## _cr13241 — IMF staff report excerpts (July 2013) ## Source details **Canonical URL:** [_cr13241 — IMF staff report excerpts (July 2013)](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13241.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13241.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13241.pdf.json) --- ### Extended Arrangement and financing - Four-year Extended Arrangement under the Extended Fund Facility approved on March 15, 2012 in the amount of SDR 23.79 billion (2,159 percent of quota; €28 billion). - Purchases made to date: SDR 5.7 billion (about €6.7 billion). - Proposed purchase on completion of fourth review: SDR 1.5 billion (about €1.8 billion). - Euro area disbursements since program approval: €130.6 billion (committed €144.6 billion), of which €48.2 billion for bank recapitalization. - Access to Eurosystem funding stands at around €85 billion. - IMF disbursement reported on completion: 1.51 billion (about €1.72 billion, or US$2.29 billion), bringing total disbursements under the arrangement to SDR 7.21 billion (about €8.24 billion, or US$10.94 billion). ### Macroeconomic developments and outlook - Recent dynamics and indicators: - Real GDP: declined by 5½ percent y/y in Q1 2013 (compared to -5¾ percent in Q4 2012). - Unemployment: about 27 percent; youth unemployment exceeds 57 percent; unemployment rose from 26.4 percent in December 2012 to 26.9 percent in April 2013. - Nominal wages: declined by 11 percent during 2010–12. - ULC-based REER: depreciated by over 8 percent y-on-y in Q1; CPI-based REER remained broadly stable y-on-y in June. - 12-month current account deficit through Q1 2013: 2¼ percent of GDP (compared to 3½ percent at end-2012). - Structural current account deficit estimated at about 6 percent of GDP in 2012. - Sovereign spreads: around 900 bps (from around 700 bps after Fitch upgrade in May). - Credit contraction: -3.7 percent y/y in May. - Outlook and projections: - Staff projects recovery starting in 2014; projected GDP contraction in 2013: 4¼ percent (staff also cites projected 4.2 percent for 2013 in medium-term framework). - Near-term: gradual slowing of GDP decline, stabilization toward end-2013 driven by exports and investment. - Wages and prices: - Gross wages and salaries projected to decline by 7 percent in 2013 and 1½ percent in 2014 (cumulative decline of over 20 percent during 2010–14). - Price dynamics: projected ¾ percent deflation for 2013. - External adjustment: - Headline current account deficit projected to improve to about 1 percent of GDP in 2013. - Structural deficit projected at about 5½ percent. ### Fiscal performance, risks, and corrective measures - 2013 fiscal outcomes YTD broadly consistent with program targets; offsets from under-execution of investment budget. - Main identified fiscal risks and quantified impacts: - Delay in billing of property taxes: impact of €450 million (table notes: Delay in billing of PPC tax for 2013: €450 million; noted as 0.2 percent of GDP in 2013 and -0.2 percent of GDP in 2014). - Overruns in health spending (EOPYY): €475 million (0.30 percent of GDP in 2013; 0.34 percent in 2014). - Non-implementation of solidarity contributions for self-employed: €600 million (0.30 percent of GDP in 2014). - Non-implementation of new wage grid for armed forces: €250 million (0.10 percent of GDP in 2014). - Corrective actions committed: - Tighter payment schedule of final installment of property taxes collected via PPC. - Bring forward measures (luxury tax, fee for lawsuits). - Tighten conditions for claiming deductions for medical spending. - Claw-back mechanism to reverse healthcare sector overspending (by September). - Additional measures to close identified 2014 gaps to be reassessed in 2014 budget review. - Fiscal targets and medium-term: - Primary balance targets (programme terms): 2013: EUR 0 million (0.0% of GDP); 2014: EUR 2,750 million (1.5% of GDP); 2015: EUR 5,700 million (3.0% of GDP); 2016: EUR 8,975 million (4.5% of GDP). - Total revenues (percent of GDP) projections: 2012: 44.1; 2013: 42.9; 2014: 43.6; 2015: 42.4; 2016: 42.0. - Total expenditures (percent of GDP) projections: 2012: 50.4; 2013: 47.0; 2014: 46.9; 2015: 44.5; 2016: 42.7. ### Debt dynamics and debt sustainability analysis (DSA) - Public debt path: - Public debt peaks around 176 percent of GDP in 2013. - Baseline with contingent relief: debt reaches 124 percent of GDP in 2020 after additional contingent relief measures of about 4 percent of GDP to be determined in 2014–15. - Eurogroup commitment: reduce debt to substantially below 110 percent of GDP in 2022, conditional on program compliance. - DSA stress test scenarios (selected outcomes preserved exactly): - If primary surplus stays at 2013 target level of 0, debt to GDP will reach 148 percent of GDP in 2020 and will be rising. - If nominal growth averages 1 percent lower than the 4 percent baseline, debt will be 134 percent in 2020. - If privatization receipts are half of €22 billion expected, debt in 2020 would be only 4 ppts higher than baseline. - If EFSF interest rates are 1 ppt higher, debt would be 4 percentage points higher than baseline. - External debt: - Gross external debt at 233 percent of GDP; projected to peak around 240 percent in 2013 then decline to about 145 percent in 2020. - Net external debt projected to fall from about 130 percent of GDP in 2012 to around 75 percent in 2020. ### Program targets, compliance, and prior actions - All six end-June 2013 quantitative performance criteria (QPCs) are expected to have been met; authorities requested waivers of applicability for three QPCs (central government debt, general government balance, domestic arrears) because final data not available. - Missed indicative targets: ceiling on stock of domestic arrears (broad definition), privatization receipts, and transfers to mobility scheme. - Nine prior actions to preserve program momentum included: income tax code adoption, submission of tax procedure code, RES account actions, placing at least 4,200 ordinary employees in mobility scheme, transfer of departments to revenue administration, closure of deferred audit-arrangement schemes for new entrants, sale of two bridge banks, banking sector strategy completion, and steps to remove privatization obstacles. - Staff recommendation: support completion of the fourth review and waivers/modifications requested by authorities. ### Revenue administration and tax system overhaul - Income Tax Code and Tax Procedures Code (TPC): - New income tax code adopted in January 2013 to clarify policy changes, unify income tax provisions, eliminate exemptions for accumulation of special reserves, simplify capital gains taxation, tighten depreciation and medical deduction rules. - TPC submitted for adoption by late July 2013; implementation by start-2014 requires IT overhaul, secondary legislation, and staff training. - Real estate tax: - New framework to replace PPC levy and FAP with a single state-level property tax effective January 2014 in a revenue-neutral way; intended programmed revenue net of exemptions of €2.7 billion (or €2.9 billion if transaction tax reduced/eliminated). - Self-assessment reliance raises number of property owners receiving bills by 30 times; significant capacity concerns. - Data collection (form E9) to be completed by end-September 2013. - Tax administration autonomy and capacity-building: - Legislative steps to transfer functions, staff, and budgets of key units to General Secretariat for Public Revenue (SGPR); establish Strategic Planning and Financial Control Directorate; select 5-member Advisory Council. - Staffing targets and hires: hire 186 external auditors (July 2013); certify 2,000 internal auditors; appoint full-time trainers (September 2013) to complete basic audit training by mid-2014. - Measures to abolish deferred payment schemes and remaining amnesties in advance of TPC introduction; abstain from extensions of tax filing deadlines. - Collection and enforcement: - Create KEAO joint collection center for SSC debt; assign 200 staff by end-August 2013 and recruit 400 recovery officers by end-2013; transfer €4.2 billion of SSC collectable debt to KEAO. - Adopt legislation for indirect bank account register (July 2013), pilot IT system (August 2013), full implementation (September 2013). - Introduce mandatory 90-day deadline for VAT and income tax refunds (by end-September 2013). - Key KPIs (Table 5 excerpts; end-September targets preserved): - Collection of new debts in the current year (percent of new debt in the year) targets: End-Jun.: 14.0%; End-Sep.: 19.0%; End-Dec.: 24.5%. - Number of risk-based full-scope audits in the year targets: End-Jun.: 176; End-Sep.: 386; End-Dec.: 596. - Collection full scope audits (percent of assessed tax and penalties) targets: End-Jun.: 65.0%; End-Sep.: 70.0%; End-Dec.: 75.0%. ### Mobility scheme and public administration reform - Mobility scheme targets and mechanics: - Prior action: place at least 4,200 ordinary employees in the mobility scheme by end-July (cumulative from April 1, 2013). - Targets: transfer at least 12,500 ordinary employees to scheme by end-September 2013; 25,000 by end-December 2013 (cumulative). - Employees in mobility scheme: wages reduced to 75 percent; maximum time reduced from 12 to 8 months to front-load exits. - Mandatory exits objective: 15,000 mandatory exits from civil service in 2013–14; 4,000 mandatory exits in 2013 (end-year) and 15,000 by end-2014 (Table 1b targets: Mandatory Exits 2.0 (Sep-13), 4.0 (Dec-13), 15.0 (Dec-14), units in thousands). - Reporting and monitoring: - MAREG to report monthly (15 days after month) on entrants, departures, stock in scheme and exits. - Mobility and Exit Scheme cumulative numbers (selected entries): June 2013: Total Personnel Covered 361,000; Actual To Date 2,000. Sep-2013: Total Personnel Covered 400,000; Actual To Date 12,500 2,000. Dec-2013: Total Personnel Covered 650,786; Actual To Date 25,000 4,000. ### Financial sector, banking strategy, and NPLs - Recapitalization and structure: - Recapitalization of four core banks completed; three raised at least 10 percent of capital needs from private sector and remain under private management; Eurobank fully recapitalized by HFSF. - Post-recapitalization deposit market shares (Percent): NBG 25; Alpha 22; Eurobank 19; Piraeus 30; remaining non-core banks and specialized institutions each below 2 percent. - Ownership shares after recapitalization (Percent of total share in equity): Alpha 16.3; HFSF 83.7 — Eurobank 1.4; HFSF 98.6 — National Bank of Greece 15.4; HFSF 84.6 — Piraeus 21.7; HFSF 78.3. - Sales and consolidation: - Sale announced of bridge banks TT New Hellenic Postbank and Nea Proton Bank to Eurobank (July 12–13 announcement). - Banking sector strategy centers on four core banks and small non-core banks with private capital; rationalization options for cooperative sector (including Panellinia bank). - Partial privatization of Eurobank to be undertaken by early next year; advisors to be hired and investors invited earlier. - Capital shortfalls, buffers, and stress testing: - Two core banks have capital shortfalls of around 1 percent of RWA relative to regulatory minimum due to asset deterioration. - Liability management exercises generated €445 million CT1 capital in two banks; final round generated just under €0.6 billion retained in banks. - Buffers: around €5 billion in financial sector envelope and €3.1 billion private sector participation. - End-year stress test modalities to align with EBA methodology; asset quality review and stress test timelines set (interim deadlines end-October/November 2013; completion by end-December 2013). - NPLs and balance sheet cleanup: - Household NPLs: above 27 percent in Q1 2013. - Corporate NPLs: 31 percent in March 2013. - Household liabilities-to-income ratio: 109 percent in Q4 2012. - House prices: -30 percent cumulative from Q3 2009 peak to Q1 2013. - Over €8 billion of non-performing assets under liquidation from bank resolutions. - Measures: updated household insolvency law; "Facilitation Program" medium-term forbearance scheme; inter-agency working group to propose enhancements by end-October 2013; distressed credit operations review to be completed by end-September 2013. ### Health sector (EOPYY) — overruns and containment - Public health expenditure: declined from 7.1 percent of GDP in 2010 to 5.8 percent in 2012 and projected to reach 5.3 percent in 2013. - EOPYY spending through April 2013 ran well above budget and would lead to an annual shortfall of 0.3 percent of GDP if not corrected. - Short-run reform: impose claw-back mechanism to limit producer-induced demand; claw-back of overspending in first 6 months to be collected by September 2013. - Contingency measures if claw-back insufficient (October 2013): across-the-board price cuts, reduction in access to private providers, introduction of entry fees. - Medium- and long-term prospects: limited scope for further durable savings without rationing non-essential services. - Measures to strengthen oversight: - Random monitoring of providers to verify co-payments. - Share providers’ reimbursement data with tax administration. - Clearer reporting requirements for providers. - Reduce EOPYY dependence on other funds. - Operational reforms: tendering procedure for in-house financial and analytical cost accounting systems of EOPYY (January 2014); introduction and expansion of e-prescription and DRG-based purchasing from January 2014. ### Structural reforms, privatization, and product-market liberalization - Privatization status and targets: - Agreement in June to sell government's 31 percent stake in DESFA (subject to regulatory approvals). - No bidder for DEPA; re-tendering and rescheduling of target (end-September privatization receipts target reduced from €1.8 billion to €0.9 billion). - Sale of OPAP awaiting regulatory approvals; expected conclusion by end-September. - Projections for sales about €1½ billion in 2013 (compared to third review target of €2.5 billion). - Product and service market reforms (selected measures and deadlines): - Liberalize regulated professions progressively; adopt Code of Lawyers by end-July; remove excessive restrictions for engineers and other professions by end-2013. - Trade facilitation: 24/7 customs at Athens airport and two shifts at Piraeus port implemented in April 2013; e-customs for imports by end-November 2013. - Investment licensing overhaul over two years with World Bank assistance; one-stop shop and self-compliance to be developed. - Retail: replace fixed margins with maximum margins for OTC products sold in pharmacies and allow sale of selected OTC products outside pharmacies by end-September 2013. - Labor market reforms: - New minimum wage setting mechanism adopted (to apply after program period); minimum wage frozen during program. - Legislation to define statutory minimum mechanism to be adopted by July 2013; review of temporary employment, agency scope, and collective dismissal rules by December 2013. ### Social protection, employment, and safety nets - Employment programs: - Youth employment voucher program launched in July to support six-month vocational training and internships for 45,000 unemployed youths. - Social community work program planned to target about 50,000 individuals from jobless households later in 2013. - Health Voucher Program to provide 100,000 long-term uninsured citizens access to primary healthcare; potential extension subject to EU structural funds. - Pilot means-tested minimum guaranteed income program with World Bank assistance to launch January 2014 and national roll-out aimed by 2015. - Pensions and social contributions: - Binding mechanism for auxiliary pensions brought forward to June 2014 (entry in force). - Reform of social contributions to reduce average rates by 3.9 percentage points phased in over 2014, 2015, 2016 (legislative actions and studies with deadlines specified). ### Program risks and staff assessment - Key risks: - Slippages in structural reforms significantly slow recovery; staff estimates productivity gains from reforms could contribute about 10 percent cumulative growth over medium-term. - Balance sheet vulnerabilities of households and SMEs; high public debt. - Political instability from high unemployment and social hardship. - External risks: weak euro-area performance; early exit from exceptional monetary policies tightening conditions. - Staff conclusion: program continues to satisfy substantive criteria for exceptional access but with little to no margin; contingent on continued official support from euro-area partners and full program implementation. - Staff recommendation: support completion of fourth review, waivers and modifications as requested, subject to prior actions and ongoing monitoring. *Source: _cr13241 - EXECUTIVE SUMMARY* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Extended Arrangement - On March 15, 2012, the Executive Board approved a four-year Extended Arrangement under the Extended Fund Facility in the amount of SDR 23.79 billion (2,159 percent of quota; €28 billion). - Purchases totaling SDR 5.7 billion (about €6.7 billion) have been made so far. - A purchase in the amount of SDR 1.5 billion (about €1.8 billion) is proposed to be released on the completion of the fourth review. - Euro area countries have so far disbursed €130.6 billion since the current program approval (of €144.6 billion committed), of which €48.2 billion was for bank recapitalization. ### Macroeconomic Developments and Outlook - The economy is rebalancing, but primarily through recession rather than productivity-enhancing structural reform. - Domestic demand continues to fall at a moderating pace; import compression has further shrunk the current account deficit. - Large output gap and high unemployment are exerting downward pressure on wages; the competitiveness gap in unit labor cost terms has narrowed further. - Product prices are easing; sentiment indicators improved but recent political crisis dampened activity. - With developments essentially as projected, no substantial changes have been made to the program’s macroeconomic and financing outlook or to the debt sustainability analysis. Key recent indicators and dynamics: - Real GDP declined by 5½ percent y/y in Q1 2013 (compared to -5¾ percent in Q4 2012). - Unemployment: about 27 percent; youth unemployment exceeds 57 percent. - Unemployment rose from 26.4 percent in December 2012 to 26.9 percent in April 2013. - Nominal wages declined by 11 percent during 2010–12. - The ULC-based REER depreciated by over 8 percent y-on-y in Q1; the CPI-based REER remained broadly stable y-on-y in June. - The 12-month current account deficit through Q1 2013 reached 2¼ percent of GDP (compared to 3½ percent at end-2012). - Structural current account deficit estimated at about 6 percent of GDP in 2012, implying an overvaluation in the CPI-based REER of about 10 percent. - Sovereign spreads increased to around 900 bps (from around 700 bps after the upgrade by Fitch in May). - Access to Eurosystem funding stands at around €85 billion. ### Financial Sector and Balance Sheets - Deposits have recovered since mid-2012 and reliance on Eurosystem funding has declined sharply; deposit movements stabilized in recent months. - Credit contraction worsened slightly to -3.7 percent y/y in May. - Household sector: - Liabilities-to-income ratio at 109 percent in Q4 2012. - House prices fell -30 percent cumulative from Q3 2009 peak to Q1 2013. - Household NPLs increased to above 27 percent in Q1 2013. - Savings rates remained close to zero in Q4 2012. - Corporate sector: - NPLs rose to 31 percent in March 2013. - Sector generated substantial surpluses (8 percent of GDP in Q4 2012). - Some large corporations raised about €2 billion through May 2013 at yields around 8 percent. - Bank recapitalization: - Private sector participation amounted to €3.1 billion, plus about €3 billion from recapitalization of subsidiaries by foreign banks that have since exited. - Three out of the four core banks retained private sector management. - One small non-core bank met capital needs privately and remains operating. - On July 12–13, it was announced that the two HFSF-owned bridge banks—TT New Hellenic Postbank and Nea Proton Bank—are being sold to Eurobank. - Cleaning up bank balance sheets remains to begin (see Box 1; Table 5). ### Policy Implementation and Fiscal Developments - Corrective actions are being taken to ensure fiscal targets for 2013–14 are met. - Achieving the targeted zero primary fiscal balance in 2013 would be an impressive achievement given the scale of imbalances three years prior. - Notable shortfalls persist in public administration reform, revenue administration reform, and privatization; discussions focused on steps to catch up. - Following core bank recapitalization, steps are being taken to further safeguard financial stability, including through the sale of two bridge banks. Fiscal specifics and risks: - 2013 fiscal outcomes year-to-date broadly consistent with program targets. - Offsets: current spending overruns and temporary delays in revenue collection were largely offset by under-execution of the investment budget. - Main risks to program targets: - Delays in billing of property taxes with approximate impact of €450 million. - Overruns in health spending in the year to date of €475 million on an annualized basis. - 2014 fiscal pressures identified: - Higher health spending and backtracking on two measures—a solidarity surcharge on the self employed (€600 million) and a reform of the wage grid of the military (€250 million)—would contribute to gaps. - Identified gaps have been closed with additional measures but will be reassessed in the 2014 budget at the next review. Public finance management and administration: - Tax administration: progress in autonomy and organizational reforms; strengthened capacity for large taxpayers and high wealth individuals; June KPIs show increases in audits and assessed amounts, but collection of assessed amounts lags targets due to continued application of deferred payment schemes. - Debt collection lags despite legislative changes to write off uncollectable debt to focus on collectible debt. - PFM reforms: expansion of the commitment register continued; about 90 percent of entities with spending above €1 million per year have functioning commitment registers. - Arrears clearance lagged: arrears fell by only €1.4 billion through May, short of targeted reduction of €4.5 billion. - Public administration reform: - Attrition of ordinary (permanent) staff in line with program targets (1:5 hiring rule). - Closure of the public broadcasting company, ERT, in June; smaller replacement being opened that could rehire a subset of former ERT staff. - Significant delays and slippages overall: staffing plans prepared for only 361,000 staff (against 450,000 planned); no employees shifted into the mobility scheme (target of 12,500 by end-June 2013); hiring of contractual staff has overshot due to activation of EU-financed employment programs. Tabled summary of identified fiscal changes (2013–2014): - Slippage: 0.5 percent of GDP (2013) and 0.59 percent of GDP (2014) — Millions of euros reflected in table rows below. - Delay in billing of PPC tax for 2013: 0.2 percent of GDP (2013) equals -0.2 percent of GDP (2014) — €450 million. - Non-implementation of solidarity contributions for self-employed: 0.00 percent of GDP (2013) and 0.30 percent of GDP (2014) — €600 million. - Non-implementation of new wage grid for armed forces: 0.00 percent of GDP (2013) and 0.10 percent of GDP (2014) — €250 million. - Overrun in spending by EOPYY: 0.30 percent of GDP (2013) and 0.34 percent of GDP (2014) — €475 million. - Source: IMF staff estimates and projections. (Millions of euros) ### Structural Reforms and Privatization - Structural reforms are progressing slowly. - Privatization: - Agreement in June to sell government’s 31 percent stake in DESFA (finalization subject to regulatory approvals). - No bidder for DEPA (natural gas company). - Finalization of sale of OPAP awaits regulatory approvals and is expected to be concluded by end-September. - Projections for sales of about €1½ billion in 2013 (compared to third review target of €2.5 billion). - Liberalization of regulated professions: slower than targeted, especially issuance of secondary legislation, reflecting resistance from vested interests. - Judicial reforms: court case backlog reduced (tax and nontax); new Code of Lawyers slated for adoption in July; anti-corruption plan implementation and draft Code of Civil Procedure delayed. - Labor market reforms: new minimum wage setting mechanism adopted (to apply after the program period); during the program the minimum wage is frozen. The new mechanism shifts power to set the statutory minimum wage to the government from a non-representative group of employers and unions. ### Key Messages and Policy Priorities - Deliver rapidly on structural reforms to unlock growth and create jobs; this is essential to lessen the pain of further adjustment. - Continue corrective fiscal actions to meet 2013–14 targets and address identified fiscal risks (property tax billing delays and health spending overruns). - Accelerate revenue administration reforms to improve collection of assessed amounts and focus on collectible debt. - Advance PFM reforms and arrears clearance, with attention to local governments and social security funds. - Complete privatizations and remove barriers to liberalization of regulated professions to improve the investment climate. - Proceed with bank balance sheet cleanup following recapitalization, and safeguard financial stability through sales and restructuring as appropriate. *Source: _cr13241 - EXECUTIVE SUMMARY* ### 9. As to program targets, all six end-June 2013 quantitative performance criteria (QPCs) ### _cr13241 - 9. As to program targets, all six end-June 2013 quantitative performance criteria (QPCs) ### Program targets and compliance - All six end-June 2013 quantitative performance criteria (QPCs) are expected to have been met, although indicative targets and some structural benchmarks were missed (MEFP Tables 1 and 2). - End-June data are available for three QPCs—primary state spending, external arrears, and new guarantees—which were all met. - Based on latest information, the three other QPCs—central government debt, general government balance, and domestic arrears—appear to have been met, but final data will be available only at the end of July or early August. The authorities requested a waiver of applicability for those three QPCs. - Missed indicative targets: ceiling on the stock of domestic arrears (broad definition), privatization receipts, and transfers to the mobility scheme—each subject to delays. - Missed structural benchmarks have been either targeted as prior actions or re-phased (MEFP Tables 2–4), or mitigating actions are being taken. ### Outlook - Staff projects a recovery starting in 2014. The latest macroeconomic data are consistent with the projected 4¼ percent GDP contraction in 2013. - Near-term path: gradual reduction in pace of GDP decline, followed by stabilization toward end-2013, driven by positive contributions from exports (boosted by tourism) and investment, and offset by falling private and public consumption. - Medium-term drivers: recovery projected to be driven by the external sector (buoyed by improved competitiveness) and investment. - Wages and prices: - Gross wages and salaries projected to decline by 7 percent this year and 1½ percent in 2014 (for a cumulative decline of over 20 percent during 2010–14), before returning to modest real growth in the medium term. - Price dynamics consistent with projected ¾ percent deflation for 2013. - Inflation expected to remain below the euro area average; output gap not expected to close fully until 2020. - External adjustment: - Headline current account deficit projected to improve to about 1 percent of GDP this year. - Structural deficit projected to be about 5½ percent. ### Risks to projections - Slippages in structural reforms: - Productivity gains from structural reforms are projected to contribute about 10 percent in cumulative growth over the medium-term; slippages would significantly slow recovery and reduce potential GDP. - Balance sheet vulnerabilities: - Stretched household and SME balance sheets pose risk of faster adjustment and weaker demand; public sector debt may hinder demand and growth. - Potential political instability: - High unemployment and social hardship raise risk; further ambitious fiscal adjustment needed to make public sector debt decline steadily, exacerbating social stress and political resistance. - External risks: - Continued weak euro-area performance would negatively affect exports and growth. - Early exit from exceptional monetary policies in advanced economies would tighten financial conditions. ### Debt projections and sustainability assessments - Public DSA: - Public debt dynamics similar to path under the Third Review given unchanged macro framework. - Debt peaking at around 176 percent of GDP this year, then expected to decline to 124 percent in 2020, after additional contingent relief measures of about 4 percent of GDP from Greece’s European partners to be determined in 2014–15. - European partners committed to reduce debt to substantially below 110 percent of GDP in 2022, if needed and conditional on Greece meeting program commitments. - Downside risks remain from lower growth and potential fiscal and privatization slippages. - External DSA: - External debt expected to decline gradually owing to projected current account improvements and continued reliance on official financing at low interest rates. - Risks: delayed structural reforms slowing competitiveness improvements, privatization slippages, and larger than expected deflation. ### Fiscal policy: recent actions and commitments - 2013 fiscal consolidation has been strong but included slippages requiring corrective actions; a back-loaded revenue profile in 2013 could strain taxpayers and revenue collection. - Authorities committed to measures to ensure 2013 fiscal target, including: - Tighter payment schedule of final installment of property taxes collected via electricity bills by PPC. - Bringing forward measures agreed in 1st and 2nd reviews (e.g., luxury tax and fee for lawsuits). - Tightening conditions for claiming deductions for medical spending. - Completing memorandum of understanding with ship owners to complement a tonnage tax. - Claw-back mechanism to reverse healthcare sector overspending (by September), followed by structural measures to reduce prices and demand for services. - Steps to close potential gaps in 2014 include the claw-back on health overspending and closing existing schemes for untaxed capital gains reserves; the package will be re-examined in the 2014 budget review. ### Renewable energy sector (RES) contingent liabilities - Authorities acted to lower RES account debts: - As of July 1, household tariffs liberalized. - RES Special Levy increased from €9.30 per MwH to €14.96 MwH. - Program aims to eliminate RES account debt by end-2014. - These steps align average electricity prices in Greece with the EU and enable gradual reduction of cross-subsidization and arrears in the electricity sector. ### Tax system overhaul - Income tax (MEFP ¶6 and 8): - New code clarifies January 2013 policy changes and unifies income tax provisions; eliminates exemptions for accumulation of special reserves; simplifies capital gains taxation on equity, bonds, and property; and tightens depreciation and medical deduction rules. - Tax procedures code (TPC) (MEFP ¶6): - Simplifies registration, filing, payment and collection; consolidates scattered provisions; modernizes penalties by introducing interest instead of surcharges; clarifies revenue collection roles; introduces internal review for tax disputes; consolidates deferred payment and installment provisions. - Introduction by start-2014 requires rapid IT overhaul, secondary legislation, and staff training; risk of slippages in preparation timeline is considerable. - Real estate tax (MEFP ¶7; Box 3): - New framework to replace PPC levy and FAP with a single state-level property tax in a revenue-neutral way, targeting properties rather than individuals and broadening the base to commercial buildings, land, and industrial properties. - Implementation risks: self-assessment reliance increases number of property owners receiving bills by 30 times; significant concerns about revenue administration capacity; additional resources and a dedicated project management team are needed. - If revenue shortfalls persist, extending existing property taxes into 2014—modified for constitutionality concerns—may be necessary. ### Public administration reform and mobility scheme - Reform motivation: improve efficiency and quality of public services, reduce employment through attrition, lower wage bill, and bring in skilled workers. Progress to date has been slow. - Commitments and targets: - Complete staffing plans for all ordinary general government employees by end-2013. - Mobility scheme: end-September 2013 target of 12,500 employees (one-quarter delay); full commitment of 25,000 staff in mobility scheme by end-year. - Transfer over 4,000 staff to the scheme in July. - Of those transferred in July, 2,000 intended for mandatory exit. - Authorities maintain objective of 15,000 mandatory exits from the civil service in 2013–14. - Maximum time in the mobility scheme reduced from 12 to 8 months, bringing forward exits from late 2014 to mid-2014. - Commitment to eliminate a substantial share of about 4,000 contractual staff using judicial claims to extend contracts. ### Employment support and social safety nets - New programs and targets: - Employment voucher program (financed by EU structural funds) launched in July to support six-month vocational training and internships for 45,000 unemployed youths. - Social community work program planned later in 2013 targeting about 50,000 individuals from jobless households. - Health Voucher Program to provide 100,000 long-term uninsured citizens access to primary healthcare; potential extension subject to EU structural funds. - With World Bank assistance, a pilot means-tested minimum guaranteed income program to launch in January 2014, with national roll-out aimed by 2015. ### Fiscal institutional reforms and revenue administration - Concern that targeted revenue administration gains of 0.4 percent of GDP in 2014 (and 1.5 percent of GDP by 2016) show no clear evidence of materializing; emphasis on organizational and operational upgrades. - Weak monitoring and control of spending—especially in social sector—threatens fiscal consolidation. - Steps to bolster autonomy and organizational change (MEFP ¶13): - Slow execution of powers transferred to Secretary General for Public Revenues (SGPR); civil service constraints hamper autonomy. - Remaining legislative work includes withdrawing powers of local tax offices and other sub-units. - Challenges: hiring procedures, daily operations interference, major staff grading overhaul, and integration of special prosecutor for tax evasion functions scheduled for October. - Specific issues hampering revenue administration autonomy (text table summary): - Ability to organize sub-units: separate ministerial decisions required for cost-incurring decisions; legal formalism creates uncertainty of SG decisions. - Ability to direct local offices: laws still grant powers to local offices; extent of delegated powers unclear. - Ability to determine grading structure: position-based grading not envisaged by Ministry of Administrative Reform and e-Governance or MAREG. - Budget autonomy: limited flexibility to re-allocate funds; revenue administration has no single budget. - Urgent efficiency steps (MEFP ¶15): - Continued granting of tax filing deadline extensions and deferred payment schemes undermine payment culture; authorities agreed to abolish deferred payment schemes and remaining amnesties in advance of TPC introduction and to abstain from extensions of tax filing deadlines. - Need to prevent slippages in debt collection reforms and reforms of large taxpayer and high-wealth units; agreed organizational changes at large debtor unit and local tax offices and to provide resources for debt collection, supporting legislative changes to write off uncollectable debt. - Anti Money Laundering (AML) strengthening (MEFP ¶14): - Banks legally obliged to report customers suspected of tax evasion; reporting level remains low and information not yet adequately used by revenue administration. - Adequate bank supervision and revision of AML law to streamline flow and use of information recommended to bolster tax compliance and fight evasion. *International Monetary Fund — staff report excerpt (content unit: _cr13241 - 9. As to program targets, all six end-June 2013 quantitative performance criteria (QPCs) )* ### 25. In light of recent slippages, the authorities are making an effort to improve the ### _cr13241 - 25. In light of recent slippages, the authorities are making an effort to improve the ### Social security contributions (SSC) collection - Authorities allocating 600 staff on secondment to the joint collection center for SSC debt (KEAO) (MEFP ¶17). - Legislative changes provide legitimacy to KEAO and enforce collection efforts of SSFs. - Risks to KEAO efficiency: - Lack of permanent staff. - Delays in identifying collectible SSC debt. - Agreed monitoring framework to help identify and address potential collection bottlenecks in a timely manner. ### Tax and SSC installment schemes - New tax and SSC installment schemes launched (MEFP ¶16). - Initial weeks: revenue collected is modest; premature to assess participation. - Authorities can maximize yield by: - Improving monitoring capacity. - Focusing on prompt collection enforcement. - If participation reaches targeted levels, administrative issues will argue for faster implementation of necessary IT changes. - Monitoring framework agreed to identify potential shortfalls quickly. ### Public financial management and budget process - Adoption of the 2013-16 medium-term fiscal strategy (MTFS) update set multi-year binding expenditure ceilings for line ministries and the health sector (MEFP ¶20). - Weaknesses revealed in budget preparation: - Adoption of local government (LG) budgets delayed well into Q1, causing slippages in arrears reporting and clearance. - Calendar for next budget cycle delayed. - Parliamentary discussion of the 2014–17 MTFS framework did not take place in the spring. - Remedies and reforms: - Amendments to the organic budget law could address some shortcomings. - Mandatory budget preparation guidelines for LGs to be jointly issued by the Ministry of Interior and GAO. - Authorities preparing to incorporate a structural budget balance rule with an automatic correction mechanism in the revised organic budget law, with outreach to the Parliamentary Budget Office. ### Control and reporting of general government entities of systemic importance - Need to strengthen control over general government entities of systemic importance (MEFP ¶19 and 22). - Inconsistency in reporting of entities in the social budget, notably EOPYY: - Difficulty identifying size and source of expenditure slippages due to quality of data from SSFs. - Staff and authorities agreed on a reporting framework for EOPYY, but significant capacity improvements required before detailed timely reporting can be introduced. - Interim commitments to prevent shortfalls and improve data quality: - (i) Introduce an additional automatic corrective mechanism (a claw-back) broadening coverage from pharmaceuticals to diagnostic and private hospital spending and imposing greater scrutiny on EOPYY’s expenditure outturn. - (ii) Tendering procedure for introduction of in-house financial and analytical cost accounting systems of EOPYY. - Authorities reviewing reporting requirements on the e-portal from commitment registers of all general government entities and preparing a plan to introduce penalties for non-reporting entities. ### Clearance of arrears - Progress slow and needs acceleration (MEFP ¶21). - Stock of general government arrears: - Fell by €1.4 billion, from €7.6 billion at end-2012 to €6.2 billion at end-May 2013. - Program target stock at end-June 2013: €3 billion. - Part of shortfall stems from roughly €700 million accumulation in arrears, over half in the Social Budget. - Legal and procedural obstacles to clearance recently addressed, including: - Objections in arrears verification by the Hellenic Court of Audit (HCA). - Lack of signed memoranda for arrears clearance by some SSFs. - Delays in adoption of LG budgets. - Expenditure arrears: - Water companies to be allowed direct payments on arrears owed to them, accounting for about €0.7 billion of outstanding arrears. - Planned actions: mandatory deadlines for each payment stage, remove role of local tax offices in payment process, IT and administrative improvements, and review of legal framework. - HCA to review effectiveness of its role; preliminary audits of EOPYY and five other SSFs to identify weaknesses hampering reporting and repayment. - Tax refund arrears: - New VAT refund risk analysis system had a slow start; additional guidelines needed. - Authorities committed to impose a mandatory 90-day deadline for payment of VAT and income tax refund claims, after which interest to taxpayers will accrue. - Deadline approaching for re-defining tax refund arrears as those not paid or rejected within 90 days of a claim being made. ### Financial sector policies and banking strategy - Recapitalization of core banks completed; focus on securing financial stability and developing a comprehensive four-pillar banking sector strategy (MEFP ¶24–25). - Structure of the banking system: - Strategy centers on four core banks to maximize funding and operational synergies while avoiding excessive concentration. - Announced sale of TT New Hellenic Postbank and Nea Proton Bank to Eurobank to bolster Eurobank as a core bank. - System to include small non-core banks with niche business models fully backed by private sector capital. - Strategy covers options for rationalization of the cooperative sector, including Panellinia bank. - Privatization strategy for banks: - Staff argued for partial privatization of Eurobank as early as possible; authorities committed to undertake this by early next year, hiring advisors and inviting potential investors earlier. - Sale to be structured to allow potential investors to gain controlling stakes. - Addressing potential capital needs: - Modalities for further capital injections discussed. - Rationalization of foreign presence: - Foreign subsidiaries of Greek banks are fragmented; options laid out in strategy. - Authorities plan to finalize plans in consultation with EC/ECB/IMF staff and DG-Comp. - Role of HFSF: - Review merited to assess legal and operational tools for managing portfolio and divestiture post-recapitalization. ### Governance and capitalization measures - Governance: - Consider amending HFSF law to provide legal indemnities to Executive Board and General Council when decisions align with long-term interests of banking sector and taxpayers. - Relationship Framework Agreements between banks and HFSF developed and in effect to insulate state-controlled banks from political influence (MEFP ¶30). - Capital shortfalls and buffers: - Two core banks have capital shortfalls of around 1 percent of risk weighted assets (RWA) relative to the regulatory minimum due to asset quality deterioration beyond 2011 projections. - Liability management exercises generated a total of €445 million CT1 capital in the two banks. - If insufficient, Bank of Greece may seek further reduction in RWA through faster divestment of non-core assets. - Agreed modalities and scope of end-year stress test to align with upcoming EBA stress test methodology; macroeconomic environment has deteriorated since the 2012 stress test. - Buffers: around €5 billion in the financial sector envelope and €3.1 billion participation by the private sector. - A final round of liability management exercises generated an additional capital of just under €0.6 billion, retained in the banks (MEFP ¶26). - Distressed credit operations review to be completed by end-September to identify improvements in recovery procedures (MEFP ¶32). ### Non-performing loans (NPLs) and asset management - Challenges to clean-up of bank balance sheets (MEFP ¶31–32): - Legal and judicial weaknesses: moratoria on auctioning collateral, seniority of state claims over banks’ claims, long waiting times for court appointments. - Breakdown of real estate market. - Potential lack of human and administrative resources. - Steps taken: - Updated household insolvency law. - Introduction of the "Facilitation Program," a medium-term forbearance scheme for over-indebted households. - Further actions needed: - Enhance debt enforcement and collateral recovery. - Design an effective out-of-court restructuring mechanism. - Inter-agency working group to be set up in July 2013 to identify bottlenecks and propose concrete enhancements by end-October 2013. - Management of assets under liquidation (MEFP ¶29): - Bank resolutions resulted in over €8 billion of non-performing assets under liquidation. - Bank of Greece amended laws and regulations to enhance recovery, including mandate to restructure loans and use collection companies, which improved collections. - Potential efficiency gains: consolidate assets into central pools for management under a liquidation company or outsource collections to banks. ### Institution for Growth (IfG) - Government intends to establish IfG to alleviate potential financing gaps for SMEs and infrastructure projects (MEFP ¶33). - Staff concerns: past Greek institutions associated with high share of non-performing loans and fiscal costs. - Authorities’ mitigating measures: - Professional management. - Cooperation with EIB and KfW. - Limit government exposure and loan guarantees of IfG to be equivalent to equity participation of €350 million. - Lend only at market terms and not allow deposit taking. - Domestic banking system will not participate in IfG’s equity or funding plans to ensure financing is additional. ### Structural reforms and competition - Structural reform implementation slow; in-depth assessment of privatization deferred to next review (MEFP ¶38). - Remainder of 2013 reform focus: - Lower regulatory barriers to competition. - Ease administrative burden on businesses. - Reduce excessive labor entry/exit costs. - Liberalization of regulated professions (MEFP ¶34): - Excessive restrictions eliminated for a number of professions. - Authorities plan to remove by end-year excessive restrictions in exclusive and shared reserved activities for engineers (24 professions). - Commitment to adopt secondary legislation during 2013 for remaining professions where liberalization started but is not complete (TMU ¶39). - Authorities and staff agreed on continuous monitoring and evaluation of de jure liberalization effects, including price changes and new entries. - Reducing red tape and attracting investment (MEFP ¶35): - Two OECD-assisted in-depth studies to identify excessive barriers; targeted recommendations expected in September and reforms to be adopted by end year. - Overhaul of complex investment licensing system over next two years with World Bank assistance, shifting to a self-compliance system. - Liberalizing product and service markets: - Replace fixed margins for over-the-counter (OTC) products sold in pharmacies with maximum ones; increase flexibility of retailers’ opening days. - Streamline mandatory ticket discounts to reduce ferry service costs. - Plan to adopt by end-August 2013 a law to liberalize long-distance bus services (secondary legislation to follow in 2014). - Allow by end-September 2013 the sale of selected OTC products outside pharmacies. - Facilitating trade: - Extend import reforms to mirror export facilitation reforms: - Longer opening hours in Athens airports and the Piraeus port by end-July. - Electronic submission system for trade declarations by end-November. - Align customs risk assessment system with best practices in EU Member States by end-September 2013 for exports and by end-January 2014 for imports. ### Labor market and employment costs - Prior labor market reforms facilitated wage adjustment and increased incentives to hire young workers who face the highest unemployment rate in Europe (MEFP ¶36). - Measures so far: - Reforms on collective bargaining and minimum wage. - Reduction in redundancy notification period and severance pay. - Remaining rigidity: - Employment protection, especially on collective dismissals, remains very rigid. - Planned action: - Adopt by end-2013, in consultation with social partners, an appropriate set of reforms to facilitate labor reallocation and attract investments; to be taken up in next review. ### Privatization and asset sales - Privatization behind schedule (MEFP ¶38); catch-up plan to bring program back on track by mid-2014: - Re-launch tender of DEPA (the natural gas company) as soon as possible. - Press ahead with sale of other assets; increase stakes of ports to be tendered and accelerate process. - Pricing policy for water companies to be issued in July to pave way for their tender. - Further 250 real estate assets transferred to HRADF. - Issue legal acts to allow Treasury to pay arrears to water companies from the arrears clearance program on behalf of local governments, with compensatory reduction in transfers to local governments. - Next steps: - Comprehensive assessment of privatization in context of fifth review, including structure and governance of privatization program. - Government announced restructuring or liquidation of three loss-making companies to be completed by year-end to release marketable assets for sale and cap fiscal costs. *International Monetary Fund — Excerpt from IMF staff report content unit _cr13241* ### 43. The authorities will implement nine prior actions to set the stage for Board ### _cr13241 - 43. The authorities will implement nine prior actions to set the stage for Board ### Prior actions to preserve program momentum - Restoring fiscal sustainability — prior actions cover: - (i) the adoption of a package of measures to implement the fiscal strategy for 2013–14 (MEFP ¶5). - (ii) the adoption of legislation to reform the income tax code and submission to parliament of the tax procedure code (MEFP ¶6). - (iii) the adoption of steps to eliminate the debt (contingent fiscal liability) in the RES account (MEFP ¶9). - (iv) the issuance of all necessary legal acts that would place at least 4,200 ordinary (permanent) employees in the mobility scheme (MEFP ¶11). - Strengthening fiscal institutions — prior actions cover: - (i) the issuance of ministerial decisions for the transfer to the revenue administration of functions, staff, and budget allocations of several departments previously under the ministry of finance (MEFP ¶13). - (ii) the adoption of legislative amendments to close—effective August 1, 2013—for new entrants any installment or deferred arrangements for payment of liabilities arising from audit assessments other than the Fresh Start and basic installment schemes (MEFP ¶15). - Preserving financial stability — prior actions cover: - (i) the completion of the sale of the two bridge banks, New Hellenic Postbank and Nea Proton Bank (MEFP ¶24). - (ii) the completion of a comprehensive banking sector strategy centered on a system of four viable core banks (MEFP ¶25). - Supporting privatization — a prior action covers steps to remove obstacles in the long-delayed privatization program (MEFP ¶39). ### Revisions to quantitative targets and structural benchmarks - Quantitative target revisions: - Targets revised to support public administrative reforms and privatization (MEFP Table 1). - Revised to preserve end-2013 totals despite significant delays in placing workers into the mobility scheme; a new indicative target proposed for the number of employees in the mobility scheme who will eventually exit. - Timeline for mandatory exits in 2014 has been front-loaded. - End-September performance criterion on privatization reduced from €1.8 billion to €0.9 billion due to the failed tender of DEPA and re-tendering expected sale pushed to 2014; achieving the revised criterion requires finalization of the sale of OPAP and national lottery, subject to regulatory approvals. - New and re-phased structural benchmarks (MEFP Table 4): - To preserve financial stability: by end-September 2013 (re-phased from end-July), banks required to update restructuring plans and submit them for validation to DG-Competition (IMF Country Report No. 13/20 MEFP ¶23). - To secure fiscal sustainability: - by end-September 2013, legislation will be adopted to establish a new property tax regime (MEFP ¶7). - by end-October 2013, secondary legislation will be adopted to implement the tax procedures code (MEFP ¶6). - end-September targets established for key performance indicators on revenue administration (MEFP ¶18) and public financial management (MEFP ¶23). ### Program reviews, financing assurances, and exceptional access - Reviews and timing: - Program reviews continue quarterly (Table 15). - Fifth review scheduled on or after September 29, 2013. - If delays persist, program will need re-phasing in future reviews. - Issues for forthcoming review include: (i) macroeconomic framework and growth outlook; (ii) 2014 budget and 2014–17 MTFS; (iii) passage and implementation of a new real estate tax; (iv) progress on privatization and possible need for structural changes; (v) progress in revenue administration reforms; (vi) securing adequate financing at least through end-2014. - Exceptional access and financing: - Program continues to satisfy substantive criteria for exceptional access but with little to no margin (Box 4). - Delays in structural reforms raise capacity-to-implement concerns; strong prior actions mitigate concerns allowing criteria to be met, albeit narrowly. - Continued commitment of euro area member states to provide additional official financing and further debt relief as necessary is essential. - Financing assurances for fourth review: - Program fully financed through July 2014; projected financing gap opens in August 2014. - Additional financing will need identification by the time of the fifth review to keep program fully financed on a 12-month forward basis. - Eurogroup has initiated discussions to eliminate projected financing gaps; Eurogroup commitments in February and November 2012 to provide adequate support remain important. ### Staff assessment of capacity to repay and macro risks - Capacity to repay: - Staff’s assessment of Greece’s capacity to repay the Fund has not changed (Table 18). - Macroeconomic outlook, debt service to the Fund, and peak access remain broadly unchanged. - Capacity to repay depends on continued official support and full implementation of the program; if program goes irretrievably off-track and euro area members do not continue support, capacity to repay would likely be insufficient. - Macroeconomic and policy risks: - Economy continues to rebalance, but sustainability concerns persist due to slow reforms (¶50). - Fiscal adjustment is exceptional; cyclically-adjusted fiscal adjustment of 15 percent of GDP over the last three years noted (¶51). - Three immediate public sector reform challenges (¶52): - Revenue administration: progress made but problems remain, including insufficient autonomy, susceptibility to political interference, negative impacts from repeated extensions of filing deadlines, modifications to deferred payment schemes, and suggestions of tax amnesties. Without urgent action, a credible 2014 budget would likely require painful expenditure cuts. - Real estate taxation: doubts staff about ability to implement a system in coming months that could replace current system from 2014 without significant revenue loss; high compliance will be challenging; authorities should consider extending electricity-bill collection scheme, modified for constitutionality concerns. Failure implies greater reliance on expenditure measures in 2014. - Public administration reforms: disappointing progress despite closure of ERT; concerns that focus is shifting from exit of redundant staff to reallocation within public sector; reliance on attrition not credible without room to hire expert staff. - Privatization: progress painfully slow; with sales delayed into next year, end-2013 objectives will be missed; regulatory, institutional, and political constraints impede asset preparation and sale; governance changes to the privatization fund may need consideration if delays become systemic (¶53). - Financial stability: critical steps completed—recapitalization of core banks, sale of bridge banks, enhancing viability of weaker core bank; rebuilding financial system, cleaning up balance sheets, and ensuring strong governance remain key challenges (¶54). - Debt sustainability: remains a risk; if investors are not persuaded of credible debt policy, investment and growth unlikely to recover as programmed; programmed path entails very high debt well into next decade, leaving Greece accident prone; European partners may need to consider faster debt reduction if concerns persist (¶55). - Overall program risks: macro deterioration, bank asset deterioration, implementation difficulties in fiscal and administrative reforms, and failure to reinvigorate structural reforms; closing financing gaps and delivering on debt reduction is a test of European support (¶56). ### Staff recommendation - Based on reforms undertaken and government commitments, staff supports completion of the fourth review and supports the authorities’ request for waivers of applicability and modification of the end-September performance criterion on privatization receipts (¶57). ### Box summaries — Banking sector and health spending - Banking sector restructuring (Box 1) — key points: - Restructuring almost complete after final recapitalization of four core banks, resolution of non-core banks, and sale of two bridge banks. - Three core banks (National Bank of Greece, Alpha Bank, and Piraeus Bank) raised more than 10 percent of their capital needs from the private sector and stayed under private management; Eurobank fully recapitalized by the HFSF. - Post-recapitalization landscape dominated by four core banks with 96 percent share of total deposits. - Share in ownership after recapitalization, 2013 (Percent of total share in equity): - Alpha 16.3; HFSF 83.7 - Eurobank 1.4; HFSF 98.6 - National Bank of Greece 15.4; HFSF 84.6 - Piraeus 21.7; HFSF 78.3 - The Status of Greek Banks, 2013 (Millions of euros) — official and private injections by bank are enumerated in the source tables. - Deposit market share (Percent): - NBG 25 - Alpha 22 - Eurobank 19 - Piraeus 30 - Remaining non-core banks and specialized institutions each below 2 percent. - Health spending overruns (Box 2) — key facts and reforms: - Public health expenditure declined from 7.1 percent of GDP in 2010 to 5.8 percent of GDP in 2012 and projected to reach 5.3 percent of GDP in 2013, below EU average of 6.3 percent of GDP. - EOPYY created in 2012 consolidated 8 SSFs but remains hindered by unresolved financial relations with old SSFs and weak budgeting and control practices. - EOPYY’s spending in 2013 through April was running well above budget and would lead to an annual shortfall of 0.3 percent of GDP if not corrected. - Underlying weaknesses include weak controls on billing, weak controls on budget implementation (SSFs retain powers over some budget functions), and deficiencies in the budget process (imprecise revenue estimates and under-budgeted expenditures). - Short-run reform: authorities will impose a claw-back mechanism to limit producer-induced demand and stay within 2013 budget allocations; claw-back is a stop-gap measure with litigation and incentive risks and should be temporary pending fundamental remedies. *Italic: IMF staff report excerpts as provided in the source content.* ### Box 2. Health Spending Overruns (concluded) ### Box 2. Health Spending Overruns (concluded) ### Containing EOPYY’s costs: oversight and enforcement measures - Durably containing EOPYY’s costs requires strengthening its oversight capacity. - Introduce better monitoring and enforcement mechanisms, including: - (i) randomly monitoring providers to verify whether co-payments are waived; - (ii) sharing data on providers’ reimbursement with the tax administration to verify that tax liabilities have increased in keeping with the spending increase (including collection of co-payments); - (iii) establishing clearer reporting requirements for providers; and - (iv) reducing EOPYY’s dependence on other funds. ### Medium- and long-term prospects for health budget savings - Over the medium and long term there is little room to achieve further durable savings from the public health budget. - Recent savings have been achieved through targeted reforms to reduce wasteful spending. - Going forward, the already low budget envelope for health care implies that there is little room for further savings short of measures to ration non-essential services. *Source: IMF staff.* ### Box 4. Greece: Exceptional Access Criteria ### Box 4. Greece: Exceptional Access Criteria ### Summary assessment - "The program continues to satisfy the substantive criteria for exceptional access but with little to no margin." - Assessment assumption: "This assessment assumes that euro area member states support Greece, including by providing additional official financing to fill future financing gaps and through further debt relief, if necessary." ### Criterion 1 — Balance of payments pressures - "The member is experiencing or has the potential to experience exceptional balance of payments pressures on the current or capital account, resulting in a need for Fund financing that cannot be met within the normal limits." - "Balance of payments support beyond normal access limits continues to be required since external financing needs remain large and financial conditions remain adverse." ### Criterion 2 — Debt sustainability - "A rigorous and systematic analysis indicates that there is a high probability that the member’s public debt is sustainable in the medium term." - Caveat: "However, in instances where there are significant uncertainties that make it difficult to state categorically that there is a high probability that the debt is sustainable over this period, exceptional access would be justified if there is a high risk of international systemic spillover." - Assessment for Greece: "In light of the commitments from euro area member states to provide additional debt relief as necessary, the baseline debt trajectory is sustainable in the medium-term but subject to significant risks." - Near-term concern: "In the near term debt will remain very high, giving rise to uncertainties that make it difficult to categorically affirm that debt is sustainable with a high probability." - Justification for exceptional access: "However, the risk of international systemic spillovers in case of a permanent interruption of the program remains high and justifies exceptional access." ### Criterion 3 — Prospects for market access - "The member has prospects for gaining or regaining access to private capital markets within the timeframe when Fund resources are outstanding." - Conditions: "Prospects for market access exist conditional on successful program implementation and adequate official financing from Greece’s European partners." - Staff expectations and policy stance: - "The staff expects the authorities to avoid large issuances, and to avail themselves of official financing that Euro area member states have committed to provide (so long as Greece adheres to program policies), on terms that would enable this financing to play an important catalytic role in securing market re-access." - "A gradual return to market access backstopped by official financing by Euro area member states will ensure Greece has financing on a scale and timing adequate to secure repayment of Fund resources." ### Criterion 4 — Prospect of program success - Required elements: "The policy program of the member provides reasonably strong prospect of success, including not only the member’s adjustment plans but also its institutional and political capacity to deliver that adjustment." - Assessment for Greece: - "Program implementation has been difficult given the social and political environment, but the authorities have demonstrated program ownership and policy resolve through the implementation of prior actions in key areas." - "Technical assistance from the EC and the IMF is supporting the authorities’ efforts." - "On this basis, staff assesses there is a reasonably strong prospect of success of the program." *Source: Box 4. Greece: Exceptional Access Criteria (from the provided IMF content).* ### 1. Direct taxes21.14.28.514.119.519.719.720.2 ### _cr13241 - 1. Direct taxes21.14.28.514.119.519.719.720.2 ### Revenue composition and trends (selected figures) - Total revenue (2010–2017, billions of euros): 90.2; 88.4; 85.5; 78.8; 80.2; 80.6; 83.8; 87.9 (2010–2017). - Direct taxes (2010–2017, billions of euros): 17.5; 18.0; 19.1; 17.0; 19.1; 19.0; 19.5; 20.4. - Income taxes (percent of GDP row in first table): 13.3; 2.0; 4.5; 8.1; 11.2; 12.5; 13.1; 14.3. - PIT (percent of GDP): 10.0; 1.6; 3.2; 5.6; 7.8; 6.7; 7.0; 7.6. - CIT (percent of GDP): 1.7; 0.0; 0.5; 1.0; 1.5; 3.7; 4.0; 4.4. - Other income taxes (percent of GDP): 1.6; 0.4; 0.8; 1.4; 2.0; 2.1; 2.1; 2.3. - Indirect taxes (2010–2017, billions of euros): 27.3; 26.6; 24.3; 23.3; 23.7; 24.3; 25.4; 26.6. - Transaction taxes (percent of GDP row): 15.7; 3.5; 6.9; 10.5; 14.3; 14.0; 14.5; 15.3. - VAT (percent of GDP): 15.0; 3.4; 6.6; 10.0; 13.4; 13.3; 13.7; 14.6. - Consumption taxes (percent of GDP): 9.6; 1.9; 3.9; 6.1; 9.4; 9.2; 9.4; 9.8. - Social contributions (2010–2017, billions of euros): 29.8; 27.4; 26.5; 24.6; 24.2; 24.7; 26.3; 27.6. - Other current revenue (2010–2017, billions of euros): 4.9; 5.7; 4.7; 4.4; 3.9; 3.7; 4.3; 4.5. - Capital revenue (2010–2017, billions of euros): 4.6; 5.0; 4.9; 4.5; 4.3; 4.1; 3.2; 3.4. ### Expenditure, balances, and debt (selected figures) - Expenditure (2010–2016, billions of euros): 114.3; 108.3; 97.7; 88.0; 85.6; 87.9; 88.9 (2010–2016). - Primary expenditure (2010–2017, billions of euros): 101.1; 93.3; 87.9; 79.0; 77.4; 78.3; 78.9; 82.7. - Primary balance (2010–2017, billions of euros): -10.9; -4.9; -2.5; 0.0; 2.8; 5.7; 7.0; 9.4. - Interest (2010–2017, billions of euros): 13.2; 15.0; 9.7; 7.5; 8.7; 9.7; 10.4; 10.7. - Overall balance / Net lending (+)/borrowing (–) (2010–2017, billions of euros): -24.1; -20.0; -12.2; -7.5; -6.0; -4.0; -1.4; -1.3. - Gross debt (Maastricht, 2010–2017, percent of GDP): 329.5; 355.2; 303.9; 322.5; 320.1; 319.7; 318.0; 313.1. - Gross debt (Maastricht, 2010–2017, billions of euros): 263,284; 299,685; 329,515; 355,172; 303,918; (2015–2017 values provided elsewhere as projections). - Nominal GDP (billions of euros, 2010–2017): 222.2; 208.5; 193.7; 183.5; 184.0; 190.2; 199.5; 209.1. ### Fiscal ratios (percent of GDP, selected) - Total primary revenue (percent of GDP, 2010–2017): 40.6; 42.4; 44.1; 42.9; 43.6; 42.4; 42.0; 42.0. - Total primary expenditure (percent of GDP, 2010–2017): 45.5; 44.8; 45.4; 43.0; 42.1; 41.2; 39.5; 39.6. - Primary balance (percent of GDP, 2010–2017): -4.9; -2.4; -1.3; 0.0; 1.5; 3.0; 4.5; 4.5. - Overall balance (percent of GDP, 2010–2017): -10.8; -9.6; -6.3; -4.1; -3.2; -2.1; -0.7; -0.6. - Interest (percent of GDP, 2010–2017): 5.9; 7.2; 5.0; 4.1; 4.7; 5.1; 5.2; 5.1. ### Balance sheet highlights (stocks, selected, 2008–2012, millions of euros) - Net financial worth (2008–2012): -221,099; -242,350; -211,112; -153,297; -198,700. - Financial assets (2008–2012): 64,412; 77,232; 79,471; 75,756; 121,573. - Currency and deposits (2008–2012): 13,213; 11,764; 16,901; 14,732; 20,707. - Equity and investment fund shares (2008–2012): 29,256; 39,757; 37,533; 34,270; 65,097. - Liabilities (2008–2012): 285,511; 319,582; 290,583; 229,053; 320,273. - Debt securities (2008–2012): 213,617; 248,184; 190,632; 104,586; 78,128. - Loans (2008–2012): 45,912; 44,811; 75,193; 102,921; 216,240. ### Identified fiscal risks and "Unidentified measures" - Unidentified measures (cumulative) reported in tables: 0.00; 0.00; 0.00; 0.1; -0.1; 1.8; 2.0; 2.0 (percent of GDP table earlier). - Unidentified measures (cumulative, billions of euros, 2010–2016): 0.00; 0.00; 0.00; 0.1; -0.1; 3.4; 4.1; 4.3 (primary operations table). - Arrears clearance is modeled below the line (footnote 2). ### Revenue collection: issues and IMF-recommended actions - Organization and management - Issues: Fragmented tax administration; General Secretariat for Public Revenues (SGPR) lacks autonomy and power; too many local offices lacking central control. - Next steps / actions (with deadlines where provided): - Establish the SGPR advisory board; transfer the IAD and revenue-related departments of GSIS to the revenue administration; identify SDOE functions and staff to be transferred; assign authority to SGPR to reallocate expenditures across budget lines (July 2013). - Issue report on remaining constraints and adopt amending legislation (early-August 2013); fully staff the Strategic Planning and Financial Control Directorate (end-September 2013). - Approve new organizational structure, staffing numbers, grading system, classification, qualification and appointment processes; transfer revenue-related functions of SDOE; prepare a 2014-15 business plan for the revenue administration (October 2013). - Approve the 2014 revenue administration budget (end-2014). - Transition staff to the new organizational structure (March 2014). - Assessment and taxpayer service - Issues: Payment of taxes at tax offices; potential large tax evasion (about 75 percent of self-employed professionals declaring taxable income below minimum exemption threshold); unregistered taxpayers. - Next steps: - Revise tax and AML laws to ensure SGPR representation at the Board of the FIU; enable SGPR to obtain FIU information on individual tax audits and debt collection; require transmission to FIU of failure-to-pay confirmed debt over €50,000; require FIU to inform SGPR when freezing assets related to laundering proceeds of tax crimes (July 2013). - Adopt a new Tax Procedures Code (TPC) to harmonize, simplify, and modernize tax procedures; establish a working group to implement the TPC (July 2013); develop a project plan for TPC implementation (August 2013); adopt highest priority secondary legislation for TPC implementation and modernize the Code of Public Revenue Collection (October 2013). - Controls, audits, and refunds - Issues: Ad hoc data gathering; no central control for monitoring/enforcing compliance; VAT and income tax refunds processed with significant delay. - Next steps: - Require all ministries to utilize taxpayer identification numbers for financial transactions (July 2013) and make compulsory for all official transactions (end-2013). - Introduce a central agency to consolidate/link different identification numbers (June 2014). - Adopt legislation introducing a 90-day deadline for VAT and income tax refund payments; optimize VAT refund risk analysis; issue circular guiding VAT refund audits; introduce income tax refund risk analysis (September 2013). - Audit capacity issues and actions: - Issues: Audit workforce insufficient; low coverage of high-risk groups; limited use of indirect methods; low collection of assessed taxes. - Next steps: Monitor performance targets monthly (2013); hire 186 external auditors (July 2013) and appoint full-time trainers (September 2013) to complete basic audit training by mid-2014; issue audit reports on more than 15 capital remittance cases using indirect audit methods (September 2013). - Enforcement and arrears collection - Issues: Poor collection enforcement of taxes and social security contributions. - Next steps: - Monitor and publish progress on performance targets and installment scheme results monthly. - Create an indirect bank account register for authorized revenue personnel; establish internal review unit; close for new entrants any installment/deferred arrangements for liabilities from audit assessments (August 2013). - Assign 200 staff to the joint collection center for SSC debt (KEAO) (August 2013) and recruit 400 recovery officers (end-2013). - Adopt secondary legislation for uncollectable SSC debt, create a single SSC debt database, and transfer €4.2 billion of SSC collectable debt to KEAO (August 2013). ### Spending process: issues and IMF-recommended actions - Budgeting - Issues: Budgets prepared mainly bottom-up with no hard constraints; disjointed preparation for general government entities; fragmented responsibility for social security. - Next steps: - Modify the organic budget law to introduce rolling 3-year expenditure ceilings (binding for first 2 years); provisions to freeze ex-ante 10 percent of discretionary appropriations; binding annual budget balance targets for LGs; performance targets for state enterprises; clarity on treatment of carryover of end-year outstanding commitments; penalty procedures for GG entities that fail to provide timely reporting to GAO (October 2013). - Adopt legislation to introduce Fiscal Compact provisions, including a structural balance rule (October 2013). - Issue a Joint Ministerial Decision for LG budget methodology and review by the Observatory of Local Authorities (July 2013). - Spending controls - Issues: Line ministries do not check/control expenditure commitments; no central control on incurred commitments by decentralized agencies; execution focused on verifying payments. - Next steps: - Adopt legislation for permanent procedures for appointment of accounting officers (July 2013). - Ensure commitment registers in operation in 94 percent of GG entities under 2013 KPI definition (September 2013). - Issue interpretive circular to eliminate discrepancies between commitment registers and surveys (September 2013). - Suspend state transfer payments to GG entities that do not report on commitment registries (October 2013). - Reporting and arrears monitoring - Issues: Limited real-time monitoring of arrears and pending bills; difficult collection of payment information at non-central government levels; monitoring/reporting focused on state budget not general government. - Next steps: - Expand scope of data captured by GAO’s e-portal to include whole expenditure cycle and ensure 78 percent of entities report expanded information (September 2013). - Clear past arrears subject to validation and compliance with PFM reforms and reporting requirements (during 2013). - Submit Presidential Decree to move responsibility for payment execution from tax offices to fiscal audit offices by January 2014 (September 2013). - Make IT/administrative changes to authorize electronic payment orders; introduce statistical reports; prepare medium-term action plan for Late Payment Directive (October 2013). - Require pension and employment funds, EOPYY, and hospitals to provide monthly reports according to GAO templates (monthly reports commence by October 2013). - External auditing and parliamentary oversight - Issues: Lack of independent oversight after dismissal of Parliamentary Budget Office. - Next steps: - Strengthen independence and competence of Parliamentary Budget Office with a view to establish a fiscal council (December 2013). - Conduct focused audits of commitment registers of SSFs comprising EOPYY, starting with IKA, OPAD, OAEE, TAYTEKO, and ETAA (August 2013). - Launch tender for an independent external auditor (September 2013) to complete an audit of EOPYY’s outstanding stock of accounts payable (end-March 2014). ### Implementation of selected structural reforms (status and deadlines) - Labor Inspectorate assessment (Dec-12) - Description: Independent assessment completed by the ILO; action plan prepared in December 2012. - Minimum wage mechanism (Mar-13) - Description: A minimum wage mechanism in line with program commitments expected to be adopted by end-July 2013; new system becomes effective in 2017. - Liberalization of regulated professions (Dec-12) - Description: Significant progress made but restrictions remain in a number of professions (e.g., engineers and lawyers); remaining issues to be addressed during 2013. - Trade facilitation (Nov-12) - Description: National trade facilitation strategy adopted in November; measures to simplify pre-customs and customs procedures and increase customs working shifts (Athens airport and Piraeus port shift to 24/7 by end-March 2013). *Sources: Ministry of Finance; and IMF staff projections; IMF staff (tables and implementation matrices contained in the source PDF).* ### 2012. The working hours for customs were increased in April 2013 to 24/7 in Athens airport, and expanded to two shifts i ### _cr13241 - 2012. The working hours for customs were increased in April 2013 to 24/7 in Athens airport, and expanded to two shifts i ### Trade facilitation and customs operations - Working hours for customs: increased in April 2013 to 24/7 in Athens airport, and expanded to two shifts in the port of Piraeus. - Planned additional measures (Table 14, Trade facilitation): - Adopt risk-based audits for imports in line with EU practices. - Adopt e-custom system (allowing for electronic submission and e-signature). - Expected macro effect: Reduces input costs. ### Simplification of licensing and business establishment - Measures described: - Simplify procedures for establishing companies, including streamlining background checks on company founders, and reducing minimum capital requirements in line with best EU practices. - Complete the legal framework for implementation of licensing laws, especially on manufacturing activities and environmental projects. - Status as of March 2013: - Procedures for establishing companies were streamlined in March 2013. - Implementation of licensing laws on manufacturing activities and environmental projects has been delayed. ### Judicial reform and backlog reduction - Measures described: - From end-2012, government publishes quarterly reports on progress in tax cases backlog reduction; updates work plan prioritizing cases exceeding €1 million. - Adopt an action plan to reduce the non-tax case backlog. - Prepare a paper outlining main proposals for amendments to the Code of Civil Procedure. - Deadlines and status: - Reduction of case backlog in courts: Dec-12 / Jan-13 — Completed. Completed. - Reforming the Code of Civil Procedure: Mar-13 — In progress (expected to be completed by end-July). - Expected macro effect: Improves efficiency of courts. ### Labor market and product-market reforms (key planned measures and targets) - Reduce employer share of social security contributions by 5 ppt in a budget-neutral, phased manner during 2014-16 by broadening the base for social security contributions; simplifying contribution schedules; phasing out nuisance taxes. (Deadlines: actuarial studies by Sep-13; adopt plan by Nov-13.) - Study and align temporary employment, agency scope, and collective dismissal rules with EU best practices (Dec-13). - Liberalization measures across professions, shipping labor arrangements, retail trade, and selected sectors (various deadlines in 2013), aimed at fostering competition and improving price flexibility and competitiveness. ### Medium-term macro framework (selected headline figures, 2012–18; percent of GDP or percent change as indicated) - Real GDP: -6.4 (2012); -4.2 (2013); 0.6 (2014); 2.9 (2015); 3.7 (2016); 3.5 (2017); 3.3 (2018). - Output gap (percent of pot. output): -7.7 (2012); -10.6 (2013); -9.5 (2014); -6.9 (2015); -4.4 (2016); -2.7 (2017); -1.1 (2018). - Unemployment rate (percent) 1/: 24.2 (2012); 27.0 (2013); 26.0 (2014); 24.0 (2015); 21.0 (2016); 18.7 (2017); 16.3 (2018). - Consumer prices (national definition), period average: 1.5 (2012); -0.8 (2013); -0.4 (2014); 0.3 (2015); 1.1 (2016); 1.2 (2017); 1.3 (2018). - Total revenues (percent of GDP): 44.1 (2012); 42.9 (2013); 43.6 (2014); 42.4 (2015); 42.0 (2016); 42.0 (2017); 42.0 (2018). - Total expenditures (percent of GDP): 50.4 (2012); 47.0 (2013); 46.9 (2014); 44.5 (2015); 42.7 (2016); 42.6 (2017); 42.8 (2018). - Overall balance (percent of GDP): -6.3 (2012); -4.1 (2013); -3.2 (2014); -2.1 (2015); -0.7 (2016); -0.6 (2017); -0.8 (2018). - Primary balance (percent of GDP): -1.3 (2012); 0.0 (2013); 1.5 (2014); 3.0 (2015); 4.5 (2016); 4.5 (2017); 4.2 (2018). - Gross debt (percent of GDP): 156.9 (2012); 175.7 (2013); 174.0 (2014); 168.1 (2015); 159.4 (2016); 149.7 (2017); 140.8 (2018). ### Fund financing schedule and program disbursements (selected items) - Board approval of EA: March 15, 2012 — 1,399.1 (Millions of SDRs); 127.0 (Percent of quota); 1.6 (Billions of euros) 1/. - Second Review (availability date August 31, 2012): 2,798.2 (Millions of SDRs); 254.0 (Percent of quota); 3.3 (Billions of euros). - Third Review (February 28, 2013): 1,506.8 (Millions of SDRs); 136.8 (Percent of quota); 1.8 (Billions of euros). - Total (2012–16): 23,785.3 (Millions of SDRs); 2,158.8 (Percent of quota); 28.0 (Billions of euros). - Note: Table uses exchange rate of January 5, 2012 for euro conversions. (Source: IMF staff projections.) ### General government financing and public sector liquidity (selected figures, billions of euros) - Gross borrowing need: 111.0 (2012); 35.3 (2013); 26.2 (2014); 14.4 (2015); 8.3 (2016). - Gross financing sources: 110.9 (2012); 35.3 (2013); 21.8 (2014); 7.9 (2015); 8.3 (2016). - Official financing (including disbursed and committed): 109.9 (2012); 37.4 (2013); 19.3 (2014); 11.1 (2015); 6.6 (2016). - Memorandum: Total Maastricht debt (percent of GDP): 156.9 (2012); 175.7 (2013); 174.0 (2014); 168.1 (2015); 159.4 (2016). ### External financing and gross financing requirements (selected figures, billions of euros) - Gross financing requirements: 216.2 (2011); 239.0 (2012); 205.6 (2013); 179.4 (2014); 141.0 (2015); 123.9 (2016). - New borrowing and debt rollover: 164.1 (2011); 183.5 (2012); 135.3 (2013); 124.4 (2014); 103.7 (2015); 86.5 (2016). - Program financing (selected): 31.5 (2011); 41.5 (2012); 109.9 (2013); 37.4 (2014); 19.3 (2015); 11.1 (2016). ### Indicators of Fund credit and debt-service metrics (selected projections) - Prospective drawings (4-year EFF) first entry: 1,399 (Millions of SDRs) (2012). - Projected total debt service to the Fund (selected years, Millions of SDRs): 504 (2012); 1,952 (2013); 7,285 (2014); 8,259 (2015). - Debt service as percent of exports of goods and services: 1.2 (2012); 4.6 (2013); 16.5 (2014); 17.8 (2015). - Outstanding stock (Millions of SDRs): 18,941 (2012); 26,294 (2013); 26,044 (2014); 24,772 (2015). - Outstanding stock (percent of GDP): 11.5 (2012); 16.9 (2013); 16.7 (2014); 15.3 (2015). ### Debt Sustainability Analysis — staff assessment (Annex I, summary points) - Public debt dynamics similar to path under the Third Review given an unchanged macro framework. - Staff conclusion: Current program can place Greece’s debt on a sustainable trajectory but significant risks remain, particularly because of the significant and sustained primary adjustment required. - Key DSA assumptions and inputs: - Output: Further contraction before a mild recovery begins in 2014. - Fiscal adjustment: Program based on 1.5 percent of GDP in headline primary adjustment per year culminating in a surplus of 4.5 percent of GDP in 2016; DSA assumes Greece can maintain a primary surplus of 4 percent in the long run. - Privatization proceeds: Assumed about €22 billion from asset sales through 2020 (down from €45 billion at start of EFF); proceeds assumed back loaded. - Financing relief measures implemented: interest margin on GLF loans cut from 100 bps to 50 bps; administrative fee on EFSF loans eliminated; interest on EFSF loans deferred; income on SMP profits expected to be transferred in July. - Eurogroup additional financing: almost €4 billion through 2014 and €5.6 billion through 2016. - Liquidity management assumptions: outstanding T-bills reduced to €15 billion and maintained at that level; financing assumed adequate to reduce arrears in net terms by €8 billion by end-2013 while maintaining deposit buffers. *Source: IMF staff.* ### 3. Baseline projections include contingent relief measures to bring the debt to ### _cr13241 - 3. Baseline projections include contingent relief measures to bring the debt to ### Baseline public debt projections and contingent relief - Baseline projections include contingent relief measures to bring the debt to 124 percent of GDP in 2020 (Table AI.1). - Debt now peaks in 2013 at around 176 percent of GDP before starting a sustained decline in 2015. - December 2012 commitments by euro area member states: provide further relief to Greece—once it reaches an annual primary surplus—to ensure: - debt is 124 percent of GDP in 2020, and - debt is substantially below 110 percent of GDP in 2022. - Modeling assumptions in the DSA: - Debt reduction to 124 percent in 2020 after additional contingent relief measures of about 4 percent of GDP to be determined in 2014–15. - Debt expected to fall to around 114 percent of GDP in 2022 (before measures to reduce debt to substantially below 110 percent of GDP in 2022 as conditionally committed). ### Stress tests and vulnerability analysis (public sector) - Baseline debt path vulnerability: - Particularly vulnerable to growth and primary surplus shocks. - Resilient to lower privatization or interest rate shocks (reflecting low privatization assumptions and largely official sector debt). - Scenario outcomes: - If the primary surplus stays at the 2013 target level of 0, debt to GDP will reach 148 percent of GDP in 2020 and will be rising over the medium term. - If nominal growth averages 1 percent lower than the 4 percent baseline projection, debt will be 134 percent in 2020 with an only modest declining path thereafter. - If privatization receipts are half of the €22 billion expected, debt in 2020 would be only 4ppts higher than the baseline while maintaining a strong downward trajectory. - If EFSF interest rates are 1 ppt higher, debt would again be only 4 percentage points higher than the baseline. Shocks to market rates only affect debt slowly after 2020. ### Key figures from Table AI.1: Baseline public sector debt trajectory (selected years) - Baseline: public sector debt 1/ (percent of GDP) - 2008: 112.9 - 2009: 129.7 - 2010: 148.3 - 2011: 170.3 - 2012: 156.9 - 2013: 175.7 - 2014: 174.0 - 2015: 168.1 - 2016: 159.4 - 2020: 124.0 - 2021: 118.2 - 2022: 113.6 - 2023: 109.4 - 2024: 105.7 - 2025: 102.3 - 2030: 86.5 - Change in public sector debt (selected entries) - 2008: 5.7 - 2009: 16.8 - 2010: 18.6 - 2011: 22.0 - 2012: -13.5 - 2013: 18.9 - 2014: -1.7 - 2015: -5.9 - 2016: -8.7 - 2020: -8.0 - Identified debt-creating flows (4+7+12) (selected) - 2008: 5.5 - 2009: 16.5 - 2010: 16.6 - 2011: 20.1 - 2012: 65.3 - 2013: 18.6 - 2014: -1.5 - 2015: -7.6 - 2016: -8.0 - 2020: -8.2 - Primary deficit (percent of GDP) - 2008: 4.8 - 2009: 10.5 - 2010: 4.9 - 2011: 2.4 - 2012: 1.3 - 2013: 0.0 - 2014: -1.5 - 2015: -3.0 - 2016: -4.5 - 2020: -4.2 - 2021: -4.0 - 2022: -4.0 - 2023–2025 and 2030: -4.0, -4.0, -4.0, -4.0 respectively (2023–2025); 2030: -4.0 - Revenue and grants (percent of GDP) (selected) - 2008: 40.7 - 2009: 38.3 - 2010: 40.6 - 2011: 42.4 - 2012: 44.1 - 2013: 42.9 - 2014: 43.6 - 2015: 42.4 - 2016: 42.0 - 2020–2030: 42.0 (constant) - Gross financing need 6/ (percent of GDP) - 2008: 9.9 - 2009: 15.6 - 2010: 19.6 - 2011: 27.5 - 2012: 18.9 - 2013: 21.1 - 2014: 25.1 - 2015: 18.6 - 2016: 11.6 - 2020: 8.7 - 2021: 7.3 - 2022: 6.4 - 2023: 8.3 - 2024: 8.6 - 2025: 7.6 - 2030: 9.2 - Gross financing need (billions of U.S. dollars) (selected) - 2008: 34.1 - 2009: 50.2 - 2010: 57.9 - 2011: 79.7 - 2012: 47.1 - 2013: 51.4 - 2014: 60.8 - 2015: 46.3 - 2016: 30.2 - 2020: 26.8 - 2021: 23.2 - 2022: 21.1 - 2023: 28.5 - 2024: 30.8 - 2025: 28.2 - 2030: 41.4 - Key macro assumptions (selected) - Real GDP growth (percent): 2008: -0.2; 2009: -3.1; 2010: -4.9; 2011: -7.1; 2012: -6.4; 2013: -4.2; 2014: 0.6; 2015: 2.9; 2016: 3.7; 2020: 2.6; 2021: 2.0; 2022: 1.9; 2023–2025: 1.9; 2030: 1.8 - Average nominal interest rate on public debt (percent) 7/: 2008: 5.0; 2009: 4.5; 2010: 4.4; 2011: 4.6; 2012: 2.7; 2013: 2.5; 2014: 2.7; 2015: 3.0; 2016: 3.2; 2020: 3.5; 2021: 3.6; 2022: 3.6; 2023: 3.7; 2024: 3.9; 2025: 4.1; 2030: 4.8 - Inflation rate (GDP deflator, percent): 2008: 4.7; 2009: 2.3; 2010: 1.1; 2011: 1.0; 2012: -0.7; 2013: -1.1; 2014: -0.4; 2015: 0.4; 2016: 1.1; 2020: 1.7; 2021: 1.9; 2022: 2.0; 2023–2025 and 2030: 2.0 (2023–2025); 2030: 2.0 ### External sector outlook and external DSA - External debt projections: - Gross external debt currently at 233 percent of GDP; would peak at around 240 percent of GDP in 2013 and then decline to about 145 percent in 2020. - Net external debt would fall from about 130 percent of GDP in 2012 to around 75 percent in 2020. - Factors supporting improvement in external debt: - Projected current account improvement as competitiveness is restored. - Continued reliance on official loans at relatively low interest rates. - Agreed reduction in the GLF interest rate and EFSF fees. - Return of SMP profits. - FDI inflows related to privatization as important non-debt-creating financing. - External sector risks and scenario impacts: - Larger current account deficits: a worsening of baseline current account projections by around 1.5 percent of GDP would leave the debt ratio on a downward path but 11 percentage points higher than baseline by 2020. - Deflation shock: an additional 1 percent deflation over the medium term would result in a 2020 debt ratio that is 14 percentage points above the baseline (assuming no volume effect). - Slippages in privatization: if privatization receipts are about half of projected, the 2020 external debt ratio would be around 4 percentage points higher than baseline. - Combined adverse shock (lagged program implementation, weak competitiveness, higher deflation): net debt ratio would reach about 105 percent of GDP in 2020, 30 percent of GDP higher than in the baseline. ### Key figures from Table AI.2: External debt trajectory (selected years) - Baseline: external debt (percent of GDP) - 2007: 70.5 - 2008: 76.8 - 2009: 90.5 - 2010: 134.4 - 2011: 148.3 - 2012: 130.6 - 2013: 135.1 - 2014: 131.5 - 2015: 124.1 - 2016: 115.0 - 2017: 105.4 - 2018: 95.3 - 2019: 85.6 - 2020: 76.4 - 2021: 69.1 - Change in external debt (selected) - 2007: -5.1 - 2008: 6.7 - 2009: 6.4 - 2010: 13.7 - 2011: 43.9 - 2012: 13.9 - 2013: -17.7 - 2014: 4.4 - 2015: -3.6 - 2016: -7.4 - Identified external debt-creating flows (4+8+9) (selected) - 2007: 6.1 - 2008: -1.9 - 2009: 9.2 - 2010: 12.6 - 2011: 16.7 - 2012: 12.2 - 2013: 5.2 - 2014: -3.9 - 2015: -8.0 - 2016: -9.8 - 2017: -9.8 - 2018: -8.5 - 2019: -8.4 - 2020: -8.2 - 2021: -7.4 - Current account deficit, excluding interest payments (percent of GDP) (selected) - 2007: 9.8 - 2008: 9.1 - 2009: 6.0 - 2010: 4.9 - 2011: 3.7 - 2012: -0.6 - 2013: -3.8 - 2014: -4.8 - 2015: -5.5 - 2016: -5.7 - 2020: -6.5 - 2021: -6.1 - Gross external financing need (billions of euros) 4/ (selected) - 2007: 93.3 - 2008: 122.9 - 2009: 194.4 - 2010: 216.2 - 2011: 239.0 - 2012: 205.6 - 2013: 179.1 - 2014: 141.0 - 2015: 123.9 - 2016: 99.7 - 2017: 84.4 - 2018: 74.5 - 2019: 66.9 - 2020: 56.9 - 2021: 42.2 - Gross external financing need (percent of GDP) (selected) - 2007: 41.9 - 2008: 52.7 - 2009: 84.1 - 2010: 97.3 - 2011: 114.6 - 2012: 106.1 - 2013: 97.6 - 2014: 76.7 - 2015: 65.2 - 2016: 50.0 - 2017: 40.3 - 2018: 34.0 - 2019: 29.2 - 2020: 23.7 - 2021: 16.9 - Key macro assumptions underlying baseline (selected) - Real GDP growth (percent): 2007: 3.0; 2008: 17.5; 2009: -3.1; 2010: -4.9; 2011: -7.1; 2012: -6.4; 2013: -4.2; 2014: 0.6; 2015: 2.9; 2016: 3.7; 2017: 3.5; 2018: 3.3; 2019: 3.0; 2020: 2.6; 2021: 2.0 - GDP deflator (change in percent): 2007: 3.3; 2008: 4.7; 2009: 2.3; 2010: 1.1; 2011: 1.0; 2012: -0.8; 2013: -1.1; 2014: -0.4; 2015: 0.4; 2016: 1.1; 2017: 1.3; 2018: 1.4; 2019: 1.7; 2020: 1.7; 2021: 1.9 - Nominal external interest rate (percent) 6/: 2007: 4.3; 2008: 4.4; 2009: 3.3; 2010: 2.8; 2011: 2.7; 2012: 1.6; 2013: 1.9; 2014: 2.2; 2015: 2.4; 2016: 2.7; 2017: 3.0; 2018: 3.2; 2019: 3.3; 2020: 3.3; 2021: 3.3 - Current account balance (percent of GDP) (selected): 2007: -14.6; 2008: -14.9; 2009: -11.2; 2010: -10.1; 2011: -9.9; 2012: -3.4; 2013: -0.8; 2014: -0.3; 2015: 0.1; 2016: 0.2; 2017: 0.6; 2018: 0.9; 2019: 1.3; 2020: 1.6; 2021: 1.5 *Source: IMF staff estimates and tables AI.1 and AI.2 as provided in the content unit.* ### Annex II. Fund Relations ### Annex II. Fund Relations (As of June 30, 2013) ### Membership and Exchange Rate Arrangements - Membership Status: Joined December 27, 1945. It has accepted the obligations of Article VIII, Sections 2, 3, and 4. - Exchange Rate Arrangements: - Greece’s currency is the euro, which floats freely and independently against other currencies. - It maintains an exchange system free of restrictions apart from those resulting from European Council regulations, which were last notified to the Fund in accordance with Decision 144. ### General Resources Account (SDR Million / Percent Quota) - Quota: 1,101.80 100.000. - Fund holdings of currency: 24,106.92 2,187.96 - Reserve position in Fund: 240.82 21.86 ### SDR Department (SDR Million / Percent Allocation) - Net cumulative allocation: 782.36 100.00 - Holdings: 553.52 70.75 ### Outstanding Purchases and Loans (SDR Million / Percent Quota) - Stand–by Arrangements: 17,541.80 1,592.10 - Extended Arrangements: 5,704.10 517.71 ### Latest Financial Arrangements (as presented) - Type / Arrangement / Date of Expiration / Amount Approved (SDR Million) / Amount Drawn (SDR Million) - EFF / Mar 15, 2012 / Mar 14, 2016 / 23,785.30 / 5,704.10 - Stand-By / May 09, 2010 / Mar 14, 2012 / 26,432.90 / 17,541.80 ### Projected Payments to Fund (SDR million; based on existing use of resources and present holdings of SDRs) - Forthcoming - 2013 2014 2015 2016 2017 - Principal 1,471.81,277.797,299.09 2,609.70591.93 - Charges/Interest 410.95721.80426.91 192.05123.59 - Total 1,882.766,999.597,726.00 2,801.75715.53 ### Implementation of HIPC Initiative - Not Applicable ### Safeguards Assessment - An update safeguards assessment of the Bank of Greece (BoG) was finalized in August 2012 in connection with the current Extended Fund Facility. - Findings: - BoG has strengthened its safeguards framework since the 2010 assessment. - Financial reporting and external audit practices adhere to international standards. - Recent amendments to the BoG’s Statute are expected to enhance governance and the central bank’s autonomy from private shareholders. - Emergency lending operations are subject to established legal and control frameworks, but the assessment recommends a compliance review by the BoG’s internal audit department. ### Article IV Consultation - Last Article IV mission: Discussions for the 2013 Article IV Consultation were held during April 8–15, 2013. - The Staff Report (Country Report No. 13/154) was considered by the Executive Board on May 31, 2013. - Article IV Consultations with Greece are currently held on a 24–month consultation cycle. ### Technical Assistance (Department / Purpose / Date) — selected entries as presented - MCM / Banking Supervision / March 2010 - FAD / Public Financial Management (PFM): Initial Analysis and Priority Reforms / April 2010 - FAD / Revenue Administration: Initial Analysis and Reform Priorities / April 2010 - STA / Data Quality and Misreporting (K-1 Report) / April 2010 - FAD / General Tax Policy / May 2010 - MCM/FAD/LEG / Financial Instruments / May 2010 - FAD / Expenditure Policy / June 2010 - FAD / PFM: Follow-up on Priority Reforms / June 2010 - LEG / Implementation of Financial Sector Components of the SBA Program / June 2010 - MCM / Implementation of Financial Sector Components of the SBA Program / June 2010 - FAD / Tax Administration: Design of the Anti-Evasion Plan / July 2010 - MCM / Implementation of Financial Sector Components of the SBA Program / September 2010 - FAD / Tax Administration: Implementation of the Anti-Evasion Plan / September 2010 - FAD / PFM: Implementation Status of Priority Reforms / September 2010 - STA / Monitoring of Fiscal Data for the Program / September 2010 - FAD / Tax Administration: Anti–Evasion and Structural Reforms / October 2010 - FAD / Health System Analysis and Proposals / October 2010 - STA / Government Finance Statistics / December 2010 - FAD / Tax Administration: Anti–Evasion and Structural Reforms / February 2011 - FAD / Role of Accounting Officers / February 2011 - STA/FAD / Government Finance Statistics/Fiscal Reporting / March 2011 - FAD / Tax Administration: Strategic Planning / March 2011 - FAD / PFM: Follow-up on Implementation of Priority Reforms / April 2011 - FAD/LEG / Tax Administration: Anti–Evasion and Structural Reforms / April 2011 - LEG / Legal Framework for Privatization / April 2011 - MCM/LEG / Review of the Legal and Operational Framework for Bank Resolution / June 2011 - FAD / Tax Administration: Strategic Planning and Taxpayer Audit / June 2011 - FAD / Tax Administration: Tax Collection and Tax Administration Reform / July 2011 - LEG / Anti-Money Laundering (AML) and Anti-Tax Evasion: Strengthening the BoG’s Supervisory Process / September 2011 - LEG / AML and Anti-Tax Evasion: Review of Cross-Border Financial Flows / September 2011 - FAD / Safeguarding Revenue and Encouraging Growth / September 2011 - FAD / Modernizing the General Accounting office / September 2011 - FAD / Preparing the 2012 Budgets / September 2011 - STA / Fiscal Reporting / December 2011 - FAD / Expenditure Policy: OECD Review of Social Programs / January 2012 - FAD / Tax Administration / January 2012 - LEG / Reform of Central Bank Governance for Banking Supervision and Resolution / January 2012 - LEG / AML and Anti-Tax Evasion: Strengthening the BoG’s Supervisory Process / January 2012 - FAD / PFM: Accounting Officers and 2013 Budget Preparation / February 2012 - FAD / Tax Administration: Collection and Analyzing Taxpayer Compliance Data / February 2012 - MCM / Strengthening Governance Arrangements for Financial Sector Agencies / February 2012 - STA / Fiscal Reporting / February 2012 - FAD / Expenditure Policy: Spending Review Mission / March 2012 - FAD / Tax Administration: Follow-up / March 2012 - FAD / Revenue Administration: Social Contribution Compliance / March 2012 - LEG / AML and Anti-Tax Evasion: Strengthening the BoG’s Supervisory Process / April 2012 - MCM / Bank Resolution / April 2012 - STA / Fiscal Reporting / April 2012 - STA / Fiscal Reporting / June 2012 - FAD / PFM: Discussions on PFM TA with the new Government of Greece / July 2012 - FAD / Tax Administration / July 2012 - (Further entries continue through July 2013 as listed in the source.) ### Resident Representatives - Mr. Bob Traa (Senior Resident Representative) and Ms. Stephanie Eble (Deputy Resident Representative) assumed their positions in October 2010. ### Letter of Intent — Key commitments and program status (Athens, July 17, 2013) - Program context and recent developments: - Progress under the program and early signs that the recession has bottomed out have contributed to improved confidence and liquidity. - Fiscal consolidation continues; bond yields have declined since the 2012 peak; deposits have increased; economic sentiment is improving; several Greek companies have recently accessed markets. - External position has improved, supported by steady competitiveness gains; the pace of job losses is slowing. - Optimism that the economy will return to growth next year, though significant downside risks remain. - Performance and targets: - Full data to assess end-June 2013 quantitative performance criteria not yet available; authorities expect to have met all targets. - Indicative targets on privatization receipts, transfers to the mobility scheme, and domestic arrears were missed. - Some structural benchmarks relevant for the review were also missed. - Prior actions and corrective steps (high-level): - Restoring fiscal sustainability: policy steps to ensure fiscal targets for 2013–14 will be met; bring down the debt in the Renewable Energy Account; reform the income tax code and the tax procedure code; bring public administration reforms back on track; advance privatization. - Strengthening fiscal institutions: legislation to allow transfer of functions and staff to the revenue administration; limit deferral of payments arising from audit assessments only through the basic and fresh start schemes; implement reforms to strengthen expenditure control and mitigate payment delays. - Safeguarding financial stability: completing a comprehensive banking sector strategy centered around the core four pillar banks; completing disposal of the two bridge banks under HFSF control; recapitalization of core banks completed; three core banks attracted sufficient private capital to remain under private management control; for the remaining core bank recapitalized by HFSF, commit to place by March 2014 a substantial equity stake with a private strategic international investor. - Accelerating growth-enhancing reforms: liberalize regulated professions; remove excessive labor market regulations; streamline export procedures; improve judicial system functioning; advance privatization program. - Facilitating employment creation and protecting vulnerable groups: employment programs targeted at unemployed youths; strengthen apprenticeship programs; improve targeting of social safety nets and leverage EU structural funds. - Financing and support: - The program is fully financed through the next twelve months. - Firm commitments in place thereafter from euro area members to provide adequate support during the program period and beyond, provided full compliance with program requirements and objectives. - Authorities remain on track to receive the first phase of conditional debt relief from European partners as described in the Eurogroup statements on November 27 and December 13, 2012. - Request to the Fund: - Request completion of the fourth review under the EFF arrangement, and the next purchase in the amount of SDR 1.5068 billion. - Revisions requested to several performance criteria and introduction of new structural benchmarks (property tax adoption in September; issuance in October of secondary legislation to implement the tax procedures code; end-September KPIs for revenue administration and public finance management reforms). - Request a waiver of applicability for the end-June quantitative performance criteria on the overall stock of central government debt, domestic arrears, and the general government balance since relevant data will not be available until early August and authorities expect to meet these targets. ### Memorandum of Economic and Financial Policies — Outlook and Strategy - Macroeconomic assessment and outlook: - Macroeconomic developments remain broadly in line with program projections. - Economic situation still difficult, with high unemployment and weak domestic demand. - Pace of output contraction has begun to decelerate; liquidity and confidence indicators have strengthened; lower unit labor costs are improving cost competitiveness. - Tentative signs that exports are beginning to contribute more to external adjustment; strong tourism bookings so far this year. - Price adjustments have started to accelerate, helping restore competitiveness and cushion household income impacts from recession and wage adjustment. - No significant modifications needed to the program’s macroeconomic framework; authorities continue to expect annual growth to turn positive in 2014. - Outlook remains uncertain; authorities will monitor developments and revise the framework if warranted. - Program focus areas (authorities’ priorities): - Fully implement the fiscal strategy for 2013–14 to restore fiscal sustainability and exit need for external assistance. - Modernize fiscal institutions: reform revenue administration to be more independent, efficient, and accountable; strengthen public financial management. - Ensure a healthy financial sector: recapitalization of core banks completed; strengthened financial sector governance; adopted tools to resolve distressed household debt. - Strengthen competitiveness and productivity: liberalize regulated professions; remove unnecessary restrictions; initiate labor market improvements. - Protect vulnerable groups: employment creation programs for young workers and jobless households; strengthen apprenticeship programs; improve targeting of social safety nets. - Fiscal policy progress and targets: - Significant progress since 2010 in addressing fiscal imbalances. - Headline primary adjustment of 9.2 percent of GDP during 2010-12. - In cyclically-adjusted terms, fiscal adjustment during this period was about 15 percent of GDP. - The 2012 fiscal deficit target was met with a comfortable margin (0.2 percent of GDP). - Authorities are taking measures to achieve primary balance in 2013. - Commitment to complete programmed fiscal adjustment—reaching a primary balance of 4½ percent of GDP by end-2016—to help put debt on a downward path. *Source: Annex II. Fund Relations (As of June 30, 2013).* ### 5. We are taking steps to ensure full implementation of our fiscal program for 2013–14. ### 5. We are taking steps to ensure full implementation of our fiscal program for 2013–14. ### Fiscal program: prior actions and short-term measures - Bring forward into 2013, according to the program target definition, some of the property tax collected via the public power company (PPC) by temporarily shortening the pay period for PPC of the revenues it collects in March 2014. - Offset overspending by EOPYY to meet fiscal targets in health care for the period 2013–15 by introducing additional “claw backs” in diagnostics and private hospitals; claw back of overspending in the first 6 months of the year will be collected by September 2013. - Contingency measures if claw back effectiveness is not confirmed by September 2013: across-the-board cut in prices, reduction in access of the insured to private providers, and/or introduction of entry fees on contractual arrangements. - Set up an early warning monitoring system to identify slippages and gaps in the healthcare sector. - Complete signatures on the Memorandum of Understanding with the Greek merchant fleet which, together with the tonnage tax, will ensure €140 million accrued in annual revenue in 2013–15. - Bring forward to August 1, 2013 through legislation the luxury tax on cars, swimming pools, and airplanes; by end August 2013, introduce a docking fee on leisure boats effective October 1, 2013. - Pass legislation to limit the use of untaxed reserve accounts for capital gains by 2015, so as to raise revenue of at least €50 million in 2014. ### Income tax reform and Tax Procedure Code (TPC) - Pass legislation to introduce a new income tax code (prior action). - Core objectives: simplify existing tax regime, increase transparency, remove ambiguities. - The reform will be revenue neutral. - New income tax code provisions: capital gains tax of 15 percent (including on real estate); reduce filing requirements; consolidate cross-border merger and reorganization provisions; combat (international) tax avoidance; extend alternative minimum (presumptive) taxation. - By end-September 2013: amend legislation to consolidate domestic merger and reorganization provisions into the income tax code; review and amend withholding of employment income and advance payment of business taxes; ensure consistency between the ITC and TPC. - By end-October 2013: adopt all necessary secondary legislation to support timely implementation of the code. - Submit to parliament a new tax procedures code (TPC) for adoption by late July 2013 to consolidate and streamline enforcement, mandatory data provision, interest and penalties, internal review, and anti-avoidance procedures. - Interim actions to ensure full implementation by January 2014: - By end-July: establish a working group to implement the TPC. - By mid-August: develop a project plan for TPC implementation. - By end-October (structural benchmark): adopt all highest priority secondary legislation necessary to support implementation. - By end-October: legislate changes necessary to modernize the Code of Public Revenue Collection and ensure full compatibility with the TPC. ### Unified property tax (as of January 2014) - Establish working group in July (MoF revenue dept, GAO, GSPR) to develop framework and identify actions to ensure adequate collection. - Agreed broad parameters (in consultation with EC/ECB/IMF staff): - Definition of the tax base. - Broaden coverage to include commercial, industrial and agricultural land and buildings. - Distribution of tax burden across property types (residential vs. commercial, industrial). - Only exemptions focused on hardship cases; clear progressivity. - Tax individual properties rather than aggregate holdings. - Unify FAP and PPC tax within new real estate tax. - Revenue neutrality of the reforms relative to the programmed revenue, net of exemptions, of €2.7 billion (or of €2.9 billion should it be decided to reduce significantly or eliminate the property transaction tax). - Data and actions: - Started collection of updated comprehensive information on taxpayers’ land and real estate assets (form E9); complete by end-September 2013. - Adopted legislation to ensure availability of cadastral information for tax authority cross-checks. - Issue by end-August a time-bound action plan to improve property tax collection rates. - Structural benchmark by end-September 2013: adopt legislation on the new property tax for 2014 in accordance with the agreed framework, allowing property rights to be taxed on a transitional basis until end-2014; 2014 regime calibrated to collect programmed revenue, net of exemptions, of €2.7 billion (or €2.9 billion if transaction tax is reduced/eliminated). - Contingency: if implementation cannot achieve programmed revenue in 2014 with high certainty, take all necessary actions (including extension of already legislated measures) to compensate. - Medium-term alignment: - Develop by end December 2013 a medium-term reform plan to: (i) by January 2015, adjust zone prices and change tax subject to individual properties; and (ii) by January 2016, align property assessment values with market values. ### Rationalization of tax incentives and fiscal transparency - Rationalize existing tax incentives disbursed across different legislative documents. - Consolidate incentives into the new income tax code by end-September via an amendment. - Replace existing incentives with standard instruments: investment allowance, investment tax credit, accelerated depreciation deduction. - Quantify tax incentives as tax expenditures under the new law and record them as budget allocations starting with the 2014 budget. ### Renewable energy account (RES) and electricity market restructuring - As a prior action, following RAE recommendation, increase the RES Special Levy from the current average of €9.30 per MwH to €14.96 per MwH. - Fully liberalized all end-user tariffs as provided by law. - Monitor developments, including number of new producers, and adjust the Renewable Energy Special Levy every six months as necessary to eliminate the debt in the RES Account by end-2014. - Starting end-June 2013, provide EC, ECB, and IMF staff with monthly tables on the stock of arrears. - Government Cabinet to approve in July the PPC restructuring and privatization plan, including timeline to complete by Q1-2016. ### Medium-term fiscal strategy (MTFS) and social contributions - Preparing MTFS for 2014–17 to meet medium-term fiscal targets. - Identifying measures to close projected gaps in 2015-16, including review of social security contributions with a view to eliminating exemptions starting 2014. - Preliminary draft MTFS planned for early September. ### Public administration reform, staffing and mobility scheme - Committed to public administration reform to build effective civil service and support fiscal targets. - Claimed meeting end-September targets on mandatory exits; expanded reform program to reallocate staff (e.g., transfer teachers from secondary to primary by end August). - Prior action: issue all necessary legal acts to place at least 4,200 ordinary employees in the mobility scheme by end-July. - Complete shifting at least 12,500 ordinary employees to the scheme by end-September and at least another 12,500 by end-December 2013. - Employees in mobility scheme have wages cut to 75 percent and will be assessed within a centrally-defined evaluation framework to be established by end-September. - Established minimum monthly targets on people continuously in the mobility scheme until exit; initial upfront transfer of 2,000 ordinary employees into the mobility scheme destined for eventual exit. - Change legislation on mobility scheme to reduce time in scheme from 12 months to 8 months to front-load exits in second half of 2014; maintain programmed definition for exits. - Commit to establish quarterly minimum targets for the mobility scheme for 2014 in September 2013. - Government will hire one new employee for each exit resulting from specific channels (disciplinary cases; due diligence leading to mergers/abolishments; voluntary exits from mobility excluding personnel within 3 years of retirement; elapse of an 8-month period in the mobility scheme). - Complete 400,000 positions staffing plans by end-September and accelerate to meet year-end deadline for general government. - By end-August 2013, define detailed hiring plans for 2013; include staffing and hiring plan in 2014 budget. - By end-September, bring all employees into the Census Database and the Single Payment Authority. - From July 2013, publish monthly data on ordinary staff and other staff, number in mobility scheme, number of exits, and pending disciplinary cases on government website. ### Employment, training and social safety net programs - Employment and training: - Launched youth internship and employment voucher program supporting six-month vocational training and internships for 45,000 beneficiaries. - Plan social community work program targeting about 50,000 individuals from jobless households (seeking EU structural funds). - Plan to increase entrants into apprenticeship and vocational training and improve curricula and business coordination. - Social protection: - Launching a Health Voucher Program to provide 100,000 long-term uninsured citizens with access to primary healthcare services; plan to extend with European Social Fund support. - Start making payments in July on the new child benefit law. - Prepare income-tested program targeting long-term unemployed to start no later than 2014. - With World Bank assistance, launch a pilot means-tested minimum guaranteed income by January 2014 and aim to roll out nationally by 2015. - Seek to fill gaps in social safety nets within existing budget envelope. ### Revenue administration: autonomy, organization, and capacity building - Legislative and organizational changes: - Passage of legislation in May providing greater flexibility to the Secretary General of Public Revenue (SGPR) over budget allocation, organizational structure, and hiring/grading of SGPR staff. - Proceeding to integrate Internal Affairs Department (IAD) of MoF and revenue-related functions of GSIS and SDOE into Revenue Administration via ministerial decisions transferring functions, staff, and budgets. - Established Strategic Planning and Financial Control Directorate to manage revenue administration budget and support project management; Directorate to be staffed by September 2013. - By end-July, identify functions and staff of SDOE to be transferred to revenue administration by October 2013 (TMU ¶28). - Screening legislation to identify constraints to delegation of powers to SGPR; issue report in early-August; adopt amending legislation by end-September. - Selected a 5-member Advisory Council to the SGPR (3 domestic experts, 2 external high-level experts); first meeting before end of July and bi-monthly schedule established for first year. - Hired external consultant for project management of organizational reforms; prepared timeline for October structural benchmark (approval of new organizational structure, staffing numbers, grading system, qualification and appointment processes). - Prepared strategic plan and to prepare 2014-15 business plan by end-October. ### Anti-Money Laundering (AML) and information sharing - Amend AML legislation by July 2013 to: - Ensure GSPR representation at the Board of the Financial Intelligence Unit (FIU). - Enable GSPR to obtain FIU information relevant to individual tax audits and debt collection cases. - Require transmission to the FIU of relevant cases of failure to pay confirmed debt over €50,000 for AML law implementation. - Require FIU to promptly inform GSPR when assets are frozen related to laundering of proceeds of tax crimes. ### Improving audit, debt collection, and refund processes - Audit: - Appointed new management and supervisors at the high-wealth individuals (HWI) audit center. - Issued audit orders on more than 250 capital remittance cases. - Issue by end-September audit reports on more than 15 cases based on indirect audit methods. - Debt collection: - Reorganized Large Debtor Unit (LDU) to focus on collectable debt; issued circular specifying criteria for fresh debt; assigned 30 staff to collection of fresh debt. - Adopted legislation for creation of an indirect bank account register to provide authorized revenue personnel access to bank account information by early August. - Appointed project manager and initial staffing for new internal review unit; aim operational by end-August. - Collection efficiency and enforcement: - Prior action: submit legislation for adoption by late July to close effective August 1, 2013 for new entrants any installment or deferred arrangements for payment liabilities arising from audit assessments other than entry into fresh start and basic installment schemes. - Amended Law 3888/2010 as of January 2013 to prevent taxpayers avoiding audits via settlements from selection for audit to completion of audit report and tax assessment. - Issued joint MoF/MoJ decision per Article 203 of the Administrative Procedures Code (amended by Law 4051/2012) to limit suspension of payment obligation from pending court cases to cases of financial hardship. - Commit to abstain from extending deadlines for filing and payment of taxes; publish every December the schedule for the following year for filing and payment of all taxes and levies for the state government and social budgets. - Personnel and training: - By end-July, complete external hiring of 186 auditors; revise Law 4038/2012 to create waiting list to reach target of 200 hires by end-October. - Completed certification of 2,000 internally selected auditors; by early September appoint team of full-time trainers to complete basic audit training of these auditors and new external hires by mid-2014. - VAT and income tax refunds: - By end-September 2013, adopt legislation introducing a 90-day deadline for VAT refund payments and a 90-day deadline for income tax refund payments. - By end-September 2013: (i) optimize VAT refund risk analysis system; (ii) issue circular guiding VAT refund audits by local tax offices. - By end-September 2013, introduce a risk analysis system for processing income tax refunds, prioritizing largest refund claims. *Source: _cr13241 - 5. We are taking steps to ensure full implementation of our fiscal program for 2013–14.* ### 16. The new tax and SSC installment schemes have been launched. For the processing ### _cr13241 - 16. The new tax and SSC installment schemes have been launched. For the processing ### Tax and SSC installment schemes; collection and monitoring - The new tax and SSC installment schemes have been launched. - For processing and verification of applications for the tax installment schemes: - Additional staff assigned to collection in the largest tax offices. - An electronic application system for tax installments is being introduced; collection will start before end-July. - An electronic application system for SSC installment arrangements has been introduced by IKA and OAEE; process for remaining SSFs will be completed by end-2013. - To monitor performance of the fresh start and basic installment schemes, a set of indicators (TMU ¶29) has been developed and will be published monthly. ### Social security contributions (SSC) collection initiatives - Legislation to establish the organization of a new joint collection center for SSC debt (KEAO) will be adopted by end-July. - Following adoption of this legislation: - By end-August 2013 assign 200 staff to KEAO. - By end-2013 complete the assignment and external recruitment of 400 additional recovery officers to boost debt recovery capacity. - In August, secondary legislation will be adopted to: - Establish a procedure to quarantine uncollectable debt. - Create a single SSC debt database. - Transfer €4.2 billion of SSC collectable debt to KEAO. - Key performance indicators for enforcement and collection of current obligations and arrears have been introduced (TMU ¶31). ### Shortfalls, audits, and remedial actions (tax administration KPIs) - Information on June 2013 KPIs on tax administration is not yet available, but shortfalls are very likely. - Shortfalls likely to be significant in: - Debt collection. - Collection of assessed amounts. - Audits of assets of managers of local tax offices and auditors. - Remedial measures: - Measures described in ¶15 on collection efficiency will address slippages in collection rate indicators. - Requested access to bank information to complete audits of assets of managers of local tax offices and of auditors; by end-July will complete 35 cases for which such information has been provided. - Expectation that all cases will be completed by mid-August after integration of the IAD in the revenue administration. - Performance monitoring and targets: - Weakening of number of audits at the HWI unit and of full-scope LTU audits after appointment of new supervisory teams requires close monitoring. - Targets set for these indicators for end-September 2013 (structural benchmark). ### Public financial management — institutional arrangements and commitment controls - General Directorates for Financial Services (GDFS) are now operating in most line ministries and commitment controls have been strengthened. - GDFS: - Joint ministerial decisions clarified organizational structure of GDFS and enabled preparation of staffing plans. - Legislation to establish permanent procedures for appointment of accounting officers in context of reorganization of ministries expected in September 2013 will be passed by end-July 2013. - Vacant accounting officers’ positions will be filled with temporary acting appointments in the meantime. - Commitment registers: - Circular issued requesting all General Government entities to send queries concerning reporting requirements on commitment registers to GAO by end-July. - By end-September, an interpretive circular will respond to queries to eliminate discrepancies in reporting between commitment registers and surveys. - Circular issued to suspend state transfer payments starting in October 2013 for entities having more than €1 million in spending that do not report on commitment registries. - Revision of the organic budget law will amend Law 3871/2010 to introduce further penalty procedures for General Government entities that fail to provide timely reporting to GAO. ### Budget process strengthening and reporting - To start 2014–17 budget cycle: - Circular and budget preparation timeline issued to line ministries to guide completion of the 2014–17 medium-term fiscal strategy by October 1, 2013. - Working group established to prepare planned amendments to the organic budget law; amendments to be adopted by end-October 2013. - Joint Ministerial Decision to be issued by end-July establishing a common methodology for preparation and adoption of local government budgets. - SOE and large Legal Entity reporting: - Financial targets set for 12 reclassified state-owned enterprises (SOEs) and their budget execution for the first quarter of 2013 relative to those targets published. - Budget execution for the first quarter of 2013 relative to targets of 27 Legal Entities with expenditure over €20 million published. ### Payment processes, arrears clearance, and audits - Measures to address institutional shortcomings causing payment delays and clearance of arrears: - Joint ministerial decision instructing fiscal audit offices to process all payment requests within 20 days, with deadlines set for each stage of the payment process. - Legislation adopted to move responsibility for payment execution from tax offices to fiscal audit offices. - By end-September submit to the Council of State a Presidential Decree with new administrative processes needed to implement reform by January 2014. - By end-October: - Make necessary IT and administrative changes so payment orders and documentation can be authorized electronically and fiscal audit offices can execute payments on a pilot basis starting in November. - Put in place statistical reports to enable follow-up on progress. - By end-October prepare a medium-term action plan to meet Late Payment Directive requirements, including: - Analysis of the IT system. - Review and simplification of legal framework on payment processes and ensuring line ministries understand documentation requirements. - Standardized thresholds for approval levels across line ministries. - By end-December, Hellenic Court of Auditors (HCA) and GAO will produce a joint note on streamlining HCA’s ex ante audits following review of HCA’s ex-post audit pilot scheme expected in November with assistance of the Dutch Court of Audit. - Teams appointed to conduct by end-August focused audits of commitment registers of SSFs comprising EOPYY, starting with IKA, OPAD, OAEE, TAYTEKO, and ETAA; audits to inform terms of reference for a comprehensive external audit of EOPYY’s outstanding liabilities. ### Reporting requirements for entities of systemic importance - To ensure consistent monitoring of targets in SSFs sector: - Pension and employment funds, EOPYY, and hospitals to provide monthly reports in accordance with reporting templates agreed with GAO. - Templates cover monthly cash outturns, accounts receivable and payable, and arrears. - Provision of data to GAO will take place within three weeks of the completion of the month, starting by October 2013. - Examination of forecasting and accounting procedures will be pursued to enable reporting projected state transfers to each subsector as separate items in line with GAO templates. ### General government reporting KPI performance (May and expectations for June) - Numbers for June KPI targets are not yet available, but expected to have been met. - For May: - 91 percent of general government entities reported their arrears through the e-portal (compared to a June floor of 80 percent). - 77 percent reported a comprehensive set of information from their commitment registers (compared to a June floor of 65 percent). - Discrepancy of less than 2 percent (compared to a June ceiling of 10 percent). - Targets for these indicators have been set for end-September 2013 (structural benchmark). ### Financial sector policies — recapitalization, consolidation, and strategy - Recapitalization and consolidation of banking sector in final stages: - Recapitalization of the four core banks is complete. - Three banks raised the minimum 10 percent in private sector capital required to remain under private sector control. - A fourth core bank is under the control of the HFSF. - Liability management exercises increased Core Tier I capital by €585 million for the four core banks. - Sale of bridge banks: - International and domestic bids invited for the sale of the two bridge banks; disposal will be completed as a prior action. - Decision will consider public interest, financial stability, and protection of HFSF assets. - Undercapitalized non-core banks: - Two remaining undercapitalized non-core banks were given extended deadlines to raise capital from private sources. - One bank managed to raise adequate private capital. - The second bank has until July 26 to complete this process; if unsuccessful, immediate resolution through purchase and assumption by a core bank will proceed. - Cooperative sector: - Develop implementation plan for rationalizing cooperative sector, including Panellenia Bank, as part of comprehensive banking sector strategy. - By end-September, legal and regulatory steps necessary to implement strategy for cooperative sector will be taken, considering findings of the BoG report “Assessment of the Greek Cooperative Banking Sector” (February 2013). - Eurobank privatization plan: - Undertake to place a substantial equity stake in Eurobank to a privately owned strategic international investor by end-March 2014. - Actions and timeline: - Contract consultants by end-August 2013. - Develop an evaluation metric for potential investors by mid-October 2013. - Allow potential investors to start due diligence no later than end-November 2013. - Placement structured to incentivize participation of investors seeking a majority stake in the future. ### Banking sector strategy, HFSF review, and supervisory work - Complete a comprehensive banking sector strategy as a prior action, in consultation with EC/ECB/IMF. - Strategy built around four core banks run on a purely commercial basis, with no role for directed lending or credit targets. - Proposes prompt disposal path of HFSF shares to private sector in accordance with existing legal framework. - Review of HFSF functioning to be completed by end-September 2013 in cooperation with EC/ECB/IMF staff; any adaptation will consider evolving tasks and long-term interests of banking sector and taxpayers. ### Stress tests, asset quality review, and distressed credit operations - Preparations underway: - Timeline and modalities of stress test established to be completed by end year, including objectives, scope and output, with EC/ECB/IMF counterparts. - Steering committee to oversee exercise: BoG, EC, ECB, IMF, and EBA representatives. - Consultant engaged to conduct asset quality review with interim deadline by end October 2013. - Distressed credit operations review scheduled to be completed by end-September 2013. ### Constraints on fiscal actions affecting banks and liquidity policy - No fiscal policy actions that would undermine bank solvency: - Banks will not be required to pay dividends on preference shares, or fees or taxes in lieu of this, unless they have distributable profits (excluding profits from acquisitions and selling of subsidiaries abroad), and the BoG has given its consent confirming compatibility with preservation of adequate capital buffers. - Liquidity preservation: - BoG, following Eurosystem procedures and rules, stands ready to continue disbursing adequate and appropriate emergency liquidity support in a timely manner, if needed. - Over medium term, banks expected to achieve sustainable funding by broadening funding base and reducing reliance on extraordinary central bank liquidity support and government guarantees. - After recapitalization, BoG will request banks to provide standardized quarterly balance sheet forecasts (funding plans) to monitor consistency with program’s macroeconomic framework in cooperation with EC and IMF. ### Assets under liquidation and bank governance - Management of assets under liquidation: - Significant progress in legal, regulatory, and operational frameworks governing assets under liquidation. - New legislation and regulatory framework provide tools including liquidation entities and restructuring tools. - Operationally, asset recovery outsourced in certain cases to collection companies with significant improvement in results. - Implementation plan to improve collections and establish targets will be developed by end-July. - Bank governance: - Relationship Framework Agreements between HFSF and core banks approved by HFSF’s General Council, signed, and published. - Core banks implementing recommendations of monitoring trustees contained in first quarterly reports. - Review of supervisory model initiated to align with international best practices and Single Supervisory Mechanism guidance; started with sanctioning toolkit and aim to complete by end-2013. - Law 3864/2010 will be amended so decisions of General Council and Executive Board are in accordance with HFSF’s mandate and commitments set out in Law 4046/2012 (FEK A 28), as updated in accordance with paragraph 5 of that law. ### Distressed household debt resolution and insolvency measures - Tools for distressed household debt: - “Facilitation Program” adopted by Parliament; necessary regulations to implement it will be in place by end-August 2013. - Amendments to Law 3869/2010 adopted to encourage out-of-court settlements, including: - Allowing decision on an out-of-court settlement to be adopted by a specific majority of creditors. - Introducing minimum debt payments between filing of a petition and the court hearing. - By end-September 2013, definitions for terms such as “acceptable living expenses” and “cooperative borrowers” will be adopted as guidance for judiciary and banks to protect vulnerable households. - Monitoring distressed debt resolution: - Working group to identify ways to improve effectiveness of debt resolution for households, SMEs, and corporates: - By end-July 2013, in consultation with EC/ECB/IMF staff, identify key bottlenecks. - By end-October 2013, with technical assistance, propose concrete enhancements. - Using review of banks’ distressed credit operations, BoG will issue by end-2013 a time-bound framework for banks to facilitate settlement of borrower arrears using standardized protocols (assessment procedures, engagement rules, defined timelines, termination strategies). - BoG requirements and timelines: - By mid-September 2013, banks to present a strategy for improving distressed credit operations. - By end-November 2013, submit a comprehensive operational plan to address shortfalls identified in the review. - The first assessment of the effectiveness of the Facilitation Program will be undertaken within six months of launch. ### Institution for Growth (IfG) — objectives, constraints, and HR involvement - Government intends to establish the Institution for Growth (IfG), a non-bank financial institution, to support innovation and growth, catalyze private sector financing for SMEs, and minimize fiscal risks. - IfG operational principles and restrictions: - Provide debt financing for SMEs. - Provide equity capital to SMEs with growth potential and to private equity and venture funds. - Provide debt or equity financing for infrastructure projects. - Where providing debt financing, loans available only under co-financing arrangements with significant participation by commercial or cooperative banks. - Lend and invest at market terms. - Not accept deposits. - Not accept capital contributions or other financing from domestic financial institutions owned or controlled by the public sector, including HFSF. - Limit any guarantees to a level not exceeding the Hellenic Republic’s (HR’s) capital subscription. - Hellenic Republic involvement: - HR will seek to become a minority shareholder eventually, with its own capital contribution limited to €350 million over the next three years. - Shareholders other than HR must agree on appointment of IfG management. - IfG board will have a strong international presence for independence. - Overlapping functions between ETEAN and IfG will be avoided; some functions may be performed by IfG upon HR request and subject to IfG investor approval. *Summary drawn exclusively from the provided content unit.* ### 34. We are advancing the liberalization of regulated professions and will assess the ### 34. We are advancing the liberalization of regulated professions and will assess the ### Liberalization of regulated professions — actions and timeline - Adopt a new Code of Lawyers by end-July, which "eliminates unjustified restrictions on legal services and aligns our legal framework with international best practice." - Issued implementing legislation to complete liberalization of a number of professions, including certified auditors and actuaries (TMU ¶39). - Remaining regulated professions from the end-2012 structural benchmark now addressed except: - firms trading petroleum, geo-technicians, chartered valuers and electricians (implementing ministerial decision by end-September 2013), and - engineers (reserved activities for all engineering specialties identified). - With HCC assistance, determine areas where reserved activities for engineering specialties are justified on public interest grounds, and remove all excessive restrictions by end-2013. - KEPE tasked to complete by end-July 2013 a study on the degree of effective liberalization of 20 economically important professions, including review of new entries and exits and price changes. - Commit to act promptly, no later than end-September 2013, to address remaining excessive restrictions identified. - Conduct by end-2013 an in-depth follow-up review of reforms of regulated professions (including interviews and surveys of stakeholders) with outside experts’ support. - Monitoring unit for regulated professions at the Ministry of Finance will, in consultation with EC/ECB/IMF staff, develop a list of high-frequency indicators by October 2013 to assess ongoing impact of reforms and publish these indicators regularly. ### Promoting competition and reducing administrative burden — sectoral measures and timelines - Retail sector: - Replaced fixed margins with maximum margins for over-the-counter products sold in pharmacies. - Allow sale of selected products outside of pharmacies by end-September 2013. - Adopt a new law by end-July to remove restrictions on discounts and increase flexibility of retailers’ opening days. - Rental sector: - Created a working group to complete by end-August a review of commercial rental regime; adopt legislation to address rigidities by end-September 2013. - Transportation sector: - Liberalize long-distance bus transportation services (adopt legislation to open lines for competition, and streamline mandatory discounts) (August 2013). - Rationalized mandatory discounts for ferry tickets; further increase flexibility for ferry transportation (October 2013). - Streamline public service obligations (PSO) for regional flights to reduce costs (reduce frequency in winter and remove PSO in tourist season when contracts expire) (October 2013). - Regulatory and administrative burden studies (with OECD assistance): - Two studies: regulatory barriers to competition in four sectors (tourism, retail, building materials, food processing), and administrative burdens in thirteen sectors. - Commit to adopt by end-2013 legislation to implement specific recommendations for the first study. - Trade facilitation: - Expand to imports the 24/7 working shifts in Athens airport and two shifts in Piraeus port by end-July 2013. - Introduce electronic submission system for all import declarations by end-November 2013. - Assess pilot customs offices (Athens airport and Piraeus port) and risk-based export release system by end-2013; adopt optimized procedures in those offices by January 2014; extend procedures nationwide by end-2014. - Investment facilitation: - Pass legislation by end-2013 to comprehensively streamline investment licenses and permits (operational, environmental, land use, use of public infrastructure) — reduce number, approval time and procedures (one stop shop, certification by independent bodies) and establish tracking system to monitor implementation and ensure accountability. - Cost of doing business: - Eliminate or transfer nuisance taxes and levies (and associated spending) to the state budget (September 2013 structural benchmark). - Adopt legislation to reform social security contributions to reduce rates by 3.9 percentage points; phased in on January 1, in 2014, 2015, and 2016; revenue neutral and preserve actuarial balance of the various funds (November 2013 structural benchmark). ### Labor market reforms and follow-up - Address remaining excessive rigidities; note some sectors (maritime and private education) were shielded from some reforms. - Issued ministerial decision clarifying individual labor agreements are allowed in maritime sector when sectoral collective agreement has expired; issued circular clarifying law 4046/2012 on severance payments and Cabinet Act (FEK 38/28-2-2012) on dismissals apply to private education sector. - By mid-July, 2013, adopt a law to establish a new minimum wage mechanism so statutory minimum wage and minimum daily wages are set by the government, consistent with MEFP of December 21, 2012. - Complete study for discussion at next review comparing Greece’s regulations on temporary employment, scope of temporary employment agencies, and collective dismissal rules/procedures with other EU member states; prepare draft reforms by end-November and implement such reforms by end-2013, in consultation with social partners. - Streamline labor reporting requirements by end-September following a comprehensive review to be completed by end-July. - Adjust sanctions for violations of labor law by end-July to better link punishments to severity of violations and focus detection on more severe cases. - Compile a Labor Code by end-2013 to eliminate inconsistencies and increase transparency. - By end-October 2013, assess impact of recent labor reforms in maritime sector (in consultation with stakeholders) and adopt further steps to strengthen competitiveness, including increasing flexibility of labor arrangements. ### Judicial reforms and anti-corruption measures - Judicial reform actions and timeline: - Continue reducing tax and non-tax case backlogs; publishing quarterly court performance data. - By end-July 2013, present to EC/IMF/ECB staff an assessment of operation of magistrates’ courts. - By end-September 2013, reallocate judges to administrative courts considering backlog reduction needs and adopt action plan to reduce civil and commercial case backlogs. - By end-October 2013, undertake analysis of court fees for civil and commercial cases. - By end-December 2013, undertake analysis of enforcement framework for civil and commercial decisions. - Preparation of amendments to the Code of Civil Procedure delayed; now to be presented to EC/ECB/IMF staff by end-September 2013. - Anti-corruption: - Present to EC/ECB/IMF staff by end-July 2013 draft legislation to align anti-corruption legal framework with relevant international standards (delayed from program target of submission to parliament by end-June). - Following appointment of National Anti-Corruption Coordinator and establishment/staffing of office, start implementation by end-July 2013 of outstanding actions in the anti-corruption plan (initially scheduled March-July 2013). ### Privatization progress, delays, and required actions - Noted delays in sales; failure to attract bidder for DEPA will cause a delay of 2013 receipts relative to program assumptions. - 2013 focus: - Finalize sale of OPAP and State Lotteries, several smaller corporate transactions, several real estate asset sales, and re-launch/conclude sale of DEPA (followed by HELPE). - Set up required SPV for State Lottery transaction before end-July 2013. - Expect to finalize OPAP sale by end-September 2013. - Increase stakes in ports to be sold and accelerate their tenders to compensate for delays. - Actions to prepare assets for sale: - Put all regulatory frameworks in place, complete state aid clearance steps, and transfer quarterly batches of 250 real estate assets to the HRADF. - Prior actions to minimize further delays and liquidate entities that cannot be privatized: - (i) Formally announce restructuring or resolution of ELVO, HDS, and LARCO, with view to completion by December-2013; - (ii) Issue five year pricing policy (2014-18) for EYATH (water tariffs); - (iii) Adopt legislative acts permitting payment of arrears owed to EYDAP and EYATH directly from the arrears clearance program (Expression-of-Interest for EYDAP privatization to be issued in Q4 2013). - Subsequent to meeting prior action: validate amount of payment arrears to the two water companies by end-August, and clear these arrears by end-September. - Issue Joint Ministerial Decision to shift second parcel of 250 real estate assets to HRADF. ### Key quantitative performance criteria and indicative targets (selected figures preserved exactly) - Table 1a (Dec., 2012–Jun., 2013) selected entries (Billions of euros, unless otherwise indicated): - Performance criteria 1. Floor on the modified general government primary cash balance 1/: -3.8 (Dec-12 program), -3.3 (Dec-12 actual), 1.5 (Mar-13 program), 1.8 (Mar-13 actual), -1.2 (Jun-13 program), ... - 2. Ceiling on state budget primary spending 1/: 56.8 (Dec-12 program), 55.4 (Dec-12 actual), 13.9 (Mar-13 program), 11.8 (Mar-13 actual), 26.0 (Jun-13 program), 24.1 (Jun-13 actual) - 3. Ceiling on the overall stock of central government debt: 340.0 (Dec-12 program), 311.4 (Dec-12 actual), 347.0 (Mar-13 program), 313.3 (Mar-13 actual), 347.0 (Jun-13 program), ... - 4. Ceiling on the new guarantees granted by the central government 2/: 0.2 (Dec-12 program), 0.1 (Dec-12 actual), 0.2 (Mar-13 program), 0.2 (Mar-13 actual), 0.0 (Jun-13 program), 0.0 (Jun-13 actual) - 6. Ceiling on the Stock of Domestic Arrears (narrow definition): 3.6 (Dec-12 program), 2.9 (Dec-12 actual), 3.0 (Mar-13 program), 2.6 (Mar-13 actual), 2.0 (Jun-13 program), ... - Indicative target 8. Floor on privatization receipts 4/: 3.2 (Dec-12 program), 0.0 (Dec-12 actual), 0.1 (Mar-13 program), 0.1 (Mar-13 actual), 1.1 (Jun-13 program), 0.1 (Jun-13 actual) - Indicative target 9. Transfers to the Mobility Scheme (employees, in thousands) 4/: ...... ...... (Dec-12 program/actual), 12.5 (Mar-13 program), 0.0 (Mar-13 actual) - Table 1b (Sep., 2013–Dec., 2017) selected entries: - Performance criteria 1. Floor on the modified general government primary cash balance 1/: -0.8 (Sep-13), -0.3 (Dec-13), ... (Dec-14 onward) - 2. Ceiling on state budget primary spending 1/: 38.8 (Sep-13), 53.2 (Dec-13) - 3. Ceiling on the overall stock of central government debt: 335.0 (Sep-13), 335.0 (Dec-13) - 6. Ceiling on the stock of domestic arrears (narrow definition): 1.0 (Sep-13), 0.0 (Dec-13) - 7. Floor on Privatization Receipts 4/: 0.9 (Sep-13) - Indicative targets (floor on privatization receipts 4/): 1.6 (Dec-14), 4.3 (Dec-15), 6.3 (Dec-16), 8.4 (Dec-17), 10.8 (beyond where indicated) - 9. Mandatory Exits (employees, in thousands) 4/ 5/: 2.0 (Sep-13), 4.0 (Dec-13), 15.0 (Dec-14) - 10. Transfers to the Mobility Scheme (employees, in thousands) 4/: 12.5 (Sep-13), 25.0 (Dec-13) *Source: _cr13241 - 34. We are advancing the liberalization of regulated professions and will assess the* ### 11. Floor on the stock of employees in the mobility scheme that will exit 2/ ### 11. Floor on the stock of employees in the mobility scheme that will exit 2/ ### Structural benchmark and prior action on mobility scheme - The government to issue all necessary legal acts so as to place at least 4,200 ordinary employees in the mobility scheme by end-July (¶11). - Macro critical relevance: Fiscal sustainability (spending) and government efficiency. - Note in Table 2: Cumulative from April 1, 2013. (Footnote 2/). - Tabulated short excerpts show: "5.0" and "11.0" and ellipses indicating continuation of tabulated targets or counts (source excerpt). ### Context within prior actions (Table 3) - Prior Actions with macro-critical relevance include: - Government to take steps to ensure full implementation of the fiscal program for 2013–14 (¶5). — Fiscal sustainability (revenue). - Adopt legislation to reform income tax code and government to submit to parliament a tax procedure code (¶6). — Fiscal sustainability (revenue). - Government to take steps to prevent accumulation of debt in the renewable energy account (¶9). — Fiscal sustainability (contingent liabilities). - Government to issue all necessary legal acts so as to place at least 4,200 ordinary employees in the mobility scheme by end-July (¶11). — Fiscal sustainability (spending) and government efficiency. - Other prior actions include revenue administration transfers, installment/deferred arrangements amendment, and banking sector and privatization actions (¶13, ¶15, ¶24, ¶25, ¶39). ### Linkages to structural benchmarks (Table 4 highlights) - The mobility-scheme prior action sits alongside other structural benchmarks scheduled across 2013: end-September, end-October, end-November, and end-December measures covering nuisance taxes, property tax regime, bank restructuring plans, revenue administration organizational structure, tax procedures secondary legislation, social security contribution reforms (including reduction by 3.9 percentage points), bank stress tests, and audits of general government accounts payable. ### Performance measurement and timing (footnotes and calendar) - Footnote guidance: - 1/ Applies cumulatively from start of the target's calendar year. - 2/ Cumulative from April 1, 2013. - 3/ Applied on a continuous basis since program approval. - 4/ Cumulative from January 1, 2013. - 5/ Quarterly targets have also been set for 2014 (cumulative from April 1, 2013): Q1: 5,000; Q2: 9,000; July: 10,500; August: 12,000; Q3: 14,000; and Q4: 15,000. ### Quantitative context in IMF program documentation (selected KPI and TMU excerpts) - Table 5: Key Performance Indicators on Tax Administration (selected figures): - Collection of tax debts as of the end of the previous year: 1,140; 1,558; 1,900 (End-Jun., End-Sep., End-Dec., units implied in table). - Collection of new debts in the current year (percent of new debt in the year): 14.0%; 19.0%; 24.5% (End-Jun., End-Sep., End-Dec. 2013 targets). - Number of risk-based full scope audits in the year 2/: 176; 386; 596 (End-Jun., End-Sep., End-Dec.). - Number of risk based temporary audits in the year 3/: 260; 470; 680. - Collection full scope audits in the year (percent of assessed tax and penalties): 65.0%; 70.0%; 75.0%. - Collection temporary audits in the year (percent of assessed tax and penalties): 45.0%; 50.0%; 55.0%. - Number of completed risk-based audits of high wealth individuals in the year 4/: 280; 550; 910. - Collection of assessed audits in the year (percent of assessed tax and penalties): 40.0%; 55.0%; 65.0%. - MoF audit of assets of managers of local tax offices 5/: 50; 80; 110. - MoF audit of assets of auditors 5/: 50; 90; 130. - Footnotes: 1/ Cumulative for the calendar year. 2/ The amount of tax and penalty assessed will be no less than €430 million in September. 3/ The amount of tax and penalty assessed will be no less than €215 million in September. 4/ The amount of tax and penalty assessed will be no less than €115million in September. 5/ Until end-July, the audit is performed by the Internal Affairs Directorate of the MoF, and subsequently by the Internal Affairs Directorate under the GSPR. - Table 6: Key Performance Indicators on Public Financial Management Reforms (selected figures): - 2013 entity coverage 1/: 80%; 94%; 97% (End-Jun., End-Sep., End-Dec.). - 2013 entity coverage 1/: 10%; 2%; 1% (listed in table excerpt). - 2013 entity coverage 1/: 65%; 78%; 93%. - Footnote: 1/ Includes new entities in the end-September 2012 ELSTAT register with spending above €1 million. ### TMU definitions relevant to program fiscal targets - Technical Memorandum of Understanding (July 17, 2013) clarifies measurement and reporting: - Program exchange rates fixed as of January 31, 2012: €1 = 1.3176 U.S. dollar, €1 = 100.63 Japanese yen, and €1.1772= 1 SDR. - General government definition includes: central government (State Budget entities per Law 2362/1995 as modified by Law 3871/2010 and other entities classified under central government by ELSTAT such as ATTIKO METRO, OSY, ELGA, HELLENIC DEFENCE SYSTEMS S.A., OSE, TRAINOSE, ELECTROMECHANICA KYMI LTD, OPEKEPE (excluding ELEGEP), KEELPNO, EOT, GAIAOSE, ERGOSE, INFORMATION SOCIETY IN GREECE, Unit for the Organization and Management of Development Projects S.A., and the Green Fund (ETERPS)); local government (municipalities and prefectures and attached agencies); social security sector (IKA, OGA, OAEE, OAED, EOPYY, hospitals); and other extra budgetary entities included by ELSTAT under general government. - Reporting requirements: MoF to provide detailed monthly data on revenues and expenditures, debt redemptions, new debt issuance, changes in cash balances at Bank of Greece, other financing sources including capital transactions, and arrears of the general government. Data to be provided within four weeks after the closing of each month. - Definition of the Modified General Government Primary Cash Balance (MGGPCB): MGGPCB = Modified General Government Cash Balance (MGGCB) minus interest payments by the state budget. - MGGCB components include: cash balances of the ordinary state budget; cash balance of the public investment budget; change in net financial assets of local government; change in net financial assets of social security; change in net financial assets of the Green Fund; change in net financial assets of reclassified public enterprises (RPEs). - Privatization receipts and proceeds from sale of land and buildings are excluded from cash receipts (with specified exceptions for certain sales from May 2010 SBA program or 2011 budget discussions). - Primary expenditure of the central government excludes payments related to bank support that are part of the program’s financial sector strategy; any such operations must be immediately reported to IMF, European Commission, and ECB staff. - Primary revenue of the central government will exclude any cash payments from loss-making banks beyond those which would accrue from the ELA guarantee fee structure existing on November 30, 2012 (25 basis points). - Capital transfers to social security funds or other entities by bonds shall exclude bond issuance for settlement of end-2009 health related arrears, and the settlement related to the judiciary liabilities. *Source: Excerpted content from IMF staff report tables, notes, and Appendix III: Technical Memorandum of Understanding (July 17, 2013).* ### 5. Supporting material. ### 5. Supporting material ### A. Cash balances and monthly fiscal reporting - Data on cash balances of the State ordinary and investment budgets will be provided to the European Commission, ECB and IMF by the General Accounting Office in the Ministry of Finance within three weeks after the end of each month. - Monthly data will include detailed information on revenue and expenditure items, in line with monthly reports published on the official website of the Ministry of Finance. - The monthly data will indicate which portion of tax refund payments relate to claims that were made before end-September 2012. - Data will also include data on capital transfers to social security funds or other entities in bonds and called guarantees. ### B. Net financial assets of sub-sectors - Data on the change in net financial assets of local authorities and social security funds, extra-budgetary funds including AKAGE, and reclassified public enterprises including the Green Fund will be provided to the IMF, European Commission and ECB by the GAO in cooperation with the Statistics Department of the Bank of Greece within four weeks after the end of each month. - With respect to reclassified public enterprises, GAO will also provide on a monthly basis the change in foreign liabilities to correct for the fact that the below the line data of the BOG only refers to changes in domestic liabilities. ### C. Ceiling of State Budget Primary Spending (Performance Criterion) — definition and reporting - Definition: state budget primary spending = state budget spending (ordinary state budget + public investment budget) minus interest expenditures paid by the state budget, minus any arrears payments made. - Ordinary state budget spending includes called guarantees to entities inside the general government. - Primary expenditure monitored for the Performance Criterion excludes any cash payments related to bank support as defined previously; any financial operation by central or general government to support banks (including issuance of guarantees or provision of liquidity) will be immediately reported to European Commission, ECB and IMF staff. - Supporting material: The General Accounting Office of the Ministry of Finance will provide monthly expenditure data of the ordinary and investment state budget. ### D. Ceiling on the Stock of Domestic Arrears (narrow definition) — definition and reporting - Definition of domestic arrears (narrow): (i) unpaid invoices of line ministries and hospitals that are 90 days past their due date; plus (ii) tax refunds for which a refund document (“AFEK”) has been issued and cleared but have not been repaid to the taxpayer. - If no due date on supplier contract, an unpaid commitment is in arrears 90 days after initiation of the invoice. - The stock of arrears excludes hospital arrears to pharmaceutical companies which were incurred by end-2009 (€113 million as of November 30, 2012). - Timeline changes: - Beginning July 1, 2013, definition will include change in the stock of tax refund claims made on or after July 1 (cumulative from July 1) that have not been paid or rejected within 90 days. - Beginning January 1, 2014, it will include the entire stock of tax refund claims that have not been paid or rejected within 90 days. - In both cases refund claims under legal dispute will be excluded. - Supporting material: - Monthly data on arrears of line ministries and public hospitals will be provided by the Ministry of Finance within four weeks after the end of each month and published on the Ministry of Finance website. - Expenditure arrears data will be based on survey data, until commitment registers are assessed by IMF, European Commission, and ECB staff. - Reports will include accounts payable overdue by 0–30, 31–60, and 61–90 days for the central government based on commitment registers. - Tax refund arrears data will be based on information provided by General Secretariat for Information Systems and General Secretariat for Tax and Customs. - The Ministry of Finance will provide a monthly table on tax refund arrears as defined above (with AFEK issued) and on full tax refund accounts payable that include refund claims for which AFEK has not been issued (showing those not assessed after 90 days). ### E. Ceiling on the Stock of Domestic Arrears of the General Government (Indicative Target) - Definition: general government domestic arrears = (i) unpaid invoices of general government entities 90 days past due; plus (ii) tax refunds with AFEK issued and cleared but not repaid. - Exclusions: (i) arrears accumulated by the Civil Servants’ Welfare Fund; and (ii) hospital arrears to pharmaceutical companies incurred by end-2009 (€113 million as of November 30, 2012). - Timeline changes: - Beginning July 1, 2013, definition will include new tax refund claims made on or after July 1 that have not been paid or rejected within 90 days. - Beginning January 1, 2014, it will include all tax refund claims not assessed within 90 days. - Refund claims under legal dispute will be excluded. - Supporting material: The Ministry of Finance will provide consistent monthly data on expenditure and tax refund arrears of the general government within four weeks after the end of each month and publish this information on its website; reports will include overdue accounts payable by aging bands and tax refund arrears from specified secretariats. ### F. Ceiling on the Overall Stock of Central Government Debt (Performance Criterion) - Definition: - Overall stock refers to ESA95 central government debt, includes state debt, debts of extra budgetary funds and public enterprises consolidated into central government, and other ESA 95 adjustments. - Holdings of intra-government debt will be netted out. - Defined as total outstanding gross debt liabilities, including liabilities in the form of securities and loans; excludes accounts payable. - Debt measured at nominal value. Program exchange rates apply to non euro-denominated debt. Inflation indexation applies to inflation indexed debt using the relevant index. - Ceiling excludes debt arising from payments for bank restructuring when carried out under the program’s banking sector restructuring strategy (does not cover debt related to the Financial Stability Fund). This includes loans to financial institutions and investments in equity of financial institutions (requited recapitalization); unrequited recapitalization; and purchase of troubled assets. - Any financial operation by the central government to support banks, including issuance of guarantees or provision of liquidity, with the exception of Hellenic Republic intermediation in repos between foreign and domestic financial institutions, will be immediately reported to IMF, European Commission and ECB staff. - Adjuster: The ceiling will be adjusted upward (downward) by the amount of any upward (downward) revision to the stock of end-December 2012 ESA95 central government debt of €311.4 billion. - Supporting material: Data on total stock of central government debt will be provided to the European Commission, ECB and IMF staff by the General Accounting Office consistent with ESA95 no later than 30 days after the end of each month. ### G. Ceiling on New Central Government Guarantees (Performance Criterion) - Definition: - Includes new guarantees granted by the state and by any entity classified under ESA95 as central government, but excludes guarantees to entities whose debt is covered under the central government debt ceiling. - Excludes: (i) guarantees to support banks; (ii) guarantees related to EIB financed loans; (iii) guarantees granted by ETEAN (up to a total amount of €50 million provided these are fully backed by an equivalent amount of bank deposits); and (iv) guarantees granted under a risk sharing instrument of the EU structural funds that do not create contingent liabilities for the Greek State. - New guarantees are those extended during the current fiscal year; for guarantees whose maturity is extended beyond initial contractual provisions, only 50 percent of the full value is counted. - Modification of existing guarantees (without changing maturity, amount, and beneficiaries) will not be treated as new guarantees. - Supporting material: All new central government guarantees will be reported in detail, identifying amounts and beneficiaries. The General Accounting Office will provide the data monthly within three weeks after the end of each month. Non-state entities classified under the central government shall report new guarantees to the General Accounting Office monthly within three weeks after the end of each month. ### H. Non-Accumulation of External Debt Payment Arrears by the General Government (Continuous Performance Criterion) - Definition: external debt payment arrear = a payment on debt to non-residents contracted or guaranteed by the general government, not made within seven days after falling due. - "Falling due" = the date external debt payments are due according to the contractual agreement, including contractual grace periods. - The performance criterion applies continuously throughout the program period. - Supporting material: The stock of external arrears of the general government will be provided by the General Accounting Office with a lag of not more than seven days. ### I. Floor on Privatization Proceeds (Indicative Target and Performance Criterion) - Definition: Privatization proceeds = cash receipts from asset sales carried out by HRADF, cash receipts from direct government sales, and cash receipts from sale of any bank participations through the HFSF, the HRADF, or from the government directly. - Included transactions: sale of equity of listed or non-listed companies and banks; shareholdings in public infrastructure; shareholdings in SPVs; leasehold in commercial real estate and publicly held land; sale-lease back operations; securitization of asset-related cash streams; sale of rights and concessions (including securitization of proceeds of concessions); other assets in authorities’ privatization program. - Proceeds will be valued in Euros and measured as inflows of cash received by HRADF and deposited in the Segregated Account at the Bank of Greece within 10 days after settlement of the transaction. - Supporting material: Monthly information on cash receipts from asset sales into the segregated account will be made available by the GAO, in collaboration with the HRADF, within 30 days after the end of each month. ### J. ESA “Program” Deficit and Overall Monitoring - ESA program deficit (EDP B.9) adjustments for the program: - (i) sale of non-financial assets such as land, buildings, and other concessions or licenses will be excluded, unless agreed in the context of the program; - (ii) costs related to banking support as defined in MGGPCB above will be excluded; - (iii) all payments relating to tax refund claims made before September 2012 will be excluded; - (iv) accrual revenue from the PPC levy of a given year will include cash receipts within the year plus amounts pertaining to the given year received through March of the following year; - (v) all transfers related to the Eurogroup decisions of February 21, 2012 and November 26, 2012 in regard to income of euro zone national central banks will be excluded, including the BoG, stemming from their investment portfolio holdings of Greek government bonds (schedule B provides the latest estimates); - (vi) any called guarantees to entities outside the general government related to liquidated public enterprises above what is already expected in the fiscal program for the current fiscal year. - ESA primary balance: defined as general government ESA95 balance (EDP B.9) minus ESA95 general government consolidated interest payable (EDP D.41). - Overall monitoring and reporting: Performance will be monitored from data supplied to the EC, ECB, and IMF by ELSTAT, the Ministry of Finance, the General Accounting Office, and Bank of Greece. Authorities will transmit any data revisions in a timely manner. ### K. Floor on Mandatory Exits (Indicative target) - Definition: Employees counted as mandatory exits to the private sector must: - (i) be employed by the general government (ESA95 definition) on a permanent employment contract or contract of indefinite duration; and - (ii) have no entitlement to early retirement within the next 3 years. - Mandatory exit: involuntary leave from public sector, includes exits from the mobility scheme to the private sector. - Mandatory exits are not entitled to severance pay or any other compensation (if not provided for under current legislation). - Exclusions: - Employees leaving because the entity is being privatized under HRADF or as part of restructuring ahead of such privatization. - Employees separated for outsourcing will not qualify to be replaced under the 1:1 re-hiring rule. - Mandatory exits cannot be rehired into the public sector except via a merit-based selection procedure by ASEP open to external candidates. ### L. Floor on Entrants for Future Exit in the Mobility Scheme (Indicative Target) - Definition: Employees counted toward this target: - Have no entitlement to early retirement within the next three years and eight months. - Qualify for the definition of entrants to the mobility scheme and will stay in the scheme until they exit from the public sector after a maximum of eight months. - Adjustment clause: After April 1, 2014, if all previous exit targets have been observed, the floor on the minimum staff will be adjusted downward by any additional exits above the cumulative end-March 2014 target of 5,000 exits from other eligible sources. - Schedule A (Indicative Amounts to be Transferred to the Greek Government by Eurosystem National Central Banks, Billions of euros, accrual terms): - ANFA: 2012 349.06; 2013 36.05; 2014 18.05; 2015 00.05; 2016 57.04; 2017 64.03; 2018 67.03; 2019 06.03; 2020 25.03; Total 3,950.0 - SMP: 2012 2,098.0; 2013 1,941.0; 2014 1,503.0; 2015 1,134.0; 2016 898.0; 2017 729.0; 2018 580.0; 2019 422.0; 2020 09.0; Total 9,305.0 - Source: Greek authorities, ECB, IMF staff estimates. - Annual Overall Employment Ceilings for the General Government (Revised) (Number of persons) — selected rows: - General government: 2012 712,494; 2013 676,421; 2014 649,878; 2015 628,295; 2016 608,928 - Ordinary staff: 2012 628,972; 2013 608,871; 2014 588,662; 2015 569,990; 2016 553,342 - Other staff: 2012 55,979; 2013 40,529; 2014 34,838; 2015 32,562; 2016 30,514 - Chapter A entities: 2012 24,914; 2013 24,392; 2014 23,749; 2015 23,114; 2016 22,443 - Chapter A fixed term contracts: 2012 2,629; 2013 2,629; 2014 2,629; 2015 2,629; 2016 2,629 - Memorandum item ESPA and self-financed other staff: 15,343 across 2012–2016 - Total general government (memorandum): 2012 727,837; 2013 691,764; 2014 665,221; 2015 643,638; 2016 624,271 - Source: MAREG. - Mobility and Exit Scheme (Cumulative numbers of persons) — selected entries: - 2013 March: Total Personnel Covered 205,000; Actual To Date 0 0 - 2013 April: Total Personnel Covered 211,000; Actual To Date 0 0 - 2013 May: Total Personnel Covered 221,000; Actual To Date 0 0 - 2013 June: Total Personnel Covered 361,000; Actual To Date 2,000 - 2013 September: Total Personnel Covered 400,000; Actual To Date 12,500 2,000 - 2013 December: Total Personnel Covered 650,786; Actual To Date 25,000 4,000 - 2014 Q1: Actual To Date 5,000 - 2014 Q2: Actual To Date 9,000 - 2014 July: 10,500; August: 12,000; Q3: 14,000; Q4: 15,000 - Source: MAREG. (Actual to date for exits from government a preliminary estimate.) ### M. Floor on Entrants to the Mobility Scheme (Indicative Target) - Definition: Employees transferred to the mobility scheme must be employed by the general government (ESA95 definition) on a permanent or indefinite contract. - Entrance into the labor mobility scheme is defined when the employee’s payment is reduced to 75 percent of the remuneration in the case of “availability,” or to one-third of the remuneration in the case of “disciplinary suspension.” - Exclusions: employees belonging to entities being privatized under HRADF or part of restructuring ahead of such privatization. *Source: _cr13241 - 5. Supporting material.* ### 27. Supporting material. The Ministry of Administrative Reform and E-Governance (MAREG) ### 27. Supporting material. The Ministry of Administrative Reform and E-Governance (MAREG) ### MAREG reporting requirements - MAREG will report monthly (15 days after the closing of each month) for the mobility scheme on: - Entrants: number, entity they previously belonged to, reason for entry, number of entrants which will exit. - Departures: number, reasons for departure, new entity transferred to or exit. - Stock of employees currently in the scheme (grouped by the months of their entrance). - MAREG will report monthly (15 days after the closing of the month) on exits: the number, the general government entity they came from, the reason for the exit, if any. - MAREG will report monthly (15 days after the closing of the month) the stock of general government employees defined as in the Census Data Base. ### Actions to achieve a semi-autonomous revenue administration (General Secretariat of Public Revenue — SGPR) - Issue secondary legislation and supporting documentation to vest the entire remit of the General Secretariat of Public Revenue as a semi-autonomous revenue administration. - Issue Ministerial Decisions as required under Law [4152]/2013 to transfer to the revenue administration: - Ministry of Finance internal affairs department, including its staff and available resources. - Competences, staff and available resources of GSIS organic units pertaining to tax and customs administration: - Directorate for Computer Applications (Directorate 30), except Sections for Budget and Public Expenditure, Payroll and Pensions. - Directorate for Computer Data Entry and Control (Directorate 32). - Issue a report identifying all tax and customs administrative functions, personnel, and budget allocations necessary to exert competences specified in case β' par. 2 and cases α' and δ' of par. 5, article 30 of L. 3296/2004, including: - Preventive checks and temporary tax audits, especially for withholding and imposed taxes, focusing on Value Added Tax (VAT). - Checks of transit, imports and exports, trading, supply and distribution of products subject to Special Consumption Tax (Excise Duty). - Checks of customs warehouses. - Checks of goods under special duty-suspension procedures and implementation of customs legislation in general. - Checks in means of transportation, shops, warehouses, etc. - Confiscation of books, documents, goods, means of transportation and other evidence. - Create a five member advisory Council appointed by the Minister of Finance: - Two members selected among persons with significant international work experience in revenue administration. - The SGPR will be an ex-officio member. - Board duties: advise on revenue administration strategy including human resource issues; monitor performance against plans and targets; support management of external stakeholders; provide assurance SGPR is exercising powers appropriately. - Limitations: no role in taxpayer-specific issues; no access to specific taxpayer information. - Issue ministerial decision to determine qualifications, duration, compensation, conflict-of-interest rules, reporting to Minister, and administrative support. - Board members term: three years. - Establish a Strategic Planning and Financial Control Directorate in the revenue administration with functions to: - Coordinate preparation of the revenue administration’s budget. - Follow up budget implementation. - Propose reallocations of non-wage recurrent spending in line with the organic budget law. - Support the SGPR in project management and monitor progress with reform and KPI implementation. - Institutional Reform Working Group (IRWG), chaired by the SGPR, to issue a report shared with the Minister and Troika that: - Analyzes and maps constraints to operational and administrative autonomy of the SGPR and proposes immediate solutions. - Examination to incorporate limits within: - Revenue laws (income tax, VAT, property tax, customs and excise and other taxes administered by the SGPR). - Other general laws related to human resources and financial management within the civil service. - Powers delegated to the SGPR. - IRWG will determine whether additional changes to law are required to authorize SGPR competence for tax administration beyond singular decisions affecting taxpayers. ### Monitoring of tax and SSC installment schemes (“fresh start” and “basic”) - Framework has two sections: values-based indicators and number-of-debtors indicators. - Values-Based Indicators: - Stocks: - outstanding stock of debt (including principal and surcharges) accumulated before end-2012. - amount of this debt (including principal and surcharges) that is currently in the Fresh Start scheme. - amount of this debt (including principal and surcharges) current in the Fresh Start scheme that has also been legally “verified”. - Flows: - amount of debt (including principal and surcharges) that has entered into the scheme during that month. - increase in the amount of debt (including principal and surcharges) that has been legally “verified” during the month. - total amount actually paid thus far under the scheme and, of this, the amount that refers to upfront full payment (including principal and surcharges paid). - amount that has become delinquent during the month. - Number-of-Debtor-Based Indicators: - Stocks: - current number of debtors with outstanding debt accumulated before end-2012. - total number of applications for participation in the scheme thus far. - total number of applications which have been legally “verified”. - Flows: - total number of applications submitted for participation in the scheme during that month. - number of applications that have been legally verified during that month. - number of debtors that made an upfront full payment, number that made their installment payment, and number newly delinquent as of that month. - number of debtors that have made their last installment payment. ### Reporting cadence for installment schemes - Weekly report: - A weekly report (subset of the data above) to be received by Tuesday after the week to which it refers. - First such report will be received on July 16 and will refer to the previous week. - It will include variables: - number of debtors currently in the scheme. - total debt currently under the scheme. - amount paid year to date. - amount of payment contractually expected in the rest of the year based on amount of debt in the scheme at that time. - Monthly report: - SGPR and the MoL will report monthly (within three weeks of the closing of each month) the full set of indicators defined in the monitoring framework for the “fresh start” and “basic” installment schemes. - First monthly report coming at end-August. - MoL report of the SSC installment schemes will provide individual information for the two largest SSFs (IKA, OAEE). ### Monitoring of SSC debt collection - Definitions: - Monitoring framework includes: - stock of debt and collection of SSC debt accumulated by December 31, 2012. - stock of debt and collection of SSC debt incurred during the current year. - number of debt assessments completed by the SSFs. - For IKA, framework includes number and value of legal collection actions: garnishments, seizure writs issued, immovable property seizure, movable property seizure, mortgage and liens, auctions, and bankruptcies and liquidations. - Reporting: - MoL will report according to the monitoring framework for SSC debt collection and for debt collection by KEAO on a monthly basis (three weeks after the closing of each month). - MoL will provide individual information for the two largest SSFs (IKA, OAEE) starting in late August. ### Monitoring of structural benchmarks and audit definitions - Benchmark on progress in revenue administration, 2013: - Progress defined as reaching or exceeding the targets set in MEFP Table 1. - Audit definitions and reporting: - A completed audit: formally finalized in the ELENXIS audit case management system, signed off by the audit supervisor, and the taxpayer assessment has been issued, or audit report states no underpayment has occurred. - Audit reports brought to the Tax Dispute Administration Resolution Committee (Article 70A Committee) for settlement after 1 January 2013 are defined as a completed audit when the case is submitted to the committee. - High Wealth Individual (HWI) audits on a legal person owned or controlled by the HWI will be regarded as an HWI audit case if carried out by the auditor(s) who carry out the audit of the relevant HWI. Audits of off-shore companies to identify the natural person owning or controlling the offshore company will be regarded as HWI audit cases and reported separately. - Assessment amounts from audit reports submitted to the Article 70A committee are included when reporting on assessment performance for HWI and Large Taxpayer Unit (LTU) audits; assessment amount is included for collection performance only when final assessment is issued following committee decision and adjusted for any difference between audit report assessment amount and final assessment amount. - Risk-based audits for large taxpayers: audits selected on a risk basis using the ELENXIS audit management system. - Collection on HWI and LTU full scope audits and temporary audits: amounts collected in the year from such audits completed during the year or previous years. - Collection of tax debt excludes debts of non-tax nature for which the tax authority collects on behalf of other public sector entities. - In 2013, new tax debt collection includes collection of debt accrued in the month of December, 2012. - Audit of assets of a manager, director or auditor includes audit of all assets (movable and immovable), including spouse’s assets; includes examination of all financial accounts for up to 10 years from a current date and comparison to State registries; conducted annually by the Internal Affairs Directorate of the MoF. - Monthly submissions: - Monthly information on risk-based full-scope audits and temporary audits of large taxpayers, self-employed and high wealth individuals, and VAT non-filers; collection of assessed taxes and penalties; collection of tax debt; audits of asset declarations from auditors and managers of local tax offices will be made available by the Minister of Finance no later than two weeks after the end of each month. - Monthly submission will also include, for each local tax office and special unit: number of audits, hours spent on audits, assessed tax specified for income tax and VAT, assessed penalties and surcharges, collected tax amount from assessments, collected penalties and surcharges from assessments, specified for temporary and full scope audits. - Benchmark on progress in public financial management, 2013: - Progress defined as reaching or exceeding the targets set in MEFP Table 2. - Definition for 2013 target reporting units: - Reporting institutional units include any unit under the general government as defined by ELSTAT as of end-September 2012 whose overall annual spending exceeded €1 million in 2011. - Entries under the e-portal include all fields with financial information as prescribed in the GAO circular of Dec 29, 2010 (protocol number 2/91118/0026); includes cumulative appropriations released, commitments made, sum of invoices received, and payments made. - e-portal and survey data publication: - Monthly summary information from the e-portal, surveys, and other sources on performance against the above indicators will be published by the General Accounting Office of the Ministry of Finance on their website no later than four weeks after the end of each month. - Data submission will include data back to end-2011. - Survey information will continue to be provided after December 2013 unless discrepancies between survey and e-portal data are fully eliminated. - An authoritative list of entities included under general government as defined by ELSTAT (including annual spending in 2011) will be made available by ELSTAT by August 30, 2013 and will be updated upon updating the ELSTAT register of general government entities. ### Regulated professions — selected actions, timing, and instruments - Chartered valuators: - Actions: Adopt secondary legislation to set up certification from the Ministry of Finance; Amend L4152/2013 to (i) allow the Ministry of Finance the option to provide certification exams itself; and (ii) to abolish requirement for applicants to provide academic qualifications on top of certification for registration. - Timing: July 19, 2013; September, 2013. - Instrument: 3 Ministerial decisions; Amend L4093 (subparagraph C2). - Actuaries: - Actions: Adopt secondary legislation to start examinations by October 2013. - Timing: July 15, 2013. - Instrument: Ministerial decision. - Electricians (41 professions): - Actions (secondary legislation): notification process of technical profession; fees paid for notification; syllabus and process for obtaining a license; defining fees paid for obtaining a license. - Timing: July 15, 2013; July 15, 2013; September 2013; October 2013. - Instrument: 4 Joint Ministerial decisions. - Technical professions (56 professions): - Actions: conditions of conducting exams by private entities; replacing professional experience by seminars organized by approved bodies; fees for the seminars replacing professional experience; syllabus and process for obtaining a license for cooling technicians; defining fees for cooling technicians; syllabus and process for obtaining a license for machine operators; defining fees for machine operators. - Timing: End-November 2013; End-March 2014; End-March 2014; End-June 2013; End-July 2013; End-August 2013; End-September 2013. - Instrument: Joint Ministerial Decision; 6 Presidential Decrees; Ministerial Decision; Joint Ministerial Decisions. - Slimming/dietary businesses: - Action: Issue circular to clarify that no restriction for co-establishment of medical or paramedical professions apply. - Timing: End-July, 2013. - Instrument: Circular. - Sales of fertilizers, propagation and plant-protecting material (10 professions): - Actions: Adopt implementing legislation to (i) abolish minimum space requirements and (ii) introduce a 3-month period for administration to issue license; Adopt legislation to (i) allow sales by individuals with adequate training without mandatory presence of scientists and (ii) define training standards. - Timing: End-July, 2013; End-July 2013. - Instrument: 2 Ministerial decisions; Presidential decree. - Geo-technicians (agronomists, foresters, geologists, ichthyologists): - Actions: Issue secondary legislation to abolish mandatory issuance of professional IDs (from the Geo-Technical Chamber); Issue implementing regulation to abolish mandatory presence of scientist for specific activities (e.g., sale of plant-protecting products). - Timing: End-August 2013; End-August 2013. - Instrument: Presidential decree; Circular. - Lawyers: - Actions: Adopt legislation to: (i) ease re-entry into the legal professions; (ii) repeal age limit to take the Bar examinations; (iii) abolish total bans on commercial communications; (iv) provide for licenses of unlimited duration; (v) remove reference to "exclusivity" for lawyers for research of books of mortgage and land registry; (vi) clarify that lawyers' fees are freely determined through a written agreement between lawyers and clients (if no written agreement for court appearances, reference fees still apply); (vii) eliminate any kind of minimum wages for salaried lawyers in the private sector; (viii) de-link contributions paid by lawyers from lawyer's reference amounts for contracts and eliminate those reference amounts; and (ix) set a system of prepaid fixed/contract sums for each procedural act or court appearance by a lawyer, not linked to a specific ‘reference amount’. - Timing: End-July, 2013. - Instrument: Code of lawyers and Presidential decree. - Engineers (including architects and land surveyors): - Actions: Present a proposal of which activities could be reserved (in exclusivity) to specific professions in consultation with the HCC; Amend unjustified or disproportionate requirements reserving certain activities to specific professions. - Timing: End-September 2013; End-December 2013. - Instrument: Proposal; Law and Presidential decree. - Firms trading Petroleum: - Wholesale actions: Adopt legislation to (i) abolish minimum capital requirement; (ii) mandate written contracts between fuel wholesalers and retailers; (iii) abolish mandatory storage of at least two categories of fuel products as a condition to wholesale licensing; (iv) remove restriction that a wholesaler’s storage facility needs to be accessible by sea, railway network, or through a refinery; (v) require installation of inflow-outflow systems throughout the refining and wholesale trading supply chain. - Retail actions: Adopt legislation to (i) mandate gasoline stations to state the price and quantity of liquid fuel on all receipts; (ii) complete installation of inflow-outflow systems in the retail market; (iii) repeal law provisions that provide the Ministry of Development with possibility to impose a minimum price on sale of fuels to consumers. - Issue secondary legislation to provide details on insurance scheme (as alternative to minimum capital requirement). - Timing: End-July 2013; End-July 2013; End-October 2013. - Instrument: Laws and 2 MDs; Market Policing Code and 1 MD; MD. - Mediators: - Action: Adopt legislation to allow mediation to be done by non-lawyers. - Timing: End-2013. - Instrument: Law. *Source: _cr13241 - 27. Supporting material. The Ministry of Administrative Reform and E-Governance (MAREG)* ### Appendix IV. Letter of Intent to the European Commission ### Appendix IV. Letter of Intent to the European Commission and the European Central Bank ### Context and overall assessment - Date and addressees: - Athens, 19 July 2013. - Addressed to: Mr. Jeroen Dijsselbloem (President, Eurogroup), Mr. Olli Rehn (Vice President for Economic and Monetary Affairs and the Euro, European Commission), and Mr. Mario Draghi (President, European Central Bank). - Purpose: - Attached update to the Memorandum of Understanding (Memorandum of Economic and Financial Policies and MoU on Specific Economic Policy Conditionality) describing progress and policy steps towards meeting the objectives of the Greek government’s economic adjustment programme. - Overall progress noted: - Incremental progress under the programme and early signs that the recession has bottomed out. - Significant improvement in confidence and liquidity since the 2012 peak: fiscal consolidation continues, bond yields have declined sharply, deposits have increased, economic sentiment is improving, several Greek companies have recently accessed markets. - External position has improved, supported by steady competitiveness gains. - Pace of job losses is slowing. - Optimistic that the economy will return to growth next year, while noting significant downside risks remain. ### Performance against targets and compliance - Data and targets: - End-June 2013 quantitative performance criteria data were not yet available at the time of the letter; the Government expects to have met all targets. - Missed targets: indicative targets on privatisation receipts, transfers to the mobility scheme, and domestic arrears (despite progress) were missed. - Some structural benchmarks relevant for the programme review were also missed. - Monitoring: - Implementation will be monitored through quantitative performance criteria and structural benchmarks as described in the attached programme documents. - Quarterly reviews will assess progress and reach understandings on any additional measures needed. ### Prior actions and fiscal policy commitments - Restoring fiscal sustainability (prior actions and commitments): - Taking policy steps to ensure that the fiscal targets for 2013–14 will be met. - Bring down the debt in the Renewable Energy Account. - Reform the income tax code and the tax procedure code to support the fiscal programme. - Bring public administration reforms back on track. - Advance the privatisation programme. - Strengthening fiscal institutions (prior actions and commitments): - Adopting legislation to allow transfer of functions and staff to the revenue administration to strengthen autonomy and improve operations. - Limiting the deferral of payments arising from audit assessments only through the basic and fresh start schemes to improve collection efficiency. - Implementing reforms to strengthen expenditure control to help prevent accumulation of new arrears. - Mitigating long delays in payment processes to speed up clearance of existing arrears. - Safeguards and fiscal governance measures referenced in the letter are reflected in the attached memoranda (Memorandum of Understanding on Specific Economic Policy Conditionality). ### Financial sector and stability measures - Banking sector strategy and prior actions: - Completing a comprehensive banking sector strategy centered around the core four pillar banks. - Completing the disposal of the two bridge banks under HFSF control consistent with the above strategy. - Recapitalisation and ownership: - Recapitalisation of core banks is now complete. - Three of the core banks attracted sufficient private capital to remain under private management control. - For the remaining core bank that was fully recapitalised by HFSF, commitment to place by March 2014 a substantial equity stake with a private strategic international investor. - HFSF and disposal actions: - Disposal of bridge banks under HFSF control to be completed in line with the banking strategy. ### Structural and growth-enhancing reforms - Priority areas: - Strengthening the investment climate and domestic competition. - Reducing administrative burdens. - Improving functioning of the labour market. - Specific actions under way: - Opening up restricted professions. - Removing excessive regulations in the labour market. - Streamlining export procedures. - Improving functioning of the judicial system. - Advancing the privatisation programme. ### Employment creation and social protection - Policies to facilitate employment and protect vulnerable groups: - Introducing employment programmes targeted at unemployed youths. - Strengthening social protection to cushion vulnerable groups from the crisis impact, including leveraging EU structural funds. ### Request for disbursement and coordination - Financing request: - On this basis, the Government requests the disbursement of the amount of EUR 3.0 billion stemming out of the financing arrangements by the EFSF supporting the Second Adjustment Programme for Greece. - Consultation commitment: - Government will consult with the European Commission, the IMF and the ECB before the adoption of any action that revises policies in the memoranda. - Letter copied to Ms Lagarde. ### Signatories - Antonis Samaras — Prime Minister (signed). - Yannis Stournaras — Minister of Finance (signed). - George Provopoulos — Governor of the Bank of Greece (signed). *Appendix IV. Letter of Intent to the European Commission and the European Central Bank, Athens, 19 July 2013.* ### 9.5 Provision of Data .................................................................................................. ### 9.5 Provision of Data ### Achieving sound public finances - 2012 primary balance according to the programme definition: -1.3% of GDP (target: -1.5% of GDP). - 2012 overall balance: 6.3% of GDP, a decline of 3.1 percentage points of GDP in 2012. - Underlying fiscal improvement was larger given the deep recession. - Identified shortfalls threatening fiscal targets for 2013-14: - Expenditure overruns in the main health care fund EOPYY in diagnostics and private clinics. - Delays in issuance of property tax bills expected to cause a 2013 revenue shortfall due to partial shift of tax collection beyond the 2013 accrual period (i.e., beyond end-March 2014). - Yield revisions downward for some measures, notably social security contribution measures. - Government decision to identify alternatives to previously agreed 2014 measures: special solidarity contribution for self-employed and application of the new wage grid for armed forces. - Corrective actions underway: - Monitoring tools detected EOPYY overruns early; corrective measures in H2 2013 expected to produce significant yields. - Structural measures to start in autumn aimed at rationing healthcare provision and preventing misuse of publicly funded services. - Claw-back mechanism for diagnostics and private health care clinics to ensure expenditures aligned with the budget by end-2013: invoices in excess of annual targets will effectively not be reimbursed. - Income tax reform-related fiscal measures (special solidarity surcharge on income from interests and dividends; lower tax deduction allowance for medical expenses) to generate additional moderate revenue. - Some 2014 measures to be frontloaded (luxury tax; increase in fees for lawsuits). - Authorities to produce in autumn a plan for phased reduction in social security contribution rates over coming years. - Authorities committed to measures to achieve primary programme targets for 2015-16. ### Fiscal consolidation: targets and accounting rules - General Government primary surplus targets (programme terms): - 2013: EUR 0 million (0.0% of GDP). - 2014: EUR 2,750 million (1.5% of GDP). - 2015: EUR 5,700 million (3.0% of GDP). - 2016: EUR 8,975 million (4.5% of GDP). - These primary surplus targets imply overall Government deficit: - 2013: 4.1% of GDP. - 2014: 3.3% of GDP. - 2015: 2.1% of GDP. - 2016: 0.8% of GDP. - Cyclically-adjusted ratios (estimates): - Cyclically-adjusted primary balance to GDP ratio: 4.5% in 2012; 6.2% in 2013; average of about 5½% of GDP in 2014-16. - Cyclically-adjusted Government deficit to GDP ratio: -½% in 2012; 2.1% in 2013; 1.5% in 2014; 0.5% in 2015; -0.4% in 2016. - Accounting exclusions: - Proceeds from privatisation of financial and non-financial assets, bank recapitalisation transactions and other bank support measures, and all transfers related to the Eurogroup decision of 21 February 2012 regarding income of euro zone national central banks (including the Bank of Greece) stemming from their investment portfolio holdings of Greek Government bonds shall not reduce required fiscal consolidation effort and shall not be counted in assessment of these targets. - Debt projection: - Adjustment path, taking into account debt-reducing measures to be implemented in December 2012, consistent with general Government consolidated debt ratio to GDP of around 160% in 2016. - Government commitments: - Confirmed commitment to implement the solidarity contribution for the self-employed in 2014. - Pre-disbursement actions (selected): - Bring forward into 2013 some property tax collected via PPC by shortening pay period for PPC final instalment to March 2014. - Complete signatures on Memorandum of Understanding with Greek merchant fleet to ensure €140 million accrued annual revenue in 2013-15 from tonnage tax. - Bring forward to August 1, 2013 through legislation the luxury tax on cars, swimming pools, and airplanes. - Pass legislation to limit use of untaxed reserve accounts for capital gains by 2015 to raise at least €50 million in 2014. - Additional Measures (selected, with timing as given): - Introduce a docking fee on leisure boats effective October 1, 2013 (August 2013). - Comprehensive review of social security contribution of OAEE to identify exemptions and enhance collection rates (September 2013). ### Structural reforms with budgetary relevance — Privatisation - Objectives: reduce public debt, reduce subsidies/transfers/state guarantees to SOEs, increase efficiency and competitiveness, attract FDI. - Authorities committed to proceed swiftly with Privatisation Plan and insulate process from political pressures. - Regulatory framework required for airports, ports, water, horse betting consistent with EU legislation and international best practices. - Privatisation of real estate assets emphasized as of utmost importance. - Pre-disbursement requirements (selected): - Adopt legislative acts permitting payment of arrears owed to EYDAP and EYATH directly from the arrears clearance program. - General Government entities validate outstanding water and drainage bills to EYDAP and EYATH and send GAO official documentation confirming outstanding debt. - Adopt in parliament law clarifying responsibilities between Jockey Club and New Concessionaire to facilitate privatisation of ODIE. - Actions to be taken by Government (selected and with deadlines where provided): 1. Rapid adoption of necessary primary and secondary legislation and implementation decisions for Privatisation Plan (all Government actions pending listed in Annex 9.1). 2. General Government entities related to public investment projects validate outstanding debt to EYDAP and EYATH and submit agreed claim to GAO (August 2013). 3. Pay outstanding water, drainage debts to EYDAP and EYATH (August 2013). 4. Pay all outstanding other debts to EYDAP and EYATH (September 2013). 5. Adopt irreversible decisions by August 2013 on restructuring or resolution of ELVO, HDS, and LARCO, with implementation by December-2013, in compliance with State aid rules. 6. Transfer full and direct ownership of 1000 commercially viable real estate assets to HRADF by end-2013, at a rate of 250 assets transferred per quarter in 2013. 7. Asset management capacity enhancements: - i. Propose a plan by November 2013 to prepare remaining real estate assets managed by ETAD for securitisation or direct privatisation; note currently some 80,000 public properties are under ETAD management. - ii. ETAD to present proposals by November 2013 to improve governance, effectiveness, and capacity. - iii. Bring all remaining non-operational properties under ETAD management by December 2013. - iv. Prepare a first progress report by June 2013 on property numbers by Ministry/Public Entity; second and third progress reports by August 2013 and October 2013; final report by January 2014. 8. Ensure no transfer or withholding of any real estate assets to entities other than HRADF without prior consultation and agreement with HRADF and EC/IMF/ECB (Continuous). 9. HRADF to assess raising additional revenues or bringing forward future receipts via securitisation and exploitation of assets not yet in privatisation plan (Continuous). 10. HRADF to be tasked with selling assets quickly and effectively; no further political review after asset transfer to HRADF (Continuous). 11. HRADF to publish quarterly reports on privatisation steps and financial accounts no later than 60 days after the end of each calendar quarter (Quarterly). 12. Privatisation receipts cumulative targets since January 2011: - At least EUR 1.6 billion by end-2012. - EUR 3.1 billion by end-2013. - EUR 6.5 billion by end-2014. - EUR 7.7 billion by end-2015. - EUR 11.1 billion by end-2016. ### Structural reforms with budgetary relevance — Tax policy reform - Prior to disbursement the Government will: a. Adopt legislation to introduce a new Income Tax Code to simplify law, increase transparency, remove ambiguities, reduce filing requirements for PAYE taxpayers and those who receive investment income, consolidate cross-border merger/reorganization provisions, and introduce anti-avoidance provisions. b. Introduce legislation for a new Tax Procedures Code (TPC) to enter into force by January 1st 2014, consolidating and streamlining existing provisions and filling legislative gaps in enforced collection methods, mandatory data provision to tax authorities, interest and penalties, and internal review procedures. c. Open the E9 filing period for submitting updated information on land and real estate assets. - Other actions (selected with timing): 1. Submit proposals for simplification and improvement of the Code of Tax Recording of Transactions to come into effect by 1/1/2014 (October 2013). 2. Complete amendments to the ITC covering investment tax incentives (September 2013). 3. Adopt all secondary legislation necessary to ensure TPC fully implemented by January 2014; legislate necessary changes to modernize the Code of Public Revenue Collection for TPC compatibility (October 2013). 4. Pass legislation on the property tax regime to take effect in 2014. 5. Work on standard procedure for revision of legal values of real estate for capital taxation purposes for fiscal year 2016; issue status report and timetable (September 2013). 6. Develop tax policy capacity in the policy unit of the Ministry of Finance with appropriate legal and economic expertise for revenue assessment of new tax initiatives (September 2013). 7. Publish every December the schedule for the following year for filing and payment of all taxes and levies for the state Government and social budgets (December 2013). 8. Abstain from extending deadlines for filing and payment of all taxes and levies for the state Government and social budgets (continuous). 9. Extend through 2016 (tax reporting for 2017) the special solidarity surcharge with 1-4 percent rate (November 2013). ### Structural reforms with budgetary relevance — Revenue administration reforms - Reform objectives: - Address weaknesses, fight tax evasion and corruption, increase autonomy for tax administration for day-to-day operations while leaving policy to Government. - Implement reforms gradually with technical assistance and careful impact assessment. - Reform elements: - Continue re-organisation of tax offices to increase audit and collection efficiency. - Improve methods using risk assessment techniques to focus audits on high-yield targets; requires new single tax procedure code. - Reinforce tax collection by consolidating debt collection into a small number of offices staffed by specialized full-time collection personnel; where possible integrate with social security and local government debt collection. - Strengthen management under a Secretary General for Public Revenue (SGPR) with increased powers; managers and auditors subject to performance targets and regular assessment; SGPR must be able to replace non-performing managers; managers must rotate regularly. - Reorganize Secretariat General for Public Revenue to include functions related to implementation of tax and customs legislation currently not integrated (audit, controls, information systems, internal audits). - Headquarters to include units for budgetary preparation and follow-up, strategic planning and project management. - Replace current administrative review process with a cost-effective compulsory pre-settlement administrative procedure to reduce tax litigation and lighten courts. - Make full use of technical assistance in a structured, on-going process involving legislation and implementing decisions with proper consultation. - Pre-disbursement transfers to strengthen Revenue Administration: a. Issue ministerial decision for transfer to revenue administration of Ministry of Finance internal affairs department. b. Issue ministerial decision for transfer to revenue administration of all functions, staff, and budget allocations of Directorates for Computer Applications (excluding sections for Budget and Public Expenditure, Payroll, and Pensions) and for Computer Data Entry and Control of GSIS. *Source: _cr13241 - 9.5 Provision of Data* ### 1. To increase the autonomy of the revenue administration, the Authorities: ### 1. To increase the autonomy of the revenue administration, the Authorities: ### Revenue administration autonomy and institutional reforms - Identify the functions and staff of the Corp for the Prosecution of Economic Crimes (SDOE) that will be transferred to the revenue administration (July 2013). - Transfer the revenue-related functions, personnel, and budget allocation of the Corp for the Prosecution of Economic Crimes (SDOE) under the revenue administration is completed (October 2013). - Establish a new Strategic Planning and Financial Control Directorate to: - manage the budget of the revenue administration starting with the preparation of the revenue administration’s 2014 budget, - support the Secretary General of the Revenue administration (SGPR) in project management, - monitor progress with reform and KPI implementation (July 2013). - Staff the Strategic Planning and Financial Control Directorate to make it fully functional (September 2013). - Issue a report proposing solutions to lift the remaining constraints to the delegation of powers to the SGPR (August 2013). - Adopt amending legislation to lift the remaining constraints to the delegation of powers to the SGPR (September 2013). - Select a 5-member Advisory Council to the SGPR, comprising 3 domestic experts and 2 high-level external experts with significant international experience in carrying out revenue administration reforms and establishes a regular at least bi-monthly schedule of meetings for the first year (July 2013). - Prepare a 2014-15 business plan for the revenue administration (October 2013). ### Centralisation of local tax offices - Continue to centralise and merge local tax offices leaving 120 open at the time when payment through banks will operational all over the territory (September 2013). ### Internal Review Unit - Appoint a project manager and provide initial staffing of a new Internal Review Unit (July 2013). - Make the Internal Review Unit operational (August 2013). ### Fight against tax evasion, money laundering and corruption - Strengthen audit capacity: - Complete the certification of 2000 tax auditors (July 2013). - Complete the external hiring of the additional 186 auditors (July 2013). - Ensure basic audit training of the of 2000 newly certified tax auditors and of the all the 200 new external hires is completed (June 2014). - Provide a plan, including training, for the integration of new staff in the revenue administration (July 2013). - Appoint a team of full-time trainers (September 2013). - Ensure an adequate number of supervisors in the High Wealth Individual (HWI) and Large Tax Payers Unit (LTU) (Continuous). - Ensure that all staff are assessed for their performance on a bi-annual basis under the new assessment system (Continuous). - Secure effective audits: - Issue audit reports on more than 15 cases based on indirect audit methods in the high-wealth individuals (HWI) unit (September 2013). - Issue orders for more than 250 capital remittance cases in the high-wealth individuals (HWI) unit (July 2013). - Adopt a decision to enhance targeted auditing based on risk assessment techniques (July 2013). - Reinforce whistle-blower protection by including provisions in the modern code of conduct concerning conflicts of interests and declaration of interests and a system for protecting whistle-blowers who report corruption (September 2013). - Legislative changes: - Revise legislation to enable prosecution for major tax evasion regardless of the tax payer paying the tax assessment in cases of settlement (September 2013). - Amend the legislation to close effective August 1, 2013 for new entrants any instalment or deferred arrangements for payment liabilities arising from audit assessments other than entry into the fresh start and basic instalment schemes (July 2013). ### Indirect bank account register and taxpayer identification - Adopt legislation for the creation of an indirect bank account register that will provide authorized revenue administration personnel access to information about existence of bank accounts held by taxpayers, and about the current balance on the account (July 2013). - Complete the development of the IT system necessary for the indirect bank account register, which will be implemented on a pilot basis (August 2013). - Complete a full implementation of the indirect bank account register (September 2013). - Ensure that Ministries and State Owned Enterprises (SOEs) which have a fiscal relationship with taxpayers and beneficiaries utilize their tax identification number for financial transactions with them (July 2013). - Make compulsory the use of tax identification numbers for all official transaction with the whole public administration (December 2013). - Introduce a system to consolidate and link all of the different identification numbers now used across various Government agencies (June 2014). ### Revenue and debt collection capacity - SGPR actions to reinforce tax and related debt collection capacity: - Present a plan for providing a compulsory professional training programme for debt management staff (July 2013). - Issue a circular specifying the criteria to determine fresh debt (July 2013). - Assign 30 staff of the Large Debtor Unit to the collection of fresh debt (July 2013). - Complete the consolidation of debt collection in the largest tax offices (DOYs) by (September 2013). - To secure a swift tax collection: - Introduce the possibility of direct debiting of bank accounts for taxpayers in arrears (September 2013). - Present a plan to replace payments in cash and cheque in tax offices with bank transfers (July 2013). - Amend the legislation (Law 2648/1998) to close for new entrants any instalment or deferred payment arrangements for payment liabilities arising from audit assessments other than entry into the fresh start and basic instalment schemes (July 2013). - Payment culture safeguards: - Commit not to adopt new tax amnesties, or extend existing amnesties for the collection of taxes and social contributions during the years covered by the economic adjustment programme (Continuous). - Abstain from extending the deadlines for the filing and payment of taxes (Continuous). - Publish every December the schedule for the following year for filing and payment of all taxes and levies for the state government and social budgets (December 2013 and Continuous). - Legal and reporting actions: - Repeal the application of the Code for Collection of Public Revenue for collection of social security contributions, and enact a new legal framework for public revenue collections in line with international best practice (February 2014). - To ensure full application of Law 4051/2012, issue the joint Ministry of finance-Ministry of Justice decision required according to Article 203 of the Administrative Procedures Code, amended by Law 4051/2012 (July 2013). - Publish monthly indicators to monitor performance of the fresh start and basic instalment schemes (continuous, starting July 2013). ### Social Security Contribution collection reforms - Special working group: - Develop a framework for coordination and integration of tax and social security contributions (SSC) arrears collection (December 2013). - Establish a new joint collection centre for social security contributions debt (KEAO): - Adopt legislation to establish the organization of KEAO (July 2013). - Assign and recruit 600 staff for the single collection centre: - 200 by August 2013; - 400 additional by December 2013. - Create a single social security contributions debt database (August 2013). - Transfer 4.2 billion of social security contributions collectable debt to the single collection centre (August 2013). - Establish a procedure to quarantine uncollectable debt (August 2013). - Develop an electronic application system for social security contributions instalment schemes: - To be introduced for IKA and OAEE by (July 2013). - And in other funds by (December 2013). ### Management of the State Revenue Service - SGPR replaces managers who do not meet performance targets (Continuous). - Update at least monthly the website used for publication of summary statistics on key performance indicators, the number of tax evasion cases sent to the FIU and to prosecution by the tax administration (Continuous). - Make full application of paragraph 21 of 55 of l. 4002/2011 to rotate the managers mentioned in the law: - For those managers in place for more than three years: in (September 2013); - Continuously after September 2013. ### IT and systems tools - The new ELENXIS system will be operational in major tax offices and audit centres by (December 2013). The National Centre for Public Administration and Local Government (EKDAA) will provide the necessary support. - The new TAXIS system is operational in all tax offices (October 2013). --- ### Public Financial Management Reforms — Monitoring and reporting - Identify other areas of operational expenditure where real time monitoring mechanisms could be introduced or strengthened (Continuous). - Enhance the monitoring system for the budget execution of Extra Budgetary Funds with expenditure below 20 million, to be effective from 1st January 2014 (December 2013). - Ensure consistent monitoring of targets in the SSFs sector requiring pension and employment funds, EOPYY, and hospitals monthly reports according to templates agreed with GAO. The provision of data to GAO will take place within three weeks of the completion of the month, and it will start by October 2013. ### Public Financial Management Reforms — Payment flows and clearance of arrears - Submit to the Council of State a Presidential Decree outlining the new administrative processes needed for fiscal audit offices to execute payments (September 2013). - Implement necessary changes to its IT and administrative processes to permit payment orders and accompanying documentation from fiscal audit offices to be authorized and accepted electronically (October 2013). - Put in place statistical reports to enable follow-up on progress (October 2013). - Prepare a medium-term action plan for meeting the requirement of the Late Payment Directive (October 2013) that will include: - an analysis of the IT systems to ensure that such a move is feasible by the January 2014 deadline; - a review the legal framework on payment processes with a view to simplify it considerably; - standardized thresholds above which different levels of approval are required across all line ministries. - Produce a joint note by the Hellenic Court of Auditors (HCA) and GAO on the role and scope for streamlining of the HCA’s ex ante audits in financial control following the review of the effectiveness of the HCA’s ex-post audit pilot scheme expected to be completed in November with the assistance of the Dutch Court of Audit (December 2013). - Commitment registers and inspections: - Ensure that commitment registers are in operation in 94% per cent of general government entities based on 2013 entity coverage (September 2013). - Monitor the effectiveness of the commitment registers by conducting regular targeted inspections in the public entities covered by the system (Continuous). - Enforce the obligation of accounting officers to report commitments by enacting sanctions to entities not submitting needed data, though disciplinary action for accounting officers, and by strengthening the role of GAO in providing support and guidance to Accounting Officers (Continuous). - Take actions as soon as significant deviations from yearly targets of EOPYY become evident (Continuous). - Strengthening central government financial management: - Complete procedures for identifying fully qualified senior financial managers for the Accounting Office positions in all line ministries (September2013). - Appoint the Accounting Officers based on these new procedures (September 2013). - MoF/GAO and MAREG, in consultation with the Accounting Officers of the Ministries, ensure adequate staffing for the financial functions in line ministries and develop training material and a training scheme for GDFS staff (continuous). - Conditions for accessing funds to clear arrears: - For expenditure arrears: establishment by the unit of a fully functioning commitment register and reporting of at least three months of consistent data on commitments, payments, and arrears (2 months for EOPYY); - For both expenditure arrears and tax refunds: verification of claims. - Entities which meet these conditions can clear their arrears even if their parent agency does not meet the conditions. - Ensure the administrative capacity to make the clearance of arrears effective by staffing the necessary units (September 2013). - Prioritize repayments by Local Governments and their legal entities to public companies for provisions of public services (namely water supplies) also through direct transfers from the special budget allocation for clearance of arrears recorded in the State budget (September 2013). - Identify and implement actions by September 2013 to ensure clearance of all outstanding lump-sum pensions (accounted for as arrears until Dec-2011) by December 2013. - Once the clearance of all verified arrears is achieved, ensure that no new arrears are accumulated (Continuous). ### Safeguards for the delivery of fiscal commitments - Adopt the necessary legislation to transpose the Fiscal Compact provisions with a view to introducing a structural budget balance rule with an automatic correction mechanism (October 2013). ### Budget preparation and implementation - Submit to the Parliament the 2014 medium-term fiscal strategy (MTFS) (September 2013). - Adopt the organic budget law by October 2013 to introduce: - MTFS will set fixed expenditure ceilings for line ministries and the health care sector and every year a ceiling for an additional year will be added while the already set ceilings (i.e. for the first two years of the rolling three-year period covered by the ceilings) would remain as previously fixed; - Establish binding annual budget balance targets for local governments; - Identify performance targets for SOEs; - Provisions to freeze ex-ante 10% of discretionary appropriations per budget line as part of the MTFS. The frozen appropriations would be released in the second half of the year conditional upon meeting the fiscal targets. The first application should concern the 2014 budget. - A revenue rule for the general government, according to which at least 30% of windfall revenues in excess of the target will be devoted to debt repayment while up to 70% could be used the following year by the Government to support temporary policies aiming to boost growth and social cohesion automatically, conditional to the achievement of the fiscal targets. *International Monetary Fund — Extracted content from the provided chapter/section.* ### 1. Ensure a continuous balance between pension contributions and benefits, by bringing forward ### _cr13241 - 1. Ensure a continuous balance between pension contributions and benefits, by bringing forward ### Pensions: binding mechanism - Bring forward to June 2014 the entry in force of the binding mechanism (for auxiliary pensions) already legislated to enter in force as of 2015. (September 2013) ### Strengthening HRADF governance and automatic correction mechanism (quarterly) - Review the functioning of the privatisation framework law, through specific QPCs to be enforced the moment the privatisation plan derails. - Take, in cooperation with EC/ECB/IMF, appropriate steps, including changes in existing legislation and/or in the composition of the Board, to safeguard and strengthen the independence and the functioning of the HRADF, if targets for the sale of assets to be privatised were missed substantially for two consecutive quarters. In all circumstances, the HRADF remains fully accountable to parliament on an ex-post basis for the integrity of every privatisation sale. - Increase automatically the primary surplus target, should there be a shortfall of privatisation proceeds due to the delay in sales of specific assets compared to programme targets for two consecutive quarters: - Unless other adjustments are agreed with the EC/ECB/IMF, the primary surplus target would be raised with immediate effect by 50 percent of the shortfall in proceeds, and should be achieved by means of current expenditure cuts in the general government. - The adjustment within any year would be capped at €1 billion. ### Local governments (LGs): top-down budget preparation and corrective mechanism - Agreement between Ministry of Interior and GAO on the total grants from the State to the LGs consistent with the updated macro-economic projections and with the binding ceilings for 2014-15 within the preparation of the MTFS. (July 2013) - Issuance of a Joint Ministerial Decision for the preparation of 2014 LGs' budgets consistent with the level of grants from the State, their own resources and with the guidelines for the assessment of the local government's budgets. (July 2013) - Municipalities prepare budgets for 2014 consistent with the balance budget rule. (September 2013) - Review process of LG’s budgets by the Observatory of local authorities to ensure consistency with the overall MTFS targets for LGS to be completed before the adoption of the MTFS. (November 2013) - Submission and approval of the LGs' budgets by the decentralized administration. (December 2013) ### Transparency, accountability and oversight - Increase transparency and accountability to the public/parliament by releasing status reports on the implementation of the legislated fiscal measures, publication of hiring numbers, proper fiscal impact assessment of legislation, statement of the main sources of fiscal risks related to changes in key economic assumptions in the forecast, and an assessment of the fiscal impact of the main sources of fiscal risk including government guarantees and other contingent liabilities. (December 2013) - Strengthen the reputation, independence and technical competence of the existing Parliamentary Budget Office towards a fully-fledged fiscal council (e.g. provision/endorsement of forecasts for the budget preparation, monitoring of compliance with budgetary targets and fiscal rules, provision of independent assessments of fiscal developments and challenges). (December 2013) ### Debt servicing account - Ensure effective implementation of the debt servicing account to monitor cash flows, avoid diversion of official financing and secure timely debt servicing. Law 4063/2012 established a segregated account in the Bank of Greece; disbursements to this account cannot be used for any other purposes than debt servicing. - Via this account the amortization and interest payment costs of all HR’s loans, debt management transactions and derivatives, as well as any parallel cost (fees and other expenses) related to debt servicing and in general to Public Debt Management are paid. The proceeds of this account are: - the disbursement of EFSF’s loans, subject to an EFSF acceptance notice; - the Hellenic Republic’s contributions to debt servicing, including all revenues from the privatisation of State assets and at least 30% of windfall revenues. - All payments from this account will be subject to prior detailed reporting to the EFSF/ESM and ex-post confirmation by the account holder. (Continuous) ### Other institutional requirements (prior to disbursement) - Adopt final amendments to the law creating a Central State Aid Unit (CSAU). The CSAU screens all measures across the Government for compliance with State aid rules before implementation and is the sole contact point for the Commission on State aid matters. - Launch the call for interest to appoint the Director and relevant officials of the CSAU, and launch procedures for staffing the CSAU. - Amend the law concerning recovery of illegal State aid to clearly exclude any possibility of recovery in instalments; the updated law should exclude the possibility of recovery in instalments while possibly maintaining reference to the Code of Collection of Public Revenues for other procedural aspects. - Complete the staffing of the CSAU so that it is fully operational within its new framework. (August 2013) - Ensure all actions attributable to public Authorities comply with the rules on free movement of capital (TFEU, Article 63). (Continuous) ### Making the public administration more efficient and effective — reform overview - Implement rigorous evaluation of administrative structures and personnel to maintain the right skill mix; reorganisations including closures; employees transferred to the mobility scheme for internal reallocation or restructuration purposes, or dismissed. Reform covers all extra budgetary funds and regional and local administrations before end-2013. - Use exits to hire new, highly qualified employees through fair, objective and transparent procedures managed by ASEP. #### Mobility scheme, staffing and exits (prior to disbursement and ongoing actions) - Issue all necessary legal acts to place 4,200 employees in the labour mobility scheme with a view to these employees being effectively placed in the labour mobility scheme before the end of July 2013. - Through the Governmental Council of Reform, adopt staffing plans for 360,000 employees. - Revise legislation on the mobility scheme to reduce the time spent in the scheme from 12 months to 8 months. - Other actions and targets: - Complete shifting at least 12,500 ordinary employees to the scheme by September 2013 and at least another 12,500 ordinary employees to the mobility scheme by (December 2013). Employees placed in the mobility scheme will have their wages cut to 75 percent. - Assess employees placed in the mobility scheme within a centrally-defined evaluation framework to be established by September 2013. - Agree minimum monthly targets on the number of people continuously in the mobility scheme until they exit from the public sector. (July 2013) - Establish quarterly minimum targets for the mobility scheme for 2014. (September 2013) - Front load the exit targets for the second half of 2014 and maintain the programmed definition for exits; support the end-2013 cumulative exit target of 4000. - Complete assessments of 400,000 positions by end-September, and accelerate completion to maintain the year-end deadline for general government. - Adopt a two-year strategy and action plan for administrative reform presenting vision, objectives, responsibilities and necessary steps. (September 2013) - Prepare a communication plan for this reform strategy addressed to the administration, main stakeholders and to citizens. (September 2013) #### Implementation details for mobility and staffing plans - Prepare a detailed action plan to be adopted by the Governmental Council of Reform (GCR) in July 2013, including a precise and realistic timetable for structural evaluations and staffing plans for all public entities. - Complete staffing plans for all general Government entities, to be adopted by the GCR progressively and at the latest by December 2013; implement with respective legal acts within three months after adoption. - Involve Commission services with respect to assessment of structures and staffing linked with Cohesion Policy (NSRF Operation Programmes) and seek its agreement when taking related decisions. (continuous) - Adopt by the GCR common guidelines by August 2013 to ensure consistent and effective functioning of the mobility scheme across the administration. - Develop necessary tools for the functioning of the mobility scheme (September 2013) including: - database for the management of personnel; - committees for selection of personnel; - a database for the management of open positions within the administration; - detailed procedure and departure package. - Complete the assessment of individual employees for the purpose of the mobility scheme. (December 2013) - Introduce a permanent, continuous, system of individual evaluations. The first round to be completed by December 2014. #### Public employment transparency and hiring rules - Publish on a monthly basis data on full time public sector employment and contractual positions, the number of employees in the mobility scheme, the number of exits and the number of pending disciplinary cases in the various stages. (monthly) - Record all employees into the census database by September 2013. - Hiring rules and ratios: - The Government will hire one new employee for each exit as a result of: (i) disciplinary cases; (ii) due diligence evaluation of legal entities of public and private law leading to mergers and abolishment; (iii) evaluation of the personnel using the mobility scheme, including before any reallocation to a new position; (iv) voluntary exits from the mobility scheme (excluding personnel within 3 years of retirement); and (v) the elapse of an 8-month period in the mobility scheme. (continuous) - If monthly assessment provided to EC/IMF/ECB shows employment developments and plans are no longer on track to achieve aggregate targets, the Authorities commit to reduce the 1:1 hiring ratio for exits mentioned above. (continuous, monthly) - For all other exits than those mentioned under (i.), the hiring ratio will remain 1:5, as envisaged in the program. (continuous) - By July 2013, define detailed hiring plans for 2013, in consultation with the EC/ECB/IMF. - By September 2013, the Cabinet of Ministers will adopt detailed hiring plans for 2014, in consultation with the EC/ECB/IMF. - Provide the hiring plans to ASEP with at least a six-month notice and ensure a sufficient budget so modern, competency-based selection methods are used by ASEP. (continuous) #### Human resources strategy - Define by July 2013 a human resources strategy to: - identify and address weaknesses of public service management of human resources; - identify and implement the best possible way to manage the career of civil servants (including recruitment procedures, appointments, trainings, evaluation as well as mobility, etc.); - assess and clarify the mandate, roles and responsibilities of all senior managers, including politically appointed and senior public service management, leading to a reduction of the number of advisors, who should be provided with a specific job description. - Reflect this strategy in legislation. (September 2013) The legal act will aim at ensuring institutional continuity and higher levels of efficiency and provide a basis for evaluating and developing competences of senior management and staff at large. - Define full set of instructions to organise HR services under regular, common and transversal standards and put them in place to develop a coordinated HR network across Ministries. (October 2013) ### Fighting corruption - By July 2013: - Present draft legislation to bring the anti-corruption legal framework in line with relevant international standards, including the UN anti-corruption convention, and the OECD and Council of Europe anti-corruption conventions and recommendations. - Initiate the implementation of all the outstanding actions in the action plan, initially scheduled for the period March-July 2013. - Ensure the National coordinator for anti-corruption is fully operational including premises, infrastructure, governance structure and development of internal and external coordination mechanisms. (September 2013) ### Coordination of Government Policies and E-Government - Consolidate preparatory work into a comprehensive and endorsed national e-Government strategy with vision, objectives, priorities, monitoring and coordination mechanisms and an implementation plan. Strategy to be adopted by the GCR. (October 2013) - Complete staffing (priority for heads of clusters) of the Secretariat General for Coordination (SGC) and set up training of its staff and coordination correspondents in the Ministries. (October 2013) - Finalise design of procedures regarding planning, coordination, control and monitoring and preparation of arbitrages for the SGC, and commence operations on priorities. Complete implementation of these procedures by December 2013. (October–December 2013) ### Avoiding waste and increasing quality through sound public procurement - Reform objectives: - Make the Single Public Procurement Authority (SPPA) fully operational as the procurement watchdog. - Establish an e-procurement platform and mandate its gradual use by the public administration. - Increase the share of supplies and services tendered through Central Purchasing Bodies, including use of framework contracts. - Codify and simplify all public procurement legislation. *International Monetary Fund — Greece program conditionality excerpt* ### 1. The SPPA ensures coordination and coherence of the functioning of the Central Purchasing ### 1. The SPPA ensures coordination and coherence of the functioning of the Central Purchasing ### Coordination and overarching objectives - The SPPA ensures coordination and coherence of the functioning of the Central Purchasing Bodies, of the reform of the Greek public procurement regulations and of the e-procurement framework with the overall public procurement system and strategy. (Continuous) ### Increasing efficiency of procurement processes - Government moves towards more centralised procurement, especially in the field of health procurement, services and supplies (including civil supplies and services for defence not falling under the scope of Directive 2009/81 on procurement in the fields of defence and security). - Government starts building a system of statistics in the field of procurement, uses framework contracts and reviews the public procurement legislation including works, supplies and services. - Reforms and actions are coordinated under the SPPA. ### Agora portal (contract transparency) - Following adoption of the JMD on the Agora Portal for contract transparency, the Government: - Facilitates compliance by reviewing standard documents and providing support to contracting Authorities and eliminating overlap with other reporting obligations. (Continuous) - Publishes a set of standard forms for contract notices based on those used to publish notices on EU Tenders Electronic Daily. (October 2013) - Starting from October 2013, publishes all contract award notices and contracts. - Publishes consolidated data on the number of contract notices on supplies, services and works and on the number of contracting authorities uploading information on the portal (for contracts with value above 30'000€). (Continuous) - Publishes the findings of an independent evaluation of the functioning of the portal, including a review of functionality and results (e.g. numbers of contract notices/contract award notices published, numbers and type of contracting authority, estimated values of contracts). (October 2013) ### Central Purchasing Bodies (CPB) — establishment and mandates - Adopts decisions leading to the creation of a Central Purchasing Body at the General Directorate for the procurement of goods and services. Government and, once operational, the CPB will: - Based on the list of categories defined in June 2013, establish and publish a detailed list of supplies and services where the requirements of multiple contracting Authorities will be standardised into a limited number of alternatives. (September 2013) - Confirm at least 3 promising categories for procurement via framework contracts, finalise design of the call for tender and prepare tender specifications. (October 2013) - Publish contract notices for at least 3 framework contracts used in frequently purchased supplies or services at central government level through the CPB. (December 2013) and award contracts by mid-2014. - Mandate the relevant administrations to source via the framework contracts submitted to the Commission services. (October 2013) - Draw framework contracts for the procurement of the abovementioned standardised supplies and services through the CPB. (Continuous) - Issue legislation mandating the purchase of the identified standard supplies and services through the CPB for all central Government authorities, with no monetary thresholds and with transitory periods agreed with the Commission services. Military purchases of standardised civil supplies and services (not falling under the scope of Directive 2009/81 on procurement in the fields of defence and security), and fuel, are also carried out through the CPB with a view of commencing on January 2014. (July 2013) - Tender at least three framework contracts used in frequently purchased supplies or services at central Government level through the CPB. (December 2013) ### Reform of public procurement legislation - Undertakes to adopt by December 2013 a reform of the public procurement system including works, supplies and services under the coordination of the SPPA with a view to: - simplifying, streamlining and consolidating the body of public procurement legislation; - rationalising the administrative structures and processes in public procurement to desired procurement results in terms of efficiency and efficacy; - improving national review procedures, including the reduction of delays triggered by the redress system and assessing the role to confer to the SPPA in the area of redress (remedies and judicial protection). - Proceeds with the reform of the public procurement legislation, in accordance with the action plan submitted to the Commission services in February 2013. Drafts of all legislative and organisational measures implementing the Action Plan are presented to the European Commission by September 2013. ### E-procurement — implementation and targets - Following transmission of the e-procurement plan to the Commission, the Government adopts all necessary measures for implementation according to the deadlines, including: - operation of supplies, services and public works procurement contracts through the e-procurement platform; - availability of functionalities such as e-notification and e-tendering; - mandatory use of the platform by the central Government, regional Government and other public sector entities; - communication and training programmes for users of the platform; - periodic monitoring mechanisms for take-up of the e-procurement platform by its users and specification of target usage levels; - interaction of the platform with the planned simplification of procurement legislation; - means to facilitate access and use to the platform by users, including easy to use e-signature and e-ID solutions. - Execution and respect of deadlines will be closely monitored in cooperation with the Commission, starting from September 2013. - In development of the e-procurement platform, Government commits to: - run supplies and services contracts for the Central Government through the e-procurement platform starting from July 1st 2013. - present the results of the pilot testing of the system software/architecture; the "fitness for purpose" of the system will be subject to an independent assessment. (September 2013) - Ensures platform use as follows: - Central Purchasing Bodies ("General Directorate for public procurement for supplies and services of the GSC and EPY") manage the e-procurement platform for all their tendering procedures. (June 2014) - The whole public sector in Greece uses the e-procurement platform for commonly bought supplies and services by December 2015. - Submits to the Commission services the data of the monitoring activities covering year 2013 against the target user levels. (1st half of January 2014). Additional reported data include: - the number of calls for tender published electronically (in absolute terms and as a percentage of total number of published calls for tender); - the number of tenders with specifications published online; - the number of contracts carried out electronically relative to the total number of contracts; - the types of purchases carried out with the e-procurement platform; - the number of contracting Authorities using e-procurement. ### Pension reform completion (ETEA / individual accounts) - Ensures that all social security contributions to ETEA will be recorded electronically. (December 2013) - Ensures that the new single fund ETEA sets up, in a cost effective way, a computerised system of individual pension accounts to be finalised by December 2013. - Produces a regular quarterly report of the activities of the Health Committee, aimed at monitoring and revising the disability status and ensure that disability pensions correspond to not more than 10 percent of the overall number of pensions. (Continuous, next report, September 2013) ### Modernising the health care system — objectives and fiscal targets - Objective: stabilise public health expenditure at, or below, 6 percent of GDP, while maintaining universal access and improving quality of care delivery. - Programme measures aim at achieving savings in the purchasing (accrual basis) of pharmaceuticals to reach: - spending on outpatient pharmaceuticals of about EUR 2371 billion and spending on inpatient pharmaceuticals of about EUR 0.66 billion in 2013 (accrual basis). - Goal to bring public spending on outpatient pharmaceuticals to about 1 percent of GDP i.e. around EUR 2 billion euro in 2014. - Total (outpatient plus inpatient) public expenditure on pharmaceuticals should be no more than 1.5 percent of GDP in 2013 and 1.3 percent of GDP in 2014. ### Health governance and purchasing - Strengthen health system governance by: - Ensuring effective concentration of all health insurance funds, without exception, into EOPYY, monitoring the transfer of staff and assets. - Ensuring the effective transfer of all health-related decision making procedures and responsibilities (including payroll expenditures) under the Ministry of Health. - Specific measures: - From January 2014, hospital services will start to be purchased directly by EOPYY through prospective budgets based on KEN-DRGs costing procedure (and payroll costs, should be at least reported). - EOPYY ensures that the number of doctors is reduced in headcount by a further 10% in 2013. ### Controlling pharmaceutical spending — contingency and pricing - Contingency measures to deliver targets: - Applies an automatic claw-back mechanism (every six months) to pharmaceutical producers which guarantees that the outpatient pharmaceutical expenditure (EOPYY budget) does not exceed the above targets. (Continuous). A note on the collection of claw back for the first half of 2013 is submitted by September 2013. - Activates contingency measures (including e.g. across-the-board cut in prices or entry fee for the positive list), if the claw-back is not able to achieve the target. Such measures produce an equivalent amount of savings. (October 2013) - If necessary, EOPYY introduces additional incentives and mechanisms, including a prescription quota system for physicians, to ensure generic substitution. (September 2013) - Pricing of medicines: - Revises downward the price of medicines, based on the three EU countries with the lowest prices (quarterly update of price list every four months in line with the provisions of Council Directive 89/105/EEC, next lists to be published by end June 2013 and September 2013). - On the basis of the report on the impact of the new profit margins of pharmacies, reduce the profit margins down to 15%, starting from 1st January 2014. - Ensures that EOPYY negotiates a 5% discount through price-volume or risk sharing agreements focusing on the top spending medicines sold in EOPYY pharmacies. (Continuous for 2013 and 2014) ### Prescribing, monitoring and e-prescription - Updates and coverage: - Update the positive list of reimbursed medicines and the list of OTC medicines; these lists must be updated after every price bulletin. - Ensures full coverage of e-prescription to doctors, outpatient facilities and providers contracted by EOPYY and to all NHS facilities (health centres and hospitals) by September 2013. E-prescribing is made compulsory and must include at least 90 percent of all outpatient medical acts covered by public funds (medicines, referrals, diagnostics). (Continuous) - Finalise implementation of the system (API) whereby pharmacies electronically register any residual manual prescriptions from doctors into the e-prescription application established by IDIKA. (New Deadline September 2013) - Clinical guidance and enforcement: - Continue publishing prescription guidelines/protocols for physicians, with priority for the most expensive and/or mostly used medicines, and makes them compulsory. (Continuous) - Enforce application of prescription guidelines through the e-prescription system starting with at least 5 therapeutic groups by September 2013. - Further develop the e-prescription system by monitoring the compulsory ICD-10 and enforcing SPC filters in the e-prescription system (At a pace of 500 drugs per month starting October 2013). - Monitoring and reporting: - Detailed monthly auditing reports on the use of e-prescription in NHS facilities and by providers contracted by EOPYY. These reports are shared with the European Commission, ECB and IMF staff teams. (Continuous) - Regular assessment of the information obtained through the e-prescribing system. (Continuous) - Detailed quarterly reports on pharmaceutical prescription and expenditure including volume and value of medicines, use of generics and off-patent medicines, and rebates received from pharmacies and pharmaceutical companies. These reports are shared with the European Commission, ECB and IMF staff teams. (Continuous, Quarterly, new report July 2013) - Detailed reporting on individual prescription behaviour to each physician relative to the average of comparable physicians and signals when they breach prescription guidelines. Feedback provided at least every month and a yearly report published covering: 1) the volume and value of the doctor's prescription in comparison to peers and to prescription guidelines; 2) the doctor's prescription of generic medicines vis-à-vis branded and patent medicines; and 3) the prescription of antibiotics. (Continuous) - Enforce sanctions and penalties as a follow-up to assessment and reporting of misconduct and conflict of interest in prescription behaviour and non-compliance with the EOF prescription guidelines. (Continuous) - Electronic monitoring and the introduction of cancellation mechanisms to barcodes of pharmaceutical products to be finalized by collaboration of EOF and IDIKA. (September 2013) ### Increasing use of generic medicines - Prior to the disbursement: Enforces compulsory ICD10 in the electronic prescription. - Targets and measures: - Increase the share of the generic medicines in total outpatient and reimbursed medicines to reach 60 percent (in volume) by December 2013, achieved by: - automatically reducing the maximum price of originator medicines when their patent (exclusivity period) expires (off-patent branded medicines) to 50 percent of its price at the time of the patent expiry; linking off-patent products to the average of the three lowest prices in the EU, to be revised periodically with price list. Producers can offer lower prices. (September 2013) - setting the maximum price of the generic to 40 percent of the price of the originator patented medicine with same active substance at the time its patent (exclusivity period) expired. After this first reduction, the price of the generic medicine is set to 80% of the downward revised price of the off-patient products (when the exclusivity period expires) which is to be set on the basis of the average of the three lowest prices in the EU as defined in point i. Producers are allowed to offer lower prices. (September 2013) - Finalises the pricing of the large backlog of generic medicines waiting for a price in compliance with EU Transparency Directive and ensures dynamic price reductions. (September 2013) - Deciding about the reimbursement of newly patented medicines on the basis of objective and strict medical and cost-effective criteria and, until internal capacity is in place, by relying on best practice health technology assessment of their cost-effectiveness carried out in other member states, while complying with Council Directive 89/105/EEC. (Continuous) - Excluding from the list of reimbursed medicines those which are not effective or cost-effective on the basis of objective criteria. (Continuous) - In the frame of the Administrative Reform process of EOF, set up scientific capacity in order to include cost effectiveness criteria in the reimbursement and licensing process and to manage the positive and internal reference price mechanism. (October 2013) - Takes further measures to ensure that at least 50 percent of the volume of medicines used by public hospitals for inpatients is made up of generics with a price below that of similar branded products and off-patent medicines. (Continuous) - Ensures that all public hospitals procure at least 2/3 of pharmaceutical products by active substance, using centralised tender procedures developed by EPY and by enforcing compliance with therapeutic protocols and prescription guidelines. (Continuous) ### Reviewing provision of medical services contracted by EOPYY - Prior to the disbursement: - Takes legislative action that allows the Minister of Health to set a claw back mechanism and targets for non-pharmaceutical expenses of EOPYY in order to meet fiscal targets in the health care sector for the period 2013-2015. *Source: _cr13241 - 1. The SPPA ensures coordination and coherence of the functioning of the Central Purchasing* ### 1. Activates contingency measures (including e.g. across-the-board cut in prices and access to ### _cr13241 - 1. Activates contingency measures (including e.g. across-the-board cut in prices and access to ### EOPYY contingency, monitoring and implementation - Activates contingency measures (including e.g. across-the-board cut in prices and access to private providers or entry fee on contractual arrangement), if, for any reason, the claw-back is not able to achieve the target. Such measures produce an equivalent amount of savings. (October 2013). - Monitors the implementation of the various policies introduced in late 2012 to improve the current financial situation of EOPYY and ensure that the budgetary execution is closer to a balanced budget in 2013. Measures to monitor include: changes in OGA contributions, in the benefit package, in cost-sharing for private care and in the fees for diagnostic and physiotherapy services, as well as the use of price-volume agreements and case-mix agreements with private providers and the use of a reference price system for reimbursement of medical devices. (Continuous) - Implements all the measures included in the “Action Plan towards a Comprehensive Set of New Measures to Control the Expenditure of EOPYY” as agreed with EC/IMF/ECB and produce an implementation report. (Quarterly) - Publishes a monthly report on the prescription and expenditure of diagnostic tests and private clinics. (Continuous) - Initiates tendering procedure for the introduction of in house financial and analytical cost accounting systems of EOPYY. (January 2014) ### National Health System (NHS) service provision — Reorganisation and management - Implements the plan for the reorganisation and restructuring, as set in Law 4052 / March 2012, aiming to reduce inefficiencies, utilise economies of scale and scope, and improve quality of care; implies reducing hospital operating costs by an additional 5% in 2013 and reducing beds substantially, as legislated by MD OG1681/B (28-7-2011). - Reorganisation to be achieved through: - increasing the mobility of healthcare staff (including doctors) within and across health facilities and health regions; - adjusting public hospital provision within and between hospitals within the same district and health region; - revising the activity of small hospitals towards specialisation (e.g. rehabilitation, cancer treatment, terminal care); - revising emergency and on-call; - optimising and balancing resource allocation of heavy medical equipment (e.g. scanners, radiotherapy facilities) on the basis of need; - reducing administrative costs notably by removing deputy managers posts; - reducing cost with outsourcing services such as IT services, laboratory services and hospital servicing costs (e.g. cleaning services). - Produces an annual report comparing hospitals performance on the basis of the defined set of benchmarking indicators (Continuous; next report 1st April 2014). On the basis of the 2013 annual report produce a benchmarking study by October 2013. - Updates a report on human resources for the whole health care sector annually and uses it as a human resource planning instrument. (Continuous; next report 1st April 2014) - Presents an analysis on healthcare needs of the long-term unemployed (and dependent family members) who lack healthcare coverage by EOPYY, including present and expected patient numbers and related public budgets, with priority-setting scenarios varied by clinical needs of impacted patient subgroups. (September 2013) ### Accounting, costing, control, IT and monitoring systems - EOPYY publishes a monthly report with analysis and description of detailed data on healthcare expenditure with a lag of three weeks after the end of the respective month, including expenditure commitments/purchases (accrual basis) and actual payments (cash basis); the report will describe performance on budget execution and accumulation of arrears, and recommend remedial actions. (Continuous) - Further measures to improve accounting, book-keeping of medical supplies and billing systems, through: - introduction of analytical cost accounting systems, with the implementation of the respective action plan, due to be finalised, with complete hospital coverage, by November 2013; - regular annual publication of balance sheets in all hospitals. (September 2013); - introduction of the uniform coding system for medical supplies developed by EPY and EKEVYL and the use of the observe.net system to monitor procurement and use of tenders for medical supplies. (Continuous); - introduction of inbound hospital logistics and warehouse management systems using barcode scanning systems for pharmaceuticals and medical consumables. (December 2013); - implement necessary action to ensure timely invoicing of full treatment costs (including staff payroll costs) - i.e. no later than 2 months to other EU countries and private health insurers for the treatment of non-nationals/non-residents. (Continuous); - enforcing the collection of co-payments and implementing mechanisms that fight corruption and eliminate informal payments in hospitals. (Continuous). - ELSTAT continues providing expenditure data in line with Eurostat, OECD and WHO databases i.e. in line with the System of Health Accounts (joint questionnaire collection exercise). (2012 figures to be released by January 2014) - Hospital computerisation programme allows measurement of financial and activity data in hospitals and health centres; Minister of Health defines a core set of non-expenditure data (e.g. activity indicators) in line with Eurostat, OECD and WHO health databases, taking account of future roll-out of DRG schemes in hospitals. (Continuous) - Government starts to develop a system of patient electronic medical records. (Continuous) - With technical assistance, continues to improve the existing KEN/DRG system to develop a modern hospital costing system for contracting (prospective block contracts between EOPYY and NHS). The existing set of KEN/DRGs is used in all hospitals: - The KEN/DRG Management Institute is established (October 2013). - DRGs will include a detailed item on costs of personnel. (Continuous) - A follow up analysis of how hospital accounting schemes integrate DRGs at hospital level for future activity-based cost reporting and prospective budgets payment for hospitals will be submitted by September 2013. ### Centralised procurement - Increase substantially the number of expenditure items and the share of expenditure covered by centralised tender procedures through EPY up to 45% of all the expenditure in medicines and medical devices by 2014; this share goes up to 60% in 2015. The Government ensures the use of such tender procedures. (Continuous) - EPY will undertake tender procedures for framework contracts for the most expensive medicines sold in EOPYY pharmacies. (Continuous) - EPY will publish a detailed annual report on its activity (2012 report published in September 2013) - In compliance with EU procurement rules, the Government conducts the necessary tendering procedures to implement a comprehensive and uniform health care information system (e-health system) including the full and integrated system of hospitals' IT systems. (Continuous) ### Upgrading the education system - Implements the Action Plan for improvement of the effectiveness and efficiency of the education system and regularly reports on progress including results of external evaluation of higher education institutions (Continuous, June and December of each year). - Higher education: provisions of laws 4009/2011 and 4076/2012 are fully and promptly implemented: - External evaluation of higher education institutions by the Quality Assurance Authority is completed. (December 2013); - Organisation charts and internal regulations of Higher Education Institutions are completed (March 2014); - Update on progress of consolidation/merging of departments of universities and technological institutes (ATHINA Project) (September 2013). - Primary and secondary education: new policy of evaluation of schools (including schools' self-assessment) and educational staff starts being implemented. (September 2013). The first cycle of evaluation of educational staff, in particular School Directors, School Advisors and Regional Directors is completed. (December 2013). ### Stabilising the Financial System — state aid and bank disposals - Ensures that no state aid will be granted to banks before it is approved by the EC under state aid rules. - Government commits to invite HFSF to complete the disposal of the two bridge-banks, considering public interest, financial stability, and protection of HFSF assets. - MoF and BoG commit to complete a comprehensive banking sector strategy in coordination with HFSF and EC/ECB/IMF and to maintain a four-pillar banking sector as long as HFSF has a majority stake in the core banks. - BoG commits to develop the implementation plan for rationalising the cooperative sector, including Panellinia Bank, as part of the comprehensive banking sector strategy. - BoG to take legal and regulatory steps necessary to implement the strategy for the cooperative sector by end-September 2013. - Government to invite HFSF to undertake to place a substantial equity stake in Eurobank with a privately owned strategic international investor by end-March 2014; consultants contracted by end-August 2013; evaluation metric for potential investors developed by end-October 2013; potential bidders allowed to start due diligence no later than end-November 2013. ### Funding and bank funding plans - BoG commits to preserve sufficient banking system liquidity in line with Eurosystem rules (continuous). - Requests banks to provide standardized quarterly balance sheet forecasts (funding plans) after recapitalization; banks to set a path over the medium term to a sustainable funding model by broadening funding base and reducing reliance on extraordinary central bank liquidity support and government guarantees; funding plans to be used by BoG and ECB to monitor consistency with the program’s macroeconomic framework. ### State-owned preference shares of the banks - Government commits to not take fiscal policy actions that would undermine the solvency of banks (continuous). - Not require banks to pay any dividends on preference shares, or fees or taxes in lieu of this, unless they have distributable profits (excluding profits from acquisitions and selling of subsidiaries abroad) and the BoG has given its consent confirming compatibility with preservation of adequate capital buffers (continuous). ### Follow up stress testing and asset reviews - BoG shall continue preparations for supervisory stress test to be completed by end-December 2013, under Steering Committee oversight (BoG/EC/ECB/IMF and EBA). - BoG has engaged a consultant to conduct the asset quality review, with interim deadline end-October 2013 and final report by end-November 2013. The distressed credit operations review is scheduled to be completed by end-September 2013. ### Management of assets under liquidation - Continue improving the management of assets under liquidation (continuous). - Develop by end-July 2013 an implementation plan outlining further steps to improve collections and establish targets, to ensure effective utilization of enhanced tools. ### Supervisory model and HFSF's liability; HFSF review - BoG commits to review its supervisory model to align with international best practices and Single Supervisory Mechanism guidance and aim to complete this process by end-December 2013. - Government commits to amend law 3864/2010 so that decisions of the Governing Council and Executive Board are in accordance with HFSF’s mandate and Law 4046/2012 commitments (July 2013). - Review functioning of the HFSF with EC/ECB/IMF staff by end-September 2013; any adaptation will consider evolving tasks, program alignment, and long-term interests of the banking sector and taxpayers. ### Review of legal insolvency frameworks and distressed debt resolution - Implement necessary regulations to put in place the “Facilitation Program” adopted by Parliament, by end-August 2013. - Adopt definitions for terms such as “acceptable living expenses” and “cooperative borrowers” as guidance for the judiciary and banks by end-September 2013. - Continue monitoring resolution of distressed debts for households, SMEs, and corporates (continuous). - Steps to build on insolvency reforms: - Established a working group to identify ways to improve debt resolution processes for households, SMEs, and corporates by end-July 2013. - By end-July 2013, in consultation with EC/ECB/IMF staff, identify key bottlenecks. - By end-October 2013, with technical assistance, propose concrete steps for enhancements. - BoG to issue, in consultation with banks and EC/ECB/IMF staff, by end-December 2013, based on the review of banks’ distressed credit operations, a time-bound framework for banks to facilitate settlement of borrower arrears using standardized protocols. - Require banks to present, by mid-September 2013, a strategy for improving their distressed credit operations (e.g., strengthen internal arrears management units, contract external work-out specialists). - Require banks to submit by end-November 2013 a comprehensive operational plan to address shortfalls identified in the review. - Government refraining from adopting new or modifying existing debt restructuring schemes; undertake first assessment of the effectiveness of the Faciliation Program within six months of its launch. ### Establishment of the Institution for Growth (IfG) - Intends to establish the IfG, a non-bank financial institution, to catalyze private sector financing, especially for SMEs, while minimizing fiscal risks. - IfG objectives and constraints: - provide debt financing for SMEs; - provide equity capital to SMEs with significant growth potential and to private equity and venture funds; - provide debt or equity financing for infrastructure projects; - where providing debt financing, make loans available only under co-financing arrangements with significant participation by commercial or cooperative banks; - lend and invest at market terms; - not take deposits; - not accept capital contributions or other financing from domestic financial institutions owned or controlled by the public sector; - limit any guarantees to a level not exceeding the Hellenic Republic’s (HR’s) capital subscription. - HR will seek to become a minority shareholder eventually, with its own capital contribution limited to € 350 million over the next three years. - Shareholders other than the HR must agree on appointment of IfG management; IfG board will have a strong international presence to ensure a high degree of independence. - Overlapping functions between ETEAN and IfG will be avoided; such functions to be performed by IfG upon HR request and subject to IfG investor's approval. ### Loan and Consignment Fund - Ensure that the Loan and Consignment Fund is not crowding out competition in the financial sector (continuous). - Ensure that the commercial sector part of the Loan and Consignment Fund will be in a gradual run-off; revise the legal framework by September 2013 to provide that its commercial sector part will not grant any new loans and will not take any new deposits, except roll-over of existing deposits. - In consultation with the EC, revise the legal framework of the Loan and Consignment Fund by September 2013 regarding the scope of activities of the reserved sector part to ensure it acts only in case of market failure. ### Strengthening labour market institutions and promoting employment - Foster effective implementation of recent labour reforms to support restoring cost-competitiveness and boost employment, noting ongoing reduction in nominal unit labour costs in the economy by 15 per cent over the period 2012-14. - Promote efficient wage-setting, reduce non-wage labour costs, fight undeclared work and informality by streamlining administrative burdens and increasing transparency and enforceability of labour law. - Enhance policies to help the unemployed remain attached to the labour market and increase matching to potential employers, and improve social safety nets in an affordable and adequate way. - Implement labour legislation reforms in consultation with social partners and in respect of EU Directives and Core Labour Standards. *IMF staff report content (extracted).* ### 4.1 Reforms in the wage-setting system ### 4.1 Reforms in the wage-setting system ### 4.1 Wage-setting reform (statutory minimum wage) - Adopt by July 2013 a law defining the decision-making mechanism for the statutory minimum wage that will prevail after the end of the Programme period once the current freezes cease. - Law will establish procedure for consultation with social partners, other stakeholders and independent experts before the minimum wage is set through a Ministerial Decision after the consent of the Council of Ministers. - Law will define how the conditions of the Greek economy, notably its growth prospects, productivity and competitiveness levels, will be factored into the decision process to ensure objectives of promoting and maintaining high employment, reducing high unemployment rates, and safeguarding labour income are achieved in a balanced way. - Review the current structure of the minimum wage rates system by March 2014 to possibly improve its simplicity and effectiveness to promote employability, fight unemployment, and enhance competitiveness. ### 4.2 Reducing non-wage labour costs - Adopt legislation by November 2013 reforming the system of social contributions in a revenue-neutral way, inter alia by: - broadening the base for contributions, - simplifying the schedule across the various funds, - shifting funds away from nuisance taxes and onto contributions, - reducing average contribution rates by 3.9 percentage points from their current levels, phased in over 2014, 2015 and 2016. - Intermediate steps: studies of possible changes in the system of social contributions and action plans proposed by September 2013. - Study first-pillar pension schemes in companies where contributions exceed social contribution rates for private sector employees in comparable firms/industries covered in IKA and present options for reduction of social contribution rates by September 2013. - Based on these studies, and together with the reform of the system of social contributions, reduce rates found to be too high and adjust benefits in a fiscally-neutral manner by December 2013. ### 4.3 Lowering compliance costs, fighting undeclared work and informality - Strengthen the fight against undeclared work and raise the effectiveness of the Labour Inspectorate (Continuous). - Prioritise activities of the Inspectorate and foster detection of the most severe cases of labour law violations. - Revise the sanctions for violations of the labour law by July 2013. - Streamline the reporting by employers and employees by September 2013. ### 4.4 Further improving regulatory framework - Review existing labour regulations to identify measures that would attract investment and support job creation while aligning Greece with best practices; include comparative review of restructuring of companies and collective dismissals to ensure balance between adjustment needs and fair sharing of burden between workers, firms and Government. - Identify reforms and changes in consultation with social partners by November 2013, and implement them December 2013. ### 4.5 More transparent and enforceable labour law - Codify by December 2013 all existing legislation relevant for labour and industrial relations into a single Labour Code to ease interpretation, reduce compliance costs and increase enforceability. ### 4.6 Support to the unemployed - Adopt a comprehensive Action Plan by July 2013 to provide continuing support to labour market policies, focusing on: - Expanding short-term public work programmes targeted at jobless households, the long-term unemployed and young people not in education, employment or training as emergency and temporary measures while labour demand remains sluggish. - May target up to 50 000 persons in a first round. - Municipalities and other public Authorities may participate directly only under full adequate and transparent control (open calls, internet publication of projects with full details, and reporting helpline). - Promoting implementation of the youth voucher scheme. - Supporting job matching and activation through reform of the Public Employment Service, including developing partnerships to deliver training, mentoring and employment services. - Improving and expanding apprenticeships and vocational training over the medium term, coordinated with educational reforms; Government to provide a plan with concrete measures by September 2013. - Action Plan should inform on financing of forthcoming initiatives. - Produce a Green Paper on social protection and policy to increase effectiveness of income support programmes by September 2013. - Launch a means-tested minimum guaranteed income scheme targeting the poor, including the long-term unemployed: - Pilot phase by January 2014 at the latest and national roll-out by 2015. - Pilot to develop and test targeting mechanisms, registration procedures and benefits platform, delivery channels and payment systems with control procedures; include some activation of beneficiaries; phased integration of other benefits and social services. - Consider an unemployment assistance scheme targeted to the poor, means-tested and promoting activation and integration with other services. - Prepare a specific position paper on the means-tested minimum guaranteed income scheme by July 2013: - Set out timetable and roadmap for national roll-out, identify pilot geographical areas and targeted population, present budgetary provisions and institutional framework including registry. - Make initial proposals for mutual responsibilities and means of activation of beneficiaries. - Describe interaction and integration with other labour market policies and social transfers, and propose monitoring and evaluation mechanisms. - Identify principles to ensure transparent and equitable selection of partners among state and local agencies, local community organisations, NGOs, and private partners. - Prepare an action plan to provide health insurance access to uninsured citizens in cooperation with foreign experts (to be finalized in the second half of 2013), and work to extend programme’s coverage to more beneficiaries and include more healthcare services (January 2014). ### 5 Creating favourable conditions for economic activity - Emphasis on structural reforms to improve business and economic environment, enhance competition and competitiveness, reduce time and costs to create a company, obtain establishment and operating licenses, get permits for environmental projects and activities, and to export and import; measures also to improve functioning of the judicial system. ### 5.1 Promoting an efficient and competitive business environment - 5.1.1 Rationalising / eliminating quasi-fiscal charges - Eliminate in the 2014 budget the vast majority of the quasi fiscal charges identified in the list presented to the Commission services in November 2011 in a budget neutral way (October 2013). - 5.1.2 Reducing procedural and other administrative burden - Take additional measures to ease doing business, as measured by the World Bank's Doing Business indicator, by May 2014. - To implement law 3982/2011 on fast track licensing for technical professions, issue secondary legislation on: - Defining fees for obtaining a license for cooling technicians by July 2013. - Notification process for electricians by July 2013. - Fees for notification for electricians by July 2013. - Syllabus and process for obtaining a license for machine operators by August 2013. - Defining fees for machine operators by September 2013. - Syllabus and process for electricians by September 2013. - Defining fees for electricians by October 2013. - Conditions of conducting exams by private entities by November 2013. - Replacing professional experience by seminars organized by approved bodies by March 2014. - Fees for the seminars replacing professional experience by March 2014. - To implement Law 4014/2011 on environmental licensing, issue: - Ministerial Decisions (Art. 8.3) laying down standard environmental commitments of projects and activities in category B: - Power stations using gas or liquid fuels; mining project; car repair shops; detention centres and prisons; building projects; gas stations; poultry and farming activities; and aquaculture (July 2013). - Garages and parking spaces; hydraulic works; ports; environmental infrastructure projects for waste and wastewaters; roads; hospitals; air transport projects; ultrahigh voltage centres; and special projects and activities (September 2013). - Ministerial Decision (Art.10.2) on content of the Special Environmental Assessment according to type of project or activity (September 2013). - Ministerial Decision (Art. 19.9) on specification of procedures for consultation and participation during the public consultation process (October 2013). - Presidential Decree (Art. 14.5) on establishment of the environmental licensing directorate (October 2013). - Ministerial Decisions and Circulars (Articles 11.3, 11.4, 11.5, and 11.6) on content of dossier for Preliminary Determination of Environmental Requirements and Environmental Impact Assessment (October 2013). - Ministerial Decision (Art.18.5) Digital Environmental Registry (February 2014). - Ministerial Decision (Art. 17.8) on fixing compensatory fees and procedures (April 2014). - Presidential Decrees (Art. 16.6) on establishment of the certified Environmental Impact Assessment assessors registry (June 2014). - Review implementation of law 4014/2011 examining degree to which licensing procedures have been simplified and shortened (December 2013). - License at least two disposal sites for hazardous waste (September 2013). - Present strategic vision and evaluation of investment licensing procedures in July 2013, followed by a roadmap in September 2013, to reduce number of licenses and rationalise processes. - Simplify export and import procedures: - Appoint at least 20 exporters in authorised trader scheme for fresh fruits and vegetables by December 2013. - Fully implement risk based control system based on EU best practice for fresh fruits and vegetables by January 2014. - Review pre-customs and customs procedures for 5 more products (olive oil, cosmetics, aluminium profiles, canned peaches, dual use product) by December 2013, and streamline relevant procedures by March 2014. - Launch pilot enabling 24/7 customs operations in Athens airport customs office and two shifts in Piraeus Port by July 2013. - Adopt pilot procedures by July 2013 allowing: - 'Presentation of goods' at appointed locations other than only the Customs office under normal procedures. - Supporting documents requested only when declaration is selected by the risk assessment system. - Acceptance of photocopies, faxes or email attachments when supporting documents requested. - Simple authorization from represented trader to customs representative without need of witness or notarization. - Implement automatic clearance for low risk declarations in line with EU best practices in customs pilot offices by November 2013, and across all customs offices by December 2013. - Align risk assessment system for exports with best practices in EU Member States by September 2013; align imports by March 2014. - Ensure e-customs system supports submission of declarations and supporting documents for exports in all customs offices by July 2013; supports imports in pilot offices by July 2013; supports imports, and electronic payments for exports and imports, in all customs offices by November 2013. - With assistance by the World Customs Organization, assess pilots by November 2013; present detailed roll-out plan by December 2013; apply optimised procedures permanently in pilot customs offices of Athens airport and Piraeus Port by January 2014; roll-out optimised procedures during 2014 and apply permanently in all other customs offices by December 2014. - Staff and empower Operational Steering Committee for the National Trade Facilitation Strategy and Roadmap project by September 2013. - Identify and eliminate unnecessary reporting requirements for businesses: - Conclude preparatory analysis of the Standard Cost Model in 13 sectors by September 2013. - Present results of the Standard Cost Model in 13 sectors (December 2013). - Complete amendments to sector specific legislation following identification of administrative burdens (March 2014). *Source: _cr13241 - 4.1 Reforms in the wage-setting system* ### 8. To facilitate spatial planning, the Government: ### _cr13241 - 8. To facilitate spatial planning, the Government: ### Spatial planning framework and regional plans - i. Adopts a revised framework legislation to simplify and reduce the time needed for town planning processes (July 2013). - ii. Completes the revision of the regional spatial plans to make it compatible with the sectoral plans on industry, tourism, aquaculture and renewable energy as follows: - a. After the completion of the first phase, the second phase of modification is completed by July 2013. - b. The third phase for the formulation of proposals is completed by November 2013. - c. The fourth phase for the legislation of the final proposal is completed by February 2014. - iii. Completes the revision of the spatial plan for South Aegean to make it compatible with the sectoral plans on industry, tourism, aquaculture and renewable energy as follows: - a. The first phase of this revision is completed by September 2013. - b. The second phase of modification is completed by November 2013. - c. The third phase for the formulation of proposals is completed by March 2014. - d. The fourth phase for the legislation of the final proposal is completed by June 2014. - iv. Reforms the forestry legislation as follows: - a. Updates the legislation on forests and forest lands by September 2013. - b. Codifies the legislation on parks, forests and forest lands by December 2014. ### Cadastre: objectives and immediate measures (following Law 4164/2013) - Rationale: Accelerating work on a modern cadastre is essential to ensure the timely completion of cadastral property register covering all land and buildings in Greece, secure fiscal revenues from real estate tax and provide legal certainty to open up the real estate market to new investment, including for foreign direct investment. - i. Ensure that the Ministry of Finance and tax administration has full access to the cadastral database for taxation purposes, including for the purpose of the E9 tax fiches (July 2013). - ii. Establish a business plan to create a nation-wide system of new Cadastral Offices under EKXA AE. The business plan will include the proposed organograms for each office in order to prepare their transformation into final offices. Ensure that until the full cadastre is in place, registrars operate as agents of these Cadastral offices. (November 2013) - iii. Ensure the immediate transformation of temporary cadastral offices into final ones in the capital of the regions where the cadastre is operational by issuing the respective PD for each office. Ensure that all responsibilities of registrars are transferred to these Offices. (December 2013) - iv. Ensure that all real estate related transactions in the country are registered electronically using the web platform provided by EKXA AE and that a standard format for registration is used (September 2013). - v. Ensure that the transaction fees that are due to the State are transferred automatically to the account of the Ministry of Finance. Data on all other transaction fees should be fully accounted and audited by the Ministry of Finance (September 2013). - vi. Ensure that Urban Planning and Construction Permits to be built on maps provides by or in conformity with EKXA AE (December 2013). - vii. Ensure that all other cadastral efforts (e.g. archaeological or industrial development) necessary for operations in different Ministries must be based on the cadastral database and layers developed and managed by EKXA AE (December 2013). - viii. Adopt secondary legislation to ensure that the Cadastre SA database is linked to other databases, such as on real estate, urban planning database, construction permits, and LPIS for agricultural subsidies calculation based on cadastral database (December 2013). - ix. Extend the cadastral database to include transaction prices, objective values of transactions. (December 2013) The scope of the cadastre should be widened to include buildings and other constructions on non-urban land (December 2014). ### Cadastre: implementation milestones and scope expansion - 10.i. Based on existing surveys, provide maps of constructions on non-urban land (June 2014). - 10.ii. Legally validate the forest maps and the coastal zone of the entire country based upon the respective maps of the EKXA delivered in 2009 (December 2015). Milestones will be set for the completion of particular areas. - 10.iii. Proceed with the awarding of the seven (7) million active property rights tendered since December 2011 (March 2014); tender out all remaining rights (ca. 15 million). (September 2013). Complete the award of tenders for unfinished cadastral projects (December 2014). - 10.iv. Make it compulsory to include the single cadastral code number of each parcel in tax declarations (form E9) of real estate (July 2013). ### Enhancing competition and better regulation (Section 5.1.3) - 1. Following the competition assessment in sectors such as food processing, retail trade, building materials and tourism, the Government prepares the legislative amendments to remove disproportionate regulatory restrictions identified by the Competition Assessment Toolkit (September 2013). - 2. The new legislation will be enacted in November 2013. - 3. To implement law 4048/ 2012 on regulatory governance: principles, procedures and tools of good law making, the Government issues the Presidential Decrees provided for in Art. 21 of that law, providing for the setting up of the better regulation structures (i.e., the Better Regulation Offices, the Legislative Initiative Offices of the Ministries and the Inter-ministerial Sector for Better Regulation) (October 2013). - 4. The Government presents an annual better regulation plan (as provided for in Art. 15 of law 4048/2012) with measurable objectives to simplify legislation (including through codification) and to eliminate superfluous regulations. (December 2013). ### Reforming the judicial system to support economic activity (Section 5.2) - Objectives: (i) ensure effective and timely enforcement of contracts, competition rules and judicial decisions; (ii) increase efficiency by adopting organisational changes to courts; (iii) speed up the administration of justice by eliminating backlog of court cases and by facilitating out-of-court settlement mechanisms. In designing and implementing the measures the Government consults the EC/IMF/ECB. Subsections and commitments: - 5.2.1 Review of the Code of Civil Procedure - The Government commits to review the Code of Civil Procedure in accordance with the roadmap defined in section 9.3 of this Memorandum, which defines intermediate steps towards its completion by March 2014. - 5.2.2 Judicial statistics - The Government will compile and publish on its website the information indicated in Section 9.4 of this Memorandum. (Quarterly) - 5.2.3 Tax case backlog reduction - 1. Prepares an assessment of the impact of all the past measures aimed at the reduction of the backlog in the administrative courts. (July 2013). - 2. Presents an action plan with structural measures aiming at reducing the backlog of tax cases pending in courts (July 2013). - 5.2.4 Non-tax case backlog reduction - 1. Based on the study on the backlog of non-tax cases in courts conducted by an external body of experts, the Government prepares by July 2013 an Action Plan with specific measures aiming at continuously reducing the number of civil and commercial cases pending in Courts. This should include short term and longer term actions. - 2. The Authorities prepare by July 2013, draft legislation on compulsory mediation for small claims. - 5.2.5 Development of e-justice applications in courts - 1. The Government updates, further refines and operationalizes the e-justice Action Plan (Continuous, on a quarterly basis). Updated versions are to be submitted within 15 calendar days from the expiration of the relevant quarter. - 2. The action plan will include additional actions as follows: - i. An evaluation of the use of IT systems in courts (March 2014); - ii. a timetable, including proposed deadlines, for the extension of case e-registration and e-tracking to all courts (March 2014). - 3. Short term actions within the framework of the E-Justice Action Plan: - a. By September 2013, the Government ensures the full operation (for all types of civil procedures, except of those for which this is not feasible due to jurisdictional/procedural rules/reasons i.e. payment orders, interim measures, provisional orders) of the e-filing project at the Athens Court of First Instance. - b. By December 2013, the Government completes the pilot implementation of e-filing in the Piraeus and Thessaloniki Courts of First Instance (provided that the respective Bar Associations co-operate with the MoJ to meet the above deadline). - 4. Implementation of integrated e-justice systems within the Framework of the E-justice Action Plan: - c. By December 2015, the Government completes the implementation of integrated e-justice applications, enabling e-filing, e-registration and e-tracking for courts that cover the majority of the total in flow of cases in the country: - i. the Magistrate Courts, Civil and Criminal Courts of First Instance & the Courts of Appeal of Athens, Piraeus, Thessaloniki & Chalkida, including the respective Prosecutors Offices - ii. All the Administrative Courts - d. The Government completes the extension of the above applications to the other courts (December 2017). - 5. The Government ensures consistency of the e-Justice action plan with the national e-government strategy. (Continuous) - 5.2.6 Promotion of pre-trial conciliation and mediation - 1. By September 2013, the Government conducts an assessment of whether the enactment of Law 3898/2010 on mediation in civil and commercial matters has delivered the results which the legislation intended to achieve, and presents data and analyses concerning costs, time and success rates arising from alternative dispute resolution. - 2. By December 2013, the Government presents a legislative proposal for the effective opening of the mediator’s profession to non-lawyers. - 3. The Ministry of Justice updates on a monthly basis the list of the Accredited Mediators and the Mediators’ Training Centres on its website (Continuous). - 5.2.7 Other measures on judicial reform - 1. Assessment of the Law on fair trial and conciliation (4055/2012): An interim assessment is presented by July 2013, and the final assessment is presented by January 2014. (Three months for the Magistrate Courts.) - 2. Administrative review of cases: The Government prepares, in accordance with Law 4048/2012 on better regulation, draft legislation providing for, where appropriate, a compulsory administrative review before an independent committee before a case may be brought before the administrative courts and submits it to the Greek Parliament. (September 2013) - 3. Study on the costs of civil litigation: the Government completes a study on the costs of civil litigation, its recent increase and its effects on workload of civil courts, together with recommendations. The study will include a table of court fees in civil and administrative courts (including magistrate courts) per court procedure and for each degree of jurisdiction, with a break down distinguishing between court fees and mandatory legal fees for lawyers, and a further break down of court fees in their different components. The table should focus on contract, land, insolvency, labour, rent, tax, attachments/seizures, injunctions, summary proceedings (October 2013). - 4. Brief on enforcement measures: the government presents an initial brief on the current situation and on the legal framework on the enforcement framework of civil decisions, including the powers, tools, fees, and organization of enforcement agents. The brief will include references to the legislation (December 2013). ### Efficient network industries and services — Energy policy (Section 6.1) - Context: Ongoing reforms include privatisation and restructuring of PPC, transition to the EU target model for the electricity market and improved sustainability of the incentives for renewable energies. 6.1.1 PPC restructuring and privatisation (actions by September 2013) - 1. Adopts legislation: - a. To provide full ownership unbundling of ADMIE from PPC within the second quarter of 2014. - b. To cap the maximum generation capacity that can be owned and/or operated by any power generator in Greece, following the definition of the assets of the new generation company, and taking into account the need for the new company to have at least 30% of PPC generation capacity, taking into account decommissioning and investment plans of PPC. - c. To clear further possible legislative obstacles to the privatisation process while protecting the rights of minority shareholders. - 2. Ownership by the State or by any other entity controlled by the State of any quota of ADMIE shares will be subject to the following conditions: - a. ADMIE shares will be managed separately (i.e. by separate state entities) from those of the PPC or another energy company; - b. The privatisation strategy and targets of the Government are fully respected; - c. The process of acquiring the shares will have no tax or financial consequences for the Government that are incompatible with the objectives of the Adjustment Programme for Greece. - 3. The execution of the plan will be made in strict adherence to the announced timetable, and in full agreement with the European Commission services so as to ensure consistency with the relevant EU legislation and best practice and with the current fiscal programme and financing targets (continuous). 6.1.2 Provisions regarding the privatisation of PPC and DESFA - 1. The Government undertakes that whichever the outcome of the privatisation process the gas industry and electricity industry structure will be fully compliant with Directive 2009/73/EC and 2009/72/EC. (Continuous) 6.1.3 Ensuring that electricity prices reflect costs - 1. RAE ensures that electricity prices fully reflect system marginal costs at wholesale level and a retail margin allowing retail competition for all customer categories when assessing price change proposals from PPC (continuous). - 2. In reviewing PPC's price change proposals, RAE will endeavour to eliminate currently existing cross subsidisation, such as may exist for instance for agricultural electricity consumers and for consumers connected to the low voltage grid with low consumption (continuous). - 3. The Government assesses best practices with a view to charging royalties for the use of hydro and lignite and publishes its report. (July 2013) 6.1.4 Providing for a financially sustainable development of renewable energy sources - Authorities commit to design and implement a comprehensive reform of renewable energy policies to provide long-term sustainability at zero average deficits, with EU technical assistance and industry input. - 1. Adjust the RES levy every six months (July 2013, January and July 2014) to eliminate the projected RES account debt by end-December 2014 (continuous). - 2. Complete by September 2013 the negotiations with the industry for introducing permanent adjustments to existing power purchasing contracts, in particular for PV installations, with a view to align rates of return to sustainable EU average levels, considering Greek-specific conditions. The results of the negotiations will have to provide the financial sustainability of the RES account to avoid an extension of the “special solidarity contribution”, without putting an excessive burden on consumers. - 3. Ensure that measures taken to ensure the financial sustainability of the RES special account do not endanger the economic viability of existing projects and that measures aimed at reducing excessive windfall profits (special solidarity contribution or negotiated Purchasing Power Agreement (PPA) payments) are only taken in cases where tariffs had not been previously adjusted to competitive levels already (continuous). - 4. Ensure that LAGIE, RAE, and the Ministry of Energy, publish monthly data on the evolution of the RES account with rolling projections over the following 24 months from the date of publication. (Monthly/continuous) These projections will have to provide a baseline and a normative scenario to bring the debt down to zero by end-2014 and support policy choices after 2014. *Italic: International Monetary Fund — Greece, Memorandum of Understanding (extracted content)._ ### 5. To ensure the financial sustainability of the RES account, and ensure that no excessive ### 5. To ensure the financial sustainability of the RES account, and ensure that no excessive burdens are put on consumers, introduces constraints that will cap the newly-installed RES capacity receiving incentives, effective 1st of January 2014. ### Renewable energy (RES) incentives and registry - Introduce constraints that will cap the newly-installed RES capacity receiving incentives, effective 1st of January 2014. - Following the entry in operation of the electronic registry of RES installations, the Government ensures the monthly publication of a report, detailed by source, on the state of existing installations (installed power and production). The report also includes data on the evolution of the licensing and installation process for forthcoming new plants. (September 2013, continuous) - The Government modifies (September 2013) Ministerial Decision ΥΑΠΕ/Φ1/οικ. 24840 (ΦΕΚ 1900/Β’/03.12.2010) to allow the inclusion of PV rooftop plants in the registry (October 2013). ### 6.1.5 Liquidity and arrears in the energy sector - The Ministry of Energy, in close cooperation with ADMIE and LAGIE, will communicate to the EC, the ECB and the IMF the detailed gross debt and credit positions of all participants in such market on a monthly basis, starting from June 2013 (continuous). - The Ministry of Energy, in close cooperation with RAE, will promote, and facilitate through intermediation, the clearing of existing obligations among energy market participants, while encouraging them for a fair sharing of the outstanding debt (continuous). - RAE implements and monitors adequate regulatory provisions for netting of credit and debt positions by all actors in the energy markets, including, inter alia, terms for clearance of debts and payment of interest and penalties in line with Directive 2011/7/EU on late payments, and Regulatory provisions will have to ensure equal treatment for all participants, avoiding any distortion or unjustified advantage coming from the belonging to vertically integrated companies (June 2013 - continuous). ### 6.1.6 Planning the development of the electricity market in the medium to long term - Based on the plan for the transitional reform of the electricity market adopted by the Government and RAE in consultation with the European Commission the Government and RAE implement the following actions: - a. Following the removal of the 10% margin, provide a timeline for the full phasing out of the 30% rule in view of the establishment of a proper mechanism for the scheduling of power producing units. (September 2013). In order to incentivise user of the 30% rule to seek alternative destinations for gas, full recovery of variable costs should not be allowed after (March 2014). - b. Calibrate the procurement of reserve capacity volumes of by type (warm, cold reserves) in line with the reserve requirements as established by ADMIE (September 2013). - c. Review capacity payment mechanisms with a view to incentivise the retirement of power plants that have reached the end of their economic life (September 2013). The revised capacity mechanism(s) will be in line with EU law, including forthcoming revisions of guidelines in this field. - Finalize the structure and the parameters of the auctions of NOME-type products, limiting the participation in auctions to generators and suppliers (September 2013). ### 6.1.7 Fuel market — regulatory and competition measures - Make operational a system for the storage of fuel reserves based, alternatively, on a non-profit independent organisation or on regulated third-party access to existing facilities; and allow the national network to use storage capacity of other EU countries in compliance with EU regulation 119/2009. (July 2013) Repeal minimum duration of one year for contracts on storage facilities' use by third parties. (September 2013) - Introduce a compulsory requirement for refineries to transmit to the Ministry and the regulator monthly data on storage and other cost components charged to domestic and international customers. (July 2013) - To remove regulatory restrictions that hinder competition in the wholesale fuel sector, the Government, as per Opinion no. 29/VII/2012 of the Hellenic Competition Commission: - i. assesses minimum capital requirements and adjusts them downwards in accordance with best practices and taking into account the relevant Opinion of the Hellenic Competition Commission (July 2013); - ii. mandates the conclusion of written contracts between fuel wholesalers and retailers, including the obligation to state the duration of the discounts offered on the payment documents (July 2013); - iii. provides in legislation for the installation of inflow-outflow systems throughout the refining and wholesale trading supply chain; new legislation to be put into force (July 2013); - iv. removes the restriction that a wholesaler’s storage facility needs to be accessible by either the sea, railway network, or through a refinery (July 2013); - v. abolishes the mandatory storage of at least two categories of fuel products, as a condition to wholesale licensing issued by them. (July 2013) - To enhance competition in the retail fuel sector, as per the same opinion of the Hellenic Competition Commission: - i. mandates gas stations to state the price and quantity of liquid fuel on all receipts issued by March 2014 (Athens-Thessaloniki August 2013, other urban areas by September, remaining March 2014); - ii. completes the installation of inflow-outflow systems by March 2014 (Athens-Thessaloniki August 2013, other urban areas by September, remaining March 2014); - iii. abolishes the possibility to impose a minimum price on the sale of fuels to consumers. (July 2013) ### 6.2 Electronic communications — release of the digital dividend - Adopt necessary secondary legislation for the establishment of licensing procedures for the DTT broadcasting network providers (September 2013). - Resolve cross-border coordination issues with neighbouring countries, if any. If difficulties on international coordination make this date unfeasible, the frequency and broadcasting plans might indicate alternative channels for re-location of broadcasters, while continuing negotiations with third countries in view of the final assignment of frequencies to broadcasters and mobile operators. (Continuous) - Launch the tender for the assignment of rights of use for DTT broadcasting transmission (September 2013). - Launch the public consultation on the tender procedure for the assignment of the digital dividend (800 MHz band) allocating and authorising the use of the digital dividend to Electronic Communication Services, in line with EC Decision 2010/267/EU and in respect of the deadlines and procedures of the RSPP. (March 2014) (*) - Launch the tender procedure for the assignment of frequencies of the digital dividend, allocating and authorising the use of the digital dividend (800 MHz band) to Electronic Communications Services in line with EC Decision 2010/267/EU and in respect of the deadlines and procedures of the RSPP. (October 2014). The obligation to ensure the 800 MHz band can actually be used for electronic communications other than broadcasting from 1 November 2014 (*) - (*) The deadlines for steps (iv) and (v) might be amended according to the Decision of the European Commission on the request for derogation from the deadline provided by Art. 6.4 of the Radio Spectrum Policy Programme submitted by the Greek Government on 15 May 2012. ### 6.3 Transport — strategy and sectoral measures - Develop a comprehensive framework for transport investment which supports infrastructure development and tackles strategically key road, rail, port and airport infrastructure networks in order to improve connectivity to core networks, enhancing the country's possibilities as an international logistics hub. (June 2014) #### 6.3.2 Road - Having completed the report on the functioning of the regular passenger services and the follow up strategy for the effective opening of the sector, the Government approves the required law (and necessary acts) that ensures equal conditions and access equity to all road passenger service operators (July 2013). #### 6.3.3 Aviation - Having submitted the National Airport Policy strategy, the Privatisation Fund (HRADF) carries out the appropriate process leading to the privatisation of regional airports. Any State Aid issues must be clarified. The concession agreements must take into account the current best practices, including capping levels for airport charges and imposed taxes, facilitating investment approval, and allowing for transparent and swift dispute resolution mechanisms (Continuous). - Ensure full implementation of EU Regulation (EU 691/2010) referring to the performance of air traffic management (Continuous). Take full advantage of the assistance offered by the Network Manager in delivery of the additional capacity for the first Reference Period as required by Regulation (EU) 691/2010, and in looking forward to the second Reference Period of the Performance scheme as enabled in regulation (EU) 390/2013. - Ensure that the Hellenic Slot Coordinator Authority (HSCA) is functionally and financially independent, sufficiently staffed, and able to carry out its functions (December 2013). To this end the Government submits all necessary draft legislation (June 2013), adopts legislation (September 2013) and fully implements the relative legislation by December 2013. #### 6.3.4 Railways - Implement the spin-off of ROSCO (Maintenance Unit), GAIAOSE (Real Estate), and the transfer of the leasing of the rolling stock activities from the OSE Group to the State, and provide an updated TRAINOSE Business Plan (July 2013). - Integrate the function of award authority for public service contracts for rail passenger transport according to Regulation 1370/2007/EU, into the new authority for contracting land passenger (both intercity bus and rail) services. The new legislation: - i. Is adopted by July 2013 and, - ii. fully implemented by December 2013. - The renewal of the current public service contract for rail passenger transport is to be completed by direct award by end April 2014 and should have a maximum duration of five years. Public service contracts concluded subsequently will be awarded by means of competitive tender. The rent contracts concerning all rolling stock, employed in every public service contract are synchronized both in terms of their duration and to allow for any reallocation of rolling stock as it may become necessary when amending these public service contracts. (continuous). The rent contract between TRAINOSE and the State will be initially synchronized with the 5 year PSO contract including one additional renewal option of five year maximum duration. Contracts will be awarded at market prices. - Adopt legislation to allow the rail regulatory authority RAS to exert its right of imposing fines, notably (1) amending law L3891/2010 granting RAS the right to perform hearings, (2) granting RAS the right of adopting a hearing regulation and (3) granting RAS the right to adopt and publish in the Official Gazette regulatory acts and decisions on all matters of its competence. To this end, the Government: - iii. submits draft legislation by May 2013 and - iv. adopts it by July 2013. - Transfer the function of safety authority to an independent authority. (July 2013). - The HRADF launches tender procedure for Trainose (July 2013). #### 6.3.5 Maritime Activities and Ports - An assessment of the impact of recent reforms, in consultation with stakeholders, will be completed by October 2013 and additional measures will be introduced with the aim to further improve the competitiveness of the sector, including by increasing flexibility of labour arrangements. - The HRADF launches the appropriate call(s) for tender for ports (through concessions of individual terminals or through the sale of shares in the "master concessions" port companies ) (September 2013). The sustainability of the financing of those Port Authorities of the twelve major ports to be privatised by selling concessions in profitable activities should be ensured (continuous). ### 6.4 The Retail Sector — liberalisation and licensing - Adopt a Ministerial Decision repealing Market Regulation 7/2009, following the results of the notification procedure provided for in Directive 98/34 one month after the end of the standstill period (July 2013). - Review and amend the Market Policing Code (Law 136 /1946) providing for various forms of public sector intervention in the production, distribution and consumption of goods in line with the simplifying recommendations of the Hellenic Competition Commission's opinion no. 24/VII/2012. This should include: - (i) removal of restrictions in order to permit more freely discounts, promotions, and offers outside and during sale periods, more sales periods combined with more flexibility in the duration of the sales, - (ii) increased flexibility in retailers' opening hours by, inter alia, giving all shops the option to remain open at least seven Sundays per year, especially during holiday seasons. (July 2013). - Review and simplify the licensing procedure for the establishment and operation of retail outlets. The results and recommendations of the review are presented in July 2013, and adopted before December 2013. - To enhance competition in the market for over-the-counter (OTC) products, allows the sales of selected products (e.g., vitamins) in other points than pharmacies (September 2013). ### 6.5 Regulated professions, professional qualifications and provision of services - For professions and economic activities included in Section 9.2, the Government adopts legislation amending sector specific legislation as per the opinions of the Hellenic Competition Commission and other requirements. The pending legislation is fully adopted by September 2013. - A report on the implementation of Law 3919/2011 is published on the Government's website (July 2013). The report: - i. Summarises the list of all professions/economic activities falling under the scope of that law and the restrictions and formalities eliminated as per Arts. 2 and 3 of the same law; - ii. Specifies whether the access to and exercise of a regulated profession or economic activity is subject to an authorisation procedure, to a declaration or to the holding of a professional identity card; - iii. Specifies whether access to a profession or economic activity requires the registration in a professional association and or to a professional registry; - iv. Specifies whether the exercise of the profession is conditional on the periodic renewal of authorisations. - To assess the proportionality and justification of activities reserved to specific regulated professions: - i. Organise a mutual evaluation exercise, whereby representatives of the engineer, architect, geologist and land surveyor professions assess the justification and the proportionality of the requirements reserving certain activities to providers with specific professional qualifications. The assessment excludes the requirements applicable to their own profession (July 2013). - ii. Present a proposal specifying the activities with an exclusive and/or shared reserve for the different types of engineer, architect, geologist and land surveyor professions for an opinion to the Hellenic Competition Commission. (September 2013). - iii. Following the opinion of the Hellenic Competition Commission, submit draft legislation to Parliament amending unjustified or disproportionate requirements reserving certain activities to specific professions (December 2013). ### 6.5.1 Additional measures (legal profession) - A draft code revising Legislative Decree 3026/1954 is adopted by July 2013. The new code should, among others: - i. Ease the re-entry into the legal profession; - ii. Repeal age limits to take the Bar examinations; - iii. Abolish total bans on commercial communications; - iv. Provide for licenses of unlimited duration; - v. Remove the reference to "exclusivity" for lawyers for the research of books of mortgage and land registry; - vi. Clarify the nature of lawyers' fees provided for in current legislation. Fees are freely determined through a written agreement between lawyers and clients. In case there is no written agreement for court appearances, the fees shall be determined through reference fees; - vii. Eliminate any kind of minimum wages for salaried lawyers working in the private sector. *Italicized source attribution: IMF staff report excerpt (CR13241).* ### 2. The Government issues a Presidential Decree, which sets a system of prepaid ### _cr13241 - 2. The Government issues a Presidential Decree, which sets a system of prepaid ### Presidential Decree on prepaid fixed/contract sums and lawyer contributions - The Government issues a Presidential Decree, which sets a system of prepaid fixed/contract sums for each procedural act or court appearance by a lawyer, which is not linked to a specific ‘reference amount’ (July 2013). - It also de-links contributions paid by lawyers from lawyer's reference amounts for contracts and eliminates those reference amounts (July 2013). ### Regulated professions: studies, reviews, and implementation steps - The Government completes a study of the 20 largest professions examining the degree to which they have been liberalized, including results with respect to new entrants and price changes (July 2013). - The Government conducts an in-depth follow-up review of the reforms of regulated professions, including interviews and surveys of stakeholders, with the support of outside experts (December 2013). - In consultation with the EC/ECB/IMF staff, the Government develops a list of high-frequency indicators to assess on an ongoing basis the impact of reforms in this area, and publishes these indicators on a regular basis to strengthen public accountability (October 2013). - The Government reviews recent reforms on the regulation of temporary employment agencies and, on that basis, fine tunes the scope of temporary employment agencies and reduces barriers to entry into this market by December 2013. ### Easing recognition of professional qualifications (implementation of EU rules) - Continues to update the information on the number of pending applications for the recognition of professional qualifications, and sends it to the European Commission. (Quarterly) - Ensures the implementation of PD 38/2010 (as amended by law 4093/2012) and the recognition of qualifications derived from franchised degrees from other Member States to access to or exercise of an economic activity and to ensure that holders of franchised degrees from other Member States have the right to work in Greece under the same conditions as holders of Greek diplomas. (Continuous) ### Services Directive and Point of Single Contact (PSC) - Amends joint ministerial decision 25209/2011 to include submission of applications and documents by electronic signature (July 2013). - Ensures adequate connection between the PSC and other relevant authorities (including one-stop shops, professional associations and the recognition of professional qualifications) and launches the submission of on-line applications as regards the recognition of professional qualifications on a pilot basis to verify technical feasibility (September 2013). - Ensures that the submission of on-line applications as regards the recognition of professional qualifications is fully operational (December 2013). ### Increasing the impact of structural and cohesion funds — absorption and project implementation - The Government meets targets for payment claims in the absorption of EU structural and cohesion funds set down in the table below. Compliance with the targets shall be measured by certified data. - Targets for payment claims in the absorption of Structural and Cohesion Funds (programming period 2007-2013) to be submitted in 2013 (EUR million) - European Regional Development Fund (ERDF) and Cohesion Fund: 3,000 - European Social Fund (ESF): 890 - Target of first half of the year: 1,284 - Target of second half of the year: 2,606 - Total annual target: 3,890 - The Government submits complete applications for all remaining major projects for which a Commission decision under Article 41 of Regulation (EC) No 1083/2006 has to be adopted. (December 2013). Out of these applications, at least 4 applications by September 2013 and the remaining by December 2013. - In deciding the "Public Investment Budget" allocation, the Government ensures that the necessary national contribution remains available in order to complete the unfinished ERDF, ESF and Cohesion Fund projects of the 2000-2006 programming period and to cover the required national contribution including non-eligible expenditure under the Structural Funds and Cohesion Fund rules in the framework of the 2007-2013 programming period (Ongoing). - The Government takes measures to accelerate implementation of projects to be completed by December 2015, prioritizing critical projects (functional review of public administration, the "Elenxis" project for the tax control services, the land register, the solid waste management infrastructures, the railway projects, the e-prescription, the e-procurement, the development of a social economy sector and the national registry). - On top of the 24 priority projects already finished and the 2 priority projects cancelled, the Government takes measures to ensure completion of 27 priority projects by end 2013, of 20 priority projects by end 2014 and of 70 priority projects by end 2015. The Greek Authorities take necessary measures to limit the number of the priority projects that will be phased. - Within public procurement regulation review, standardised tendering documents per category of works are set up to simplify procedures on contract awarding. (September 2013) - The monitoring tool for expropriations is completed and operational and the data are made accessible to the public. (July 2013) - The Government consolidates the simplification initiative by reviewing the "implementation trail" and the mapping of competences of involved entities, permits and deadlines for main categories of projects supported by the Structural Funds and the Cohesion Fund; lifts unnecessary steps, simplifies implementation processes and sets reasonable deadlines. Establishes an alternative to the function of "ypologos" procedure for EU co-funded projects and establishes electronic payment (September 2013). The ypologos should be abolished by December 2013. Periodically until the end of the programming period 2007-2013, it reviews "sleeping" projects, un-activated delegations and "sleeping" contracts and informs the Commission on those eliminated. - The Government adopts measures and starts implementing an anti-fraud strategy in the field of the Structural Funds and the Cohesion Fund (September 2013). - The Government reports the Commission monthly on the progress of the Financial Engineering Instruments. If necessary and where appropriate, it proposes a rationalisation of the current allocations and instruments. (September 2013) - The Government establishes an efficient inter-service consultation procedure for the EU co-financed projects supported by an electronic system. An integrated project will be fully operational for the EU co-financed projects by end of 2013 (December 2013). ### Monitoring — Statistics and ELSTAT independence and resourcing - Government will fully honour the Commitment on Confidence in Statistics signed in February 2012 by implementing all envisaged actions, including respecting international statistical standards; guaranteeing, defending and publicly promoting the professional independence of ELSTAT; and supporting ELSTAT in upholding confidence in Greek statistics and defending them against any efforts to undermine their credibility. (continuous) - Legal amendment will be introduced to ensure that ELSTAT will have access to the tax information (including tax registration number), at individual level, of legal entities under private law, associations of individuals and natural persons, notwithstanding tax confidentiality, so that it can carry out its statistical work for the production of official statistics, as it is provided for in Law 3832/2010 as in force, and is specifically set out in the Regulation on Statistical Obligations, while at the same time ELSTAT safeguards the confidentially of personal records. (July 2013) - Government respects the independence of ELSTAT in carrying its tasks and providing high quality statistics. In this regard it fully respects the financial independence of ELSTAT, and provides all the necessary resources in a timely manner, as approved in the annual budget of ELSTAT, for the agency to complete uninterrupted its tasks. In this respect, Government cannot invoke art. 1 of Legal Act of 18/11/2012 and the Ministerial Decree 2/91674 of 201/12/2012, while, at the same time, ELSTAT provides to the Hellenic Parliament information for monitoring the execution of its budget as provided for in the Regulation of the Parliament (Article 31A) and the Statistical Law of Greece (Article 16). (continuous) - Government will facilitate ELSTAT to complete, as soon as possible, the acquisition of qualified staff under way for staffing essential positions in its central office, as well as receive additional qualified staff through transfers from other Government entities for addressing urgent staffing needs in prefecture offices and the central office, as reflected in the Medium term plan of ELSTAT submitted in the context of the preparation of the MTFS preparation and incorporated in the latter. (September 2013) ### Privatisation plan — summary of projects under development and timing highlights - The annex lists numerous State-owned enterprise/share sale, concessions, and real estate projects under development with timing and intermediate steps. Selected timing and status entries include: - OTE: Done. - Delivery of aircrafts (Airbus): n/a n/a - Public Gas (DESFA): State aid clearance (DG Comp). Q4 Q2/13 - Football Prognostics Organization (OPAP): Proceed with phase B and finalize selection (April 2013 - DONE). 2013 Q1 Q3/13 - Horse race Betting Organization (ODIE): Launch of tender (March 2013- DONE). Q1 Q4/13 - Thessaloniki Water (EYATH): Establish regulatory framework (March 2013 - DONE). Establishing pricing policy and amend the license (November 2013). n/a n/a - Railways (Trainose): Trainose will be transferred to HRADF (March 2013 - DONE). Comfort letter from DG Comp for TRAINOSE State Aid investigation clearance (June 2013 - DONE). n/a n/a - Athens Airport (AIA): Agreement on transaction process with Hochtief Airports new shareholder PSP Investments. Q3 Q1/14 - Public Power Corporation (PPC): Launching refers to the tender of ADMIE by PPC. Government approves and announces PPC restructuring and privatisation plan (April 2013 - DONE). Q4 Q3/14 - Di gital Dividend: Adopt secondary legislation for TV stations and analogue switch-off date (June 2013 - DONE). Launch tender for TV network providers (tbc). - Real Estate lot 3: At least 1,000 real estate properties to be transferred to HRADF (December 2013). The first 250 real estate assets are transferred to HRADF (April 2013 - DONE). - Source indicated as: HRADF update on projects under development. ESCHADA = zoning and land planning permit. ### Regulated professions: specific legislative and secondary legislation steps (selection) - Selling and production of reproductive material for agricultural plant species and selling of plant-protecting material, fertilizers, and pesticides: - Adopt implementing legislation that (i) abolish minimum square requirements and (ii) introduces a 3-month period for administration to issue license, after which professionals are free to operate; and adopt legislation that (i) allow sales by individuals with adequate training without the mandatory presence of scientists and (ii) define training standards (cfr. HCC opinion no. 19/VI/2012) (July 2013). - Chartered valuers: - Amend Law 4152/2013 to (i) set up certification from the Ministry of Finance and establish procedures for state examination (July 2013) and (ii) abolish the requirement for applicants to provide academic qualifications on top of certification for registration (September 2013). - Geo-technician: - Issue secondary legislation to abolish administrative license and mandatory issuance of professional IDs (from the Geo-Technical Chamber) (August 2013). ### Agreed roadmap for review of the Code of Civil Procedure - The Task Force for the review of the Code of Civil Procedure presents an initial draft of the Code at the earliest possible date following the completion of the third review of the economic adjustment programme. By mid-September 2013, the draft Code of Civil Procedure is presented by the Task Force to the Authorities. Within 15 days, by end September 2013, the draft Code of Civil Procedure is presented to the EC/IMF/ECB for comments. - On the basis of the above cooperation, the Task Force presents to the Authorities, by November 2013, a revised version of the draft Code of Civil Procedure. The Authorities carry out a broad public consultation, including EC/IMF/ECB, on the draft law bringing the Code of Civil Procedure in line with international best practice. - The Authorities submit the final draft Code to the Hellenic Parliament (March 2014). ### Statistics to be published by the Ministry of Justice (quarters and content) - Every quarter, for civil and administrative first instance court, court of appeal as well as the Supreme Court and the Council of State, tables published will provide: - the number of judges and administrative staff, - the stock of cases at the beginning of the period, - the inflow of cases registered during the period, - the outflow of cases closed during the period, - the stock of cases at the end of the period. - Additional table content: - For the tax and customs cases, data will include the inflow of the new cases with a breakdown above and under 150 000 euros. - For civil and commercial courts, the data for stock and flows of cases will also show the corporate insolvency cases. - For administrative Justice, a specific table will include a breakdown by year of registration of the stock of cases for which no hearing date has been fixed yet (provided for beginning and for end period) and will show the total number of cases with a hearing date. *Source: _cr13241 (extracts of IMF staff report content).* ### 2. For some of the most relevant courts, defined in agreement with EC, IMF and ECB, the ### _cr13241 - 2. For some of the most relevant courts, defined in agreement with EC, IMF and ECB, the ### Judicial case reporting and insolvency data - Ministry of Justice to publish by quarter, or by semester or year if so agreed by EC-IMF/ECB: - The stock of cases (both at beginning and at end period), with a breakdown by year of registration. - For civil and commercial Justice, more detailed information on corporate insolvency cases including: - a more detailed breakdown by value, defined in agreement with EC, IMF and ECB. - a more detailed breakdown by sector (e.g., agriculture, construction, manufacturing, and services), defined in agreement with EC, IMF and ECB. - Notes and definitions: - A case is considered closed, and registered in the outflow, at the moment the full decision is published (and its content is available to the parties). - "Value" of the case could correspond to the value of the liabilities of bankruptcy, as this appears after the 3-months period of the submission of announcements by the debtors has expired. ### Ministry of Justice and General Secretariat for Public Revenue - General Secretariat for public revenue will conduct and publish by September 2013 one study based on small but random sample, to gather information on recovery rate for tax and customs cases. - The Ministry of Justice will try and propose a method to get relevant information on recovery rates for corporate insolvency cases. ### IT system outputs (when fully in place) - The Ministry of Justice will publish: - Tables showing: - the number of judges and administrative staff (At the end of the period). - the stock of cases at the beginning of the period. - the inflow of cases registered during the period. - the outflow of cases closed during the period (A case is considered closed, and registered in the outflow, at the moment the full decision is published (and its content is available to the parties)). - the stock of cases at the end of the period. - The stock of cases at beginning and at end period will be broken down by year of registration. - The stock of cases at beginning and at end period and the flow of cases will be broken down by categories of litigations. - The average duration of the outflow cases during the period. ### Provision of data to EC, ECB and IMF (summary of reporting requirements) - General instruction: During the programme, the following data shall be made available to the European Commission, the ECB and the IMF staff on a regular basis. These data should be sent to ecfin-greece-data@ec.europa.eu. - To be provided by the Ministry of Finance (selection of recurrent requirements): - Preliminary monthly data on the state budget execution (including breakdown by main categories of revenue and expenditure and by line ministry). Frequency: Monthly, 15 days after the end of each month; these data should also be included in subsequent transmissions in case of revision. - Final monthly state budget execution, including breakdown by main categories of revenue and expenditure and by line ministry. Frequency: Monthly, 30 days after the end of each month. - Monthly data on staff: number of employees, entries, exits, transfers among Government entities; and from and into the mobility and exit scheme, per entity, average wage (including the relative shares of the base wage, allowances and bonuses). Frequency: Monthly, 30 days after the end of each month. - Monthly above the line cash data on general Government entities other than the state. Frequency: Monthly, 30 days after the end of each month; these data should also be included in subsequent transmissions in case of revision. - Weekly information on the Government's cash position with indication of sources and uses as well of number of days covered. Frequency: Weekly on Friday, reporting on the previous Thursday. - Data on below-the-line financing for the general Government. Frequency: Monthly, no later than 15 days after the end of each month; these data should also be included in subsequent transmissions in case of revision. - Data on expenditure pending payment and clearance (including arrears) of the general Government, including the State, local Government, social security, hospitals and legal entities. Frequency: Monthly, within 30 days after the end of each month. - Data on use of international assistance loans split among categories: Financial stability fund, segregated account, debt redemption, interest payments, other fiscal needs, building of cash buffer; per quarter and cumulative. Frequency: Quarterly, by the end of each quarter. - Data on public debt and new guarantees issued by the general Government to public enterprises and the private sector; data on maturing debt (planned redemptions per month, split between short-term (Treasury bills and other short-term debt) and long-term (bonds and other long-term) debt); data on planned monthly interest outflows. Frequency: Monthly, within one month. - Data on assets privatised and proceeds collected. Frequency: Monthly. - Data on state-owned enterprises: revenue, costs, payroll, number of employees and liabilities (including maturities of public enterprises' debts). Frequency: Monthly, within three weeks of the end of each month for the ten largest enterprises; Quarterly within three weeks of the end of each quarter for the other enterprises; Quarterly for the maturities of state-owned enterprises' liabilities. - Monthly statement of the transactions through off-budget accounts. Frequency: Monthly, at the end of each month. - Monthly statement of the operations on the special accounts. Frequency: Monthly, at the end of each month. - Report on progress with fulfilment of policy conditionality. Frequency: Quarterly before the respective review starts. - Monthly data on health care expenditure by the social security funds with a lag of three weeks after the end of the respective quarter. Frequency: Monthly, within three weeks of the end of each month. - Monthly execution of SOEs and EBFs financial results and the quarterly targets for the monitoring of the corrective mechanisms. Frequency: Monthly, 30 days after the end of each month. - To be provided by the Bank of Greece (selection): - Assets and liabilities of the Bank of Greece. Frequency: Weekly, next working day. - Assets and liabilities of the Greek banking system - aggregate monetary balance sheet of credit institutions. Frequency: Monthly, 30 days after the end of each month. - Evolution of the external funding provided by Greek banks to their subsidiaries abroad. Frequency: Monthly, 15 days after the end of each month. - Report on banking sector liquidity situation. Frequency: Weekly, next working day. - Report on the evolution of financial stability indicators. Frequency: Quarterly, 30 days after the publication data of each quarter. - Report on NPLs, restructured loans and write-offs on a 30, 60, 90 and 180 days basis. Frequency: Quarterly. - Weighted average of Loan-to-value (LTV) ratio for new loans with real estate collateral. Frequency: Yearly. - To be provided by the Hellenic Financial Stability Fund: - Detailed report on the balance sheet of the Hellenic Financial Stability Fund with indication and explanation of changes in the accounts. Frequency: Monthly. ### Key numeric items and operational definitions (preserved as in source) - A case is considered closed and registered in the outflow at the moment the full decision is published (and its content is available to the parties). - "Value" of the case could correspond to the value of the liabilities of bankruptcy, as this appears after the 3-months period of the submission of announcements by the debtors has expired. - Reporting deadline examples preserved exactly as in source: "Monthly, 15 days after the end of each month", "Monthly, 30 days after the end of each month", "Weekly on Friday, reporting on the previous Thursday", "Quarterly, by the end of each quarter", "Weekly, next working day", "Yearly." ### Statement by the Staff Representative — selected points - Prior actions and public administration: - The authorities completed nearly all the prior actions, and are expected to complete the one on public administration by the time of the Board meeting. - On public administration reform, omnibus bill took effect on July 23, 2013 to place ordinary employees in the mobility scheme; legislation initially fell short of placing at least 4,200 employees in the mobility scheme in July owing to significant eligibility exemptions. - Authorities plan to restrict the exemptions through an amendment on July 25, 2013. Once approved and published, staff expects the prior action will have been met; authorities estimate it would result in at least 4,200 employees being placed in the scheme. Confirmation of the precise number will take the process into August. - Wages of these employees will be reduced to 75 percent, effective retroactively to the date of passage of the omnibus bill. - Privatization and water tariff policy: - European Commission experts were satisfied with broader progress; authorities agreed on a policy framework for water tariffs but did not issue the detailed five-year water tariff policy as specified in the prior action, indicating need until August to complete technical work. - Tax administration indicators: - All but one of the key performance indicators in tax administration for end-June (structural benchmarks) were missed. Main gaps relate to collection of old debts and number of completed “full-scope” audits for large taxpayers and high wealth individuals. Authorities are taking corrective actions. - VAT reduction on restaurants and catering: - VAT rate on restaurants and catering reduced effective between August 1 and December 31 of this year, from 23 to 13 percent (and from 16 to 9 percent on islands). - Fiscal impact estimated at about €130 million, which the authorities intend to offset by reducing military expenditures by €100 million and other savings. - Warnings from staff: advised against reduction due to limited fiscal space and other priorities, but accepted it given accompanying measures and temporary nature. ### Selected table entries (Table 2: Key Performance Indicators on Tax Administration — preserved text and numbers) - Indicator — Actual — Target - Collection of tax debts as of the end of the previous year8471140 - Collection of new debts in the current year (percent of new debt in the year) 13.2% 14.0% - Number of risk-based full scope audits in the year 118176 - Number of risk based temporary audits in the year 273260 - Of which: field audits - Collection full scope audits in the year (percent of assessed tax and penalties) 31.9% 65.0% - Collection temporary audits in the year (percent of assessed tax and penalties) 41.9% 45.0% - Number of completed risk-based audits in the year 227280 - Collection of assessed audits in the year (percent of assessed tax and penalties) 34.5% 40.0% - MoF audit of assets of managers of local tax offices 050 - MoF audit of assets of auditors 050 - (End-June, 2013 1/; 1/ Cumulative from January 2013.) ### Programme milestone and disbursement - Press Release headline: IMF Completes Fourth Review Under Extended Fund Facility Arrangement for Greece, Approves €1.72 Billion Disbursement *Source: IMF staff.* ### 1.51 billion (about €1.72 billion, or US$2.29 billion), which would bring total disbursements ### _cr13241 - 1.51 billion (about €1.72 billion, or US$2.29 billion), which would bring total disbursements ### IMF review outcome and financing package - Disbursement of 1.51 billion (about €1.72 billion, or US$2.29 billion), which would bring total disbursements under the arrangement to SDR 7.21 billion (about €8.24 billion, or US$10.94 billion). - Executive Board approved a waiver of applicability of three end-June performance criteria on which data are not yet available: the overall stock of government debt, government domestic arrears, and the general government balance. - Executive Board approved modification of the end-September performance criterion on privatization receipts. - The EFF arrangement was approved on March 15, 2012, and is part of a joint package of financing with euro area member states amounting to about €173 billion over four years. - The EFF entails exceptional access to IMF resources equivalent to about 2,159 percent of Greece’s quota. ### Statement by IMF Managing Director Christine Lagarde — key messages - Commendation: Greek authorities have continued to make commendable progress in reducing fiscal and external imbalances. - Concern: Progress on institutional and structural reforms, in the public sector and beyond, has not been commensurate with Greece’s problems. - Policy priorities emphasized: - Greater reform efforts remain key to economic recovery and lasting growth. - Corrective actions to meet the ambitious target of a zero primary balance in 2013. - Deeper public sector reforms to complete fiscal adjustment with broad public support. - Strengthen autonomy and operational efficiency of revenue administration; prepare and implement income tax reform and a property tax that achieves revenue targets. - Avoid tax policy changes that undermine revenues. - Ensure exit of unqualified personnel to create room to hire new staff with relevant skills, given slow public administration reform progress. - Accelerate broader structural reforms to boost productivity and growth. - Address concerns about the structure and governance of the privatization program and improve its effectiveness. - Financial sector priorities: cleaning up balance sheets, ensuring strong governance structures, and rapidly re-privatizing the remaining state-owned bank. - Debt outlook and external assurances: - Public debt is projected to remain high well into the next decade. - Assurances from Greece’s European partners that they will consider further measures and assistance, if necessary, to reduce debt to substantially below 110 percent of GDP by 2022, conditional on Greece’s full implementation of all conditions contained in the program, are welcome. - Continued commitment from partners to provide adequate financial support during the life of the program and beyond until Greece has regained market access, provided Greece complies fully with the program, remains essential. ### Political developments (Statement by Thanos Catsambas) - Since the last Board meeting on May 31, the government of Prime Minister Samaras was reorganized on the basis of two coalition parties: New Democracy as the main party and PASOK as the junior partner. - Cabinet reshuffle included appointment of two new ministers in Administrative Reform and Health, seen as positive for cohesive decision-making on public administration and health reforms. ### General outlook and market sentiment - Program status: Fund-supported adjustment program entered its fourth year; proceeding at a steady, if slower than expected in some areas, pace. - Reforms scope: Reforms touch public administration, labor market, product market, pensions and social benefits, justice, education and health. - Confidence indicators: - Economic Sentiment Indicator at 93.5 in June (level not seen since September 2008). - Purchasing Managers Index for June at 45.4, improved for the third consecutive month and at a 24-month high. - 10-year Greek government bond spreads vis-à-vis bunds stand at around 950 bps, down from over 3000 bps a year ago. ### Macroeconomic framework and structural reform achievements - Fiscal stance and measures: - No contractionary measures foreseen for the remainder of the calendar year. - Temporary reduction in VAT rate on restaurants and catering from 23 percent to 13 percent, effective August 1 to December 31, 2013. - Inflation and GDP outlook: - Greek prices fell 0.4% year-on-year in June (only EU country to record outright deflation on the CPI measure). - Given persistent reduction in domestic demand, a GDP contraction of 4.2% continues to be expected in 2013. - Authorities hopeful for moderate recovery: annual GDP growth of 0.6% in 2014 and accelerating in 2015 and beyond. - Revenue administration reforms and tax system changes: - New tax audit techniques introduced in May to combat tax evasion by individuals. - Legal changes transfer more powers to the Secretary General for Public Revenue Administration (SGPR); SGPR authorized to determine a grading and promotion system for staff. - High Wealth Individual Audit Centre established; Large Tax Payers Office transformed into a fully functioning audit centre. - Comprehensive income tax reform legislated in January 2013, complemented by adoption of the Income Tax Code and the Tax Procedures Code in July 2013. - Key innovations: tighter and more transparent rules on eligible business expenditures and benefits in kind; new rules to avoid tax evasion (e.g., through off-shore companies); modern rules on business capitalization and transfer pricing. - Tax Procedures Code consolidates provisions on tax registration, auditing, collection and enforcement, including internal review procedures. - Revised and simplified business tax accounting rules (Code of Tax Recording) to be adopted in October; all three codes planned to enter into force as of January 2014. - Public administration downsizing: - Downsizing includes closing, merging, restructuring public entities and dismissing or transferring staff according to new staffing plans. - Direct dismissal of over 2,500 employees of the Public Broadcasting Company, which was shut down in June and expected to be replaced by a leaner entity. - Public administration reform carried out in phases during 2013 and 2014; some quantitative targets were missed and authorities are redoubling efforts. - Banking sector recapitalization and governance: - Recapitalization of the Greek banking system completed. - All four Greek core banks recapitalized; Hellenic Financial Stability Fund (HFSF) becoming the largest shareholder. - Three core banks attracted at least 10 percent of required additional capital from private sources and will remain under private control. - Two bridge banks acquired by one of the core banks. - One non-core bank fully recapitalized through the market; another in final phase of negotiations with foreign investors. - Comprehensive banking sector strategy in final stages to create a leaner, cost efficient, competitive and well capitalized banking sector. - Governance of the HFSF improved by including two independent members in its General Council; relationship frameworks signed between HFSF and each of the four core banks; monitoring trustees oversee banks' governance and operations. - Product market reforms: - Reforms appear to be increasing competition and leading to lower prices. - Actions: liberalize sales periods and trading days and hours; relax restrictions on road haulage; restructure railways sector; new liberalization and growth strategies in airport and maritime sectors. - Two OECD studies identified barriers to entry, limited incentives for suppliers to compete, and restriction of choices and information for consumers; authorities to adopt appropriate reforms by end of 2013. ### Challenges, corrective measures, and next steps - Fiscal consolidation package: very large and front-loaded, totaling over 6.7% of GDP over 2013-14; largely implemented but with shortfalls in three areas: - Expenditure overruns in the main health care fund EOPYY in diagnostics and private clinics. - Delays in issuance of property tax bills expected to be paid during 2013. - Downward revision in the yield of some measures, notably social security contributions. - Corrective measures adopted in July: - Comprehensive omnibus legislation adopted by parliament on July 17 to frontload some measures planned for 2014 and recoup expenditure overruns. - Corrective actions to address healthcare overruns: structural measures aimed at rationing healthcare provision and preventing misuse of publicly funded services. - Short-run claw-back mechanism for diagnostics and private health care clinics: reimbursing invoices only up to level of annual budget targets. - Revised fiscal measures include shortening the pay period for the property tax collected by the Public Power Company and establishment of a Center for the Collection of Overdue Social Security Contributions. - Frontloaded 2014 measures: luxury tax on cars, swimming pools and airplanes; increase in court fees for lawsuits; docking fee for leisure boats from October 2013. - Streamlining in defense expenditures to be implemented from the autumn. - Privatization shortfalls and actions: - Privatization proceeds to date below expectations. - DEPA (natural gas company) tender concluded in June 2013 with no bidders; privatization delayed until later in the year. - DESFA (gas transmission operator) received a successful bid and its privatization is proceeding swiftly. - Government, with Hellenic Privatization Fund, considering initiatives to speed up earlier approved projects (e.g., regional ports) and promote sale of assets not previously in the pipeline. - Public administration reform corrective timeline (Omnibus bill measures): - Place at least 4,200 permanent employees in the mobility scheme by end-July. - Place 12,500 employees by end-September. - Place 25,000 employees (cumulatively) by end-December. - Employees in mobility scheme to be assessed within a centrally-defined evaluation framework to be established by end-September, before reallocation or exit. - Mobility scheme compressed to eight months from original twelve. - Exit targets agreed in April 2013 remain: 4,000 employees by end-2013 and 15,000 (cumulatively) by end-2014. - Cabinet considering strategy for allocation of staff to be hired or reallocated. ### Growth prospects and international support - Growth drivers and projects: - Greece's participation in the Trans-Adriatic Pipeline (TAP) project expected FDI of the order of €1.5 billion; direct positive effects include job creation and non-tax revenues. - Creation of Institution for Growth (IfG), a development fund to be managed on commercial terms with potential to attract public and private investors; purpose to alleviate credit constraints for SMEs and critical infrastructure projects. - Government intends to participate in IfG primarily as a catalyst to attract private and institutional investment funds, such as EIB and KfW. - International support acknowledgements: - German Finance Minister Schaueble visited Athens on July 18 and pledged €100 million to the IfG on behalf of the German government. - US Secretary of the Treasury Lew visited on July 21 and emphasized jobs and growth and recognition of shared sacrifices. ### Risks and conclusions - Downside risks: - Slowdown in global economic activity. - Adverse turnaround in market sentiment. - Delays in implementation of ambitious structural reforms. - Continued anemic credit conditions. - Increased implementation risks associated with deeper reforms and stronger reactions by vested interests (e.g., withdrawal of third minor party from coalition). - Upside risks: - Sustained strong policy implementation can reduce uncertainty and prompt faster return of investment spending, both foreign and domestic. - Accelerated utilization of EU funds in cooperation with the European Investment Bank could boost activity. - Improved institutional environment (easier to do business, more efficient public administration, reliable justice system) would encourage FDI. - Liquidity injection from accelerated clearance of government arrears, public works programs, and a more dynamic tourist season could support activity. - Domestic investment could grow faster with improved financing conditions due to banking recapitalization, restructuring, and operations of the IfG. - Government request: - Authorities are requesting approval of the Fourth Review, including the waiver of applicability of three QPCs and modification of the end-September performance criterion on privatization receipts. *International Monetary Fund — Statement materials excerpted from the July 29, 2013 submission by the Greek Alternate Executive Director and associated IMF statements.* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13241.pdf_