Dear President of the Eurogroup,
In the Eurogroup of 20 February 2015 the Greek government was invited to present
to the institutions, by Monday 23rd February 2015, a first comprehensive list of reform
measures it is envisaging, to be further specified and agreed by the end of April
2015.
In addition to codifying its reform agenda, in accordance with PM Tsipras’
programmatic statement to Greece’s Parliament, the Greek government also
committed to working in close agreement with European partners and institutions, as
well as with the International Monetary Fund, and take actions that strengthen fiscal
sustainability, guarantee financial stability and promote economic recovery.
The first comprehensive list of reform measures follows below, as envisaged by the
Greek government. It is our intention to implement them while drawing upon
available technical assistance and financing from the European Structural and
Investment Funds.
Truly
Yanis Varoufakis
Minister of Finance
Hellenic Republic

I. Fiscal structural policies
Tax policies – Greece commits to:
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Reform VAT policy, administration and enforcement. Robust efforts will be
made to improve collection and fight evasion making full use of electronic
means and other technological innovations. VAT policy will be rationalised in
relation to rates that will be streamlined in a manner that maximises actual
revenues without a negative impact on social justice, and with a view to
limiting exemptions while eliminating unreasonable discounts.
Modify the taxation of collective investment and income tax expenditures
which will be integrated in the income tax code.
Broaden definition of tax fraud and evasion while disbanding tax immunity.
Modernising the income tax code and eliminating from it tax code exemptions
and replacing them, when necessary, with social justice enhancing measures.
Resolutely enforce and improve legislation on transfer pricing.
Work toward creating a new culture of tax compliance to ensure that all
sections of society, and especially the well-off, contribute fairly to the financing
of public policies. In this context, establish with the assistance of European
and international partners, a wealth database that assists the tax authorities in
gauging the veracity of previous income tax returns.

Public Finance Management – Greece will:
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Adopt amendments to the Organic Budget Law and take steps to improve
public finance management. Budget implementation will be improved and
clarified as will control and reporting responsibilities. Payment procedures will
be modernised and accelerated while providing a higher degree of financial
and budgetary flexibility and accountability for independent and/or regulatory
entities.
Devise and implement a strategy on the clearance of arrears, tax refunds and
pension claims.
Turn the already established (though hitherto dormant) Fiscal Council into a
fully operational entity.

Revenue administration – Greece will modernise the tax and custom
administrations benefiting from available technical assistance. To this end Greece
will:
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Enhance the openness, transparency and international reach of the process
by which the General Secretary of the General Secretariat of Public Revenues
is appointed, monitored in terms of performance, and replaced.
Strengthen the independence of the General Secretariat of Public Revenues
(GSPR), if necessary through further legislation, from all sorts of interference
(political or otherwise) while guaranteeing full accountability and transparency
of its operations. To this end, the government and the GSPR will make full
use of available technical assistance.
Staff adequately, both quantitatively and qualitatively, the GSPR and in
particular the high wealth and large debtors units of the revenue

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administration and ensure that it has strong investigative/prosecution powers,
and resources building on SDOE’s capacities, so as to target effectively tax
fraud by, and tax arrears of, high income social groups. Consider the merits of
integrating SDOE into GSPR.
Augment inspections, risk-based audits, and collection capacities while
seeking to integrate the functions of revenue and social security collection
across the general government.

Public spending – The Greek authorities will:
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Review and control spending in every area of government spending (e.g.
education, defence, transport, local government, social benefits)
Work toward drastically improving the efficiency of central and local
government administered departments and units by targeting budgetary
processes, management restructuring, and reallocation of poorly deployed
resources.
Identify cost saving measures through a thorough spending review of every
Ministry and rationalisation of non-salary and non-pension expenditures
which, at present, account for an astounding 56% of total public expenditure.
Implement legislation (currently in draft form at the General Accounts Office GAO) to review non-wage benefits expenditure across the public sector.
Validate benefits through cross checks within the relevant authorities and
registries (e.g. Tax Number Registry, AMKA registry) that will help identify
non-eligible beneficiaries.
Control health expenditure and improve the provision and quality of medical
services, while granting universal access. In this context, the government
intends to table specific proposals in collaboration with European and
international institutions, including the OECD.

Social security reform – Greece is committed to continue modernising the pension
system. The authorities will:
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Continue to work on administrative measures to unify and streamline pension
policies and eliminate loopholes and incentives that give rise to an excessive
rate of early retirements throughout the economy and, more specifically, in
the banking and public sectors.
Consolidate pension funds to achieve savings.
Phase out charges on behalf of ‘third parties’ (nuisance charges) in a fiscally
neutral manner.
Establish a closer link between pension contributions and income, streamline
benefits, strengthen incentives to declare paid work, and provide targeted
assistance to employees between 50 and 65, including through a Guaranteed
Basic Income scheme, so as to eliminate the social and political pressure for
early retirement which over-burdens the pension funds.

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Public administration & corruption – Greece wants a modern public
administration. It will:
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Turn the fight against corruption into a national priority and operationalize fully
the National Plan Against Corruption.
Target fuel and tobacco products’ smuggling, monitor prices of imported
goods (to prevent revenue losses during the importation process), and
tackle money laundering. The government intends immediately to set itself
ambitious revenue targets, in these areas, to be pursued under the
coordination of the newly established position of Minister of State.
Reduce (a) the number of Ministries (from 16 to 10), (b) the number of
'special advisors' in general government; and (c) fringe benefits of ministers,
Members of Parliament and top officials (e.g. cars, travel expenses,
allowances)
Tighten the legislation concerning the funding of political parties and include
maximum levels of borrowing from financial and other institutions.
Activate immediately the current (though dormant) legislation that regulates
the revenues of media (press and electronic), ensuring (through
appropriately designed auctions) that they pay the state market prices for
frequencies used, and prohibits the continued operation of permanently
loss-making media outlets (without a transparent process of
recapitalisation)
Establish a transparent, electronic, real time institutional framework for
public tenders/procurement – re-establishing DIAVGEIA (a side-lined online
public registry of activities relating to public procurement)
Reform the public sector wage grid with a view to decompressing the wage
distribution through productivity gains and appropriate recruitment policies
without reducing the current wage floors but safeguarding that the public
sector’s wage bill will not increase
Rationalise non-wage benefits, to reduce overall expenditure, without
imperilling the functioning of the public sector and in accordance with EU
good practices
Promote measures to: improve recruitment mechanisms, encourage meritbased managerial appointments, base staff appraisals on genuine evaluation,
and establish fair processes for maximising mobility of human and other
resources within the public sector
Financial stability

Instalment schemes – Greece commits to
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Improve swiftly, in agreement with the institutions, the legislation for
repayments of tax and social security arrears
Calibrate instalment schemes in a manner that helps discriminate efficiently
between: (a) strategic default/non-payment and (b) inability to pay; targeting
case (a) individuals/firms by means of civil and criminal procedures
(especially amongst high income groups) while offering case (b)
individuals/firms repayment terms in a manner that enables potentially solvent

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enterprises to survive, averts free-riding, annuls moral hazard, and reinforces
social responsibility as well as a proper re-payment culture.
De-criminalise lower income debtors with small liabilities
Step up enforcement methods and procedures, including the legal framework
for collecting unpaid taxes and effectively implement collection tools

Banking and Non-Performing loans. Greece is committed to:
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Banks that are run on sound commercial/banking principles
Utilise fully the Hellenic Financial Stability Fund and ensure, in collaboration
with the SSM, the ECB and the European Commission, that it plays well its
key role of securing the banking sector’s stability and its lending on
commercial basis while complying with EU competition rules.
Dealing with non-performing loans in a manner that considers fully the banks’
capitalisation (taking into account the adopted Code of Conduct for Banks),
the functioning of the judiciary system, the state of the real estate market,
social justice issues, and any adverse impact on the government’s fiscal
position.
Collaborating with the banks’ management and the institutions to avoid, in the
forthcoming period, auctions of the main residence of households below a
certain income threshold, while punishing strategic defaulters, with a view to:
(a) maintaining society’s support for the government’s broad reform program,
(b) preventing a further fall in real estate asset prices (that would have an
adverse effect on the banks’ own portfolio), (c) minimising the fiscal impact of
greater homelessness, and (d) promoting a strong payment culture.
Measures will be taken to support the most vulnerable households who are
unable to service their loans
Align the out-of-court workout law with the instalment schemes after their
amendment, to limit risks to public finances and the payment culture, while
facilitating private debt restructuring.
Modernise bankruptcy law and address the backlog of cases
Policies to promote growth

Privatisation and public asset management – To attract investment in key sectors
and utilise the state’s assets efficiently, the Greek authorities will:
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Commit not to roll back privatisations that have been completed. Where the
tender process has been launched the government will respect the process,
according to the law.
Safeguard the provision of basic public goods and services by privatised
firms/industries in line with national policy goals and in compliance with EU
legislation.
Review privatisations that have not yet been launched, with a view to
improving the terms so as to maximise the state’s long term benefits,
generate revenues, enhance competition in the local economies, promote
national economic recovery, and stimulate long term growth prospects.
Adopt, henceforth, an approach whereby each new case will be examined
separately and on its merits, with an emphasis on long leases, joint ventures

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(private-public collaboration) and contracts that maximise not only
government revenues but also prospective levels of private investment.
Unify (HRDAF) with various public asset management agencies (which are
currently scattered across the public sector) with a view to developing state
assets and enhancing their value through microeconomic and property rights’
reforms.

Labor market reforms – Greece commits to:
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Achieve EU best practice across the range of labour market legislation
through a process of consultation with the social partners while benefitting
from the expertise and existing input of the ILO, the OECD and the available
technical assistance.
Expand and develop the existing scheme that provides temporary
employment for the unemployed, in agreement with partners and when fiscal
space permits and improve the active labour market policy programmes with
the aim to updating the skills of the long term unemployed.
Phasing in a new ‘smart’ approach to collective wage bargaining that
balances the needs for flexibility with fairness. This includes the ambition to
streamline and over time raise minimum wages in a manner that safeguards
competiveness and employment prospects. The scope and timing of changes
to the minimum wage will be made in consultation with social partners and the
European and international institutions, including the ILO, and take full
account of advice from a new independent body on whether changes in
wages are in line with productivity developments and competitiveness.

Product market reforms and a better business environment – As part of a new
reform agenda, Greece remains committed to:
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Removing barriers to competition based on input from the OECD.
Strengthen the Hellenic Competition Commission.
Introduce actions to reduce the burdens of administrative burden of
bureaucracy in line with the OECD’s input, including legislation that bans
public sector units from requesting (from citizens and business) documents
certifying information that the state already possesses (within the same or
some other unit).
Better land use management, including policies related to spatial planning,
land use, and the finalisation of a proper Land Registry
Pursue efforts to lift disproportionate and unjustified restrictions in regulated
professions as part of the overall strategy to tackle vested interests.
Align gas and electricity market regulation with EU good practices and
legislation

Reform of the judicial system – The Greek government will:
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Improve the organisation of courts through greater specialisation and, in this
context, adopt a new Code of Civil Procedure.
Promote the digitisation of legal codes and the electronic submission system,
and governance, of the judicial system.

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Statistics – The Greek government reaffirms its readiness to:
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Honour fully the Commitment on Confidence in Statistics, and in particular the
institutional independence of ELSTAT, ensuring that ELSTAT has the
necessary resources to implement its work programme.
Guarantee the transparency and propriety of the process of appointment of
the ELSTAT President in September 2015, in cooperation with EUROSTAT.

IV. Humanitarian Crisis – The Greek government affirms its plan to:
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Address needs arising from the recent rise in absolute poverty (inadequate
access to nourishment, shelter, health services and basic energy provision)
by means of highly targeted non-pecuniary measures (e.g. food stamps).
Do so in a manner that is helpful to the reforming of public administration and
the fight against bureaucracy/corruption (e.g. the issuance of a Citizen Smart
Card that can be used as an ID card, in the Health System, as well as for
gaining access to the food stamp program etc.).
Evaluate the pilot Minimum Guaranteed Income scheme with a view to
extending it nationwide.
Ensure that its fight against the humanitarian crisis has no negative fiscal
effect.

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