
electronic transactions, energy and personal data protection, and other courts are expected 

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to  follow  suit,  following  the  appointment  of  the  newly  elected  court  administrations  in 
October 2020.  

  The work stream on improving the working methods in courts, which is an important part 
of the ongoing justice reform, is proceeding as planned. The Code of Judicial Staff is set 
to be adopted in December 2020. The authorities are aiming at upgrading and maintaining 
exacting  standards  for  the  performance  by  judicial  clerks  mainly  through  cultivating  a 
heightened sense of duty. The revision of certain sections of the draft Code on the Status 
of  Judges  and  the  Organisation  of  Courts,  which  are  expected  to  bring  improvements  to 
the  methodology  for  the  evaluation  and  professional  advancement  of  judges  and  to  the 
treatment of disciplinary matters, will be entrusted to a law-drafting committee in January 
2021 with a view to its adoption in time for the start of the next judicial year in September 
2021.  Its  work  will  be  informed  by  technical  support  provided  through  the  European 
Commission.  

  The  launch  of  the  tender  for  the  ‘JustStat’  project  for  the  creation  of  the  statistical 
information unit for judicial data is expected to take place by the end of December 2020. 
Concurrently,  the  authorities  confirmed  that  secondary  legislation  is  in  preparation,  in 
cooperation  with  the  Hellenic  Statistic  Authority,  regarding  the  provision  of  technical 
know-how.  

The National Authority for Transparency is now fully operational, which is expected to 
improve coordination and a number of important steps have been taken regarding the 
fight  against  corruption  in  the  political  field.  The  National  Transparency  Authority 
oversees the implementation of the National Anticorruption Plan, which shows encouraging 
results and has amongst  others supported the drafting of a dedicated anticorruption strategy 
by  the  Ministry  of  Health.  The  fight  against  corruption  in  the  political  field  has  advanced, 
with  the  launch  of  a  codification  project  for  the  legislation  on  political  party  financing  in 
2021 and the adoption of the law on lobbying  activities to  enter into  force as  of mid-2021. 
The authorities are yet to improve the accessibility of some databases to the bodies in charge 
of asset declaration audits and to align the list of politically exposed persons subject to asset 
declaration  with  the  updated  definition  of  politically  exposed  people.  Last,  a  major  reform, 
which aims at implementing sound internal control systems across the public administration, 
is  overseen  by  the  Authority  and  is  expected  to  have  a  major  impact  in  the  fight  against 
corruption in the public administration as well as in the public finance management sector. 

The  implementation  of  the  recommendations  made  by  the  Group  of  States  against 
Corruption  regarding  the  softening  of  sanctions  for  bribery  of  public  officials  is 
ongoing.  Addressing  these  recommendations  requires  a  comprehensive  review  of  the  legal 
framework for the fight against corruption of public officials before drafting amendments to 
the  relevant  codes,  expected  to  be  delivered  by  mid-2021.  The  Group  of  States  against 
Corruption has invited the authorities to submit a report on measures taken to implement their 
recommendations  by  end-October  2021.  A  swift  adoption  of  the  provisions  addressing  the 
Group  of  States  against  Corruption’s  recommendations  would  enable  Greece  to  fight 
corruption  of  public  officials  more  effectively  and  also  to  abide  by  the  Criminal  Law 
Convention on Corruption and its Additional Protocol. 

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