## _cr14151 — IMF staff report (selected excerpts)

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### Executive summary — Extended Arrangement and program financing
- Four-year arrangement approved on March 15, 2012 for SDR 23.79 billion (2,159 percent of quota; €28 billion).
- Purchases made to date: SDR 7.2 billion (€8.1 billion); proposed purchase on completion of review: SDR 3 billion (€3.5 billion).
- Euro area disbursements to date: €139.9 billion (of €144.6 billion committed); €48.2 billion of these for bank recapitalization.
- Key macro outcomes by end-2013:
  - Primary fiscal and external current account balances in surplus.
  - Real GDP: fell by 3.9 percent in 2013.
  - CPI-based REER: over-valued by about 10 percent.
  - Unemployment: around 26½ percent; over two-thirds long-term unemployed.
  - Real output decline since 2007: close to 25 percent.
  - Public debt historically near 130 percent of GDP pre-crisis.

### Recent macro developments and outlook
- Activity and prices:
  - Q1 GDP flash estimate: -1.1 percent year-on-year.
  - PMI in manufacturing > 50 for first time since mid-2009.
  - Private sector nominal wages down by about 16 percent since 2009.
  - Inflation (2014 projection): -0.8 percent; GDP deflator (2014): -0.7 percent.
- External sector:
  - Current account registered a surplus in 2013; underlying structural external current account estimated deficit of 4 percent of GDP in 2013.
  - Most adjustment since 2009 driven by import compression rather than export strength.
- Financial conditions:
  - Reliance on central bank funding declined by over €95 billion from its peak in 2012 to €62 billion at end-April 2014; ELA declined to €3 billion.
  - Deposit rates declined from a peak of 3 percent in 2012 by 120 bps.
  - Average lending rates declined by 80 bps to 5.5 percent.
  - Credit contracting at an annual rate of 4 percent.
  - Government bond issuance: €3 billion 5-year bond at yield of 4.95 percent (mid-April 2014 / also noted as 4.75 percent in other text for April 9 bond issue).
- Growth projections:
  - 2014: about ½ percent (noted elsewhere as 0.6 percent).
  - Medium-term potential growth: about 2 percent per year (estimated long-term).

### Fiscal performance, near-term targets, and gaps
- 2013 primary fiscal surplus: 0.8 percent of GDP (target zero).
- 2014 primary surplus target: 1.5 percent of GDP (authorities on track).
- One-off social dividend (gross cost): €525 million (includes €38 million for homeless and uninsured and €37 million for security personnel).
- Measures and fiscal space for 2014:
  - Revised spending ceilings in the 2015–18 MTFS: €320 million.
  - Structural measures worth about €220 million (including €100 million from extra-budgetary funds, ~€50 million from military procurement).
  - Income Tax Code measures: over €350 million.
  - Withholding tax on pensions: over €400 million (one-off revenue gains phased over two years).
  - SSC reductions and nuisance charges at net cost of about ¼ percent of GDP (SSA cut specifics below).
- Gaps for 2015–16 (preliminary staff estimates):
  - Gap around 1 percent of GDP in 2015 relative to primary surplus target of 3 percent of GDP.
  - If closed with permanent measures, further gap of around ¾ percent of GDP in 2016 relative to 4.5 percent target.
  - Authorities estimate smaller gaps; to be re-visited during 2015 budget preparations.

### Debt dynamics and Annex I (Debt Sustainability Analysis)
- Baseline: debt peaks at about 174 percent of GDP (this year) then declines to about 128 percent of GDP in 2020 and 117 percent of GDP in 2022 (before additional contingent relief).
- Assumptions: primary surpluses of over 4 percent of GDP sustained for several years and relatively high nominal GDP growth.
- Gross financing needs: around 23 percent of GDP in 2014, falling to about 6 percent of GDP by 2022.
- Key downside risks: lower nominal growth, privatization slippages, financial sector contingent liabilities, fiscal slippages, delayed structural reforms, higher-than-expected deflation.
- Stress-test illustrative results:
  - Combined adverse scenarios would materially worsen paths (examples: permanent 1 percent lower growth raises debt by about 10 percentage points of GDP by 2020; deflation shock of 1 percent adds about 5 percentage points to 2020 debt).

### Financial sector: stress test, NPLs, and recapitalization
- Bank of Greece stress test (end-June 2013 data, results announced March 6, 2014):
  - Capital needs (Millions of euros) — Bank-level reported (preserve source formatting):
    - Alpha: 2,625 / 6,0 (entry in source appears as "Alpha262560")
    - Eurobank: 2,945 / 4,980
    - NBG: 2,183 / 2,502
    - Piraeus: 425 / 757
    - Sub total: 5,815 / 8,799
    - Attica: 397 / 434
    - Panellinia: 169 / 186
    - Total: 6,382 / 9,418
- Bank-level system notes:
  - Staff concerns that assumptions understate lifetime losses; staff estimate additional capital needs of over €4 billion under more prudent provisioning assumptions in adverse scenario.
  - NPLs and restructured loans reached 40 percent of total loans by end-2013; coverage ratio (provisions over NPLs) 49 percent; NPLs net of provisions exceeded banks’ capital (138 percent).
  - Planned recapitalization: HFSF buffer set aside; law amended to allow HFSF injections with full voting rights and to implement EU state-aid burden sharing.
  - Bank recapitalization timeline: banks to meet baseline capital needs by end-June 2014; adverse-scenario plans submitted by end-May 2014 for BoG approval by end-June 2014.
- Staff policy preference: larger upfront recapitalization to enable faster NPL write-downs and avoid prolonged deleveraging; staff concerned that baseline-only recapitalization may be insufficient.
- Bank balance sheet vulnerabilities: falling collateral values; part of banks’ capital low quality (negative goodwill and deferred tax assets).

### NPL resolution framework and institutional reforms
- Key reforms planned to strengthen private debt resolution:
  - Design out-of-court debt restructuring framework based on international best practices.
  - Introduce new code of conduct for banks’ engagement with debtors and restructuring tools.
  - Review and amend household and corporate insolvency laws to speed rehabilitation of viable entities and liquidation of non-viable ones.
  - Establish a regulated profession of insolvency practitioners with supervision and incentives.
- Government Council for the Management of Private Debt established; deliverables include:
  - Binding Code of Conduct for banks by end-May 2014 (structural benchmark).
  - Design of out-of-court SME and enterprise mechanisms by end-May 2014 and legislative adoption by end-July 2014.
  - Review of insolvency laws by end-June 2014 and legislative changes by end-October 2014 (structural benchmark).
  - Public awareness, data collection, auction process cost reductions, and real estate price registers with specified deadlines.

### Structural reforms, competition and privatization
- Product and service market reforms: authorities committed to address nearly all 329 OECD recommendations in four sectors (tourism, retail trade, building materials, food processing); 43 addressed to date.
- Selected sector actions and timelines:
  - Tourism/retail: liberalize Sunday trading in selected areas; review for national roll-out by March 2015.
  - Energy: ADMIE split from PPC; PPC split into two generation and retail companies; sale of 17 percent of legacy PPC; “small PPC” to take about 30 percent of PPC assets and be privatized.
  - Transport: maritime and air reforms to reduce operating costs and increase competition; maritime measures include suspending sectoral labor agreements and promoting firm-level agreements.
  - Regulated professions: opening mediator profession to non-lawyers (prior action); further sector-specific liberalizations with deadlines through end-2014.
- Privatization performance:
  - 2013 receipts: just over €1 billion (target €1.6 billion).
  - 2014 target revised down from €2.7 billion to €1.5 billion; projections through 2022 lowered by €3.9 billion to €22.4 billion.
  - Remedial actions: strengthen HRADF control, review land-use policies, clear land titles, streamline permits, and complete 8 government actions as prior actions under the review.
  - HRADF commitments: publish quarterly reports; complete assessments of boards and management by end-June 2014; transfer and prepare assets per ETAD/HRADF timelines.

### Tax policy, tax administration, and revenue measures
- Income Tax Code and Tax Procedures Code amended to simplify policy, broaden base, ease administration, and combat evasion; secondary legislation issued as prior actions.
- SSC cuts (MEFP ¶6):
  - Employers’ non-pension contributions (to IKA) cut by 2.9 pp in one step.
  - Employees’ non-pension contributions cut by 1 pp in one step.
  - Review for further cuts scheduled for mid-2015.
  - Broadening the base and stronger collections expected to yield about €400 million annually.
- Nuisance taxes:
  - Abolished 40 charges at annualized cost of €245 million; timing and phasing specified for July 1, 2014 and January 1, 2015 actions.
  - Removed revenue earmarking of 12 taxes amounting to €1.4 billion effective January 1, 2015.
- New property tax (ENFIA) introduced end-2013 with progressive wealth tax component on total value of property rights above €300,000; transaction tax reduced from 10 to 3 percent.
- VAT reform commitments:
  - Review VAT policy and administration by June 2014; streamline VAT refund system by July 2014; legislate comprehensive reform by October 2014 to take effect January 1, 2015 (structural benchmark).
- Revenue administration KPIs for 2014 (selected):
  - Collection of tax debts as of end previous year: End-Jun. 1,000 (millions of euros); End-Sep. 1,500; End-Dec. 2,000.
  - Number of risk-based full scope audits in year: End-Jun. 250; End-Sep. 375; End-Dec. 500.
  - Percent of VAT refund claims paid or rejected within 90 days (claims received on or after 1 Jan 2014): End-Jun. 70%; End-Sep. 80%; End-Dec. 90%.
  - Ceiling on stock of total tax refund claims: End-Jun. €2.4 billion; End-Sep. €2.2 billion; End-Dec. €2.0 billion.

### Public financial management, budget framework, and arrears
- Binding multi-year expenditure ceilings set for line ministries and health sector; binding balanced budget targets for local governments introduced.
- Organic budget law amendments planned to align with best practice (second stage by October 2014).
- Public investment budget to be integrated with ordinary budget monitoring over medium term.
- Monthly fiscal report with complete above-the-line data for all subsectors recently published; follow-up to reduce discrepancies between above- and below-the-line items.
- Arrears:
  - Stock of general government arrears fell from €8.2 billion at end-2012 to €3.9 billion at end-2013 (but indicative and narrowly-defined domestic arrears targets were missed).
  - Clearance plan: special plan for pre-2012 arrears extended to Q3 2015; targeted audit of general government accounts payable rephased for end-2015.
- Payment processes:
  - Measures to enhance support for line ministries, modernize information systems, reduce ex-ante audit volumes.
  - New KPI on timely payment of invoices; social sector KPIs on transfers from IKA to EOPYY, hospitals’ submission of claims, and EOPYY’s audits.

### Public administration reform, employment and exits
- Employment reduction target: reduce public sector headcount by 150,000 by end-2015 (noted elsewhere as 161,000 since 2010; 19 percent reduction).
- Mobility and availability schemes:
  - Cumulative targets and prior actions: place 25,000 staff into mobility scheme and achieve 5,000 exits (prior action); reporting and monitoring detailed.
  - Availability scheme: wages reduced by 25 percent for participants; exits from availability to count against severance entitlements.
- Hiring and replacement rules:
  - New hiring through 2015 to remain within 1:5 ceiling, with exceptions and contingency rules; mandatory exits replacement rules (1:1) for specific categories.
- Performance system and wage grid reform:
  - New annual performance system passed to limit share receiving top grade.
  - Legislate wage grid reform by end-October 2014; effective January 1, 2015 (structural benchmark).

### Social protection, health sector and pharmaceuticals
- Social safety net:
  - Pilot means-tested income support (GMI) expected to start September 2014 (delayed from early 2014); national rollout in 2015 if financing available.
  - Social community work program expanded by 50,000 places.
- Health sector measures and pharmaceutical controls:
  - Claw-back mechanism applied every six months to pharmaceutical producers; clawback ceiling: €2 billion including vaccines and medicines for uninsured (April 2014).
  - Measures to reduce medicine prices: off-patent drugs price revision, generics pricing and targets, regressive pharmacy profit margins reduced to 15 percent starting June 1, 2014.
  - EOPYY audits of private clinics and diagnostic centers with deadlines for completion and clawback targets for 2014–2015.
  - Hospital reforms: electronic claims submission to EOPYY starting 2015; audits and budgetary controls to link payments to audited claims.

### Judicial reform and anti-corruption
- Administrative courts backlog reducing; civil courts backlog increasing.
- Authorities committed to adopt new Code of Civil Procedure by end-May 2014 (structural benchmark).
- New anti-corruption legislation adopted; further legislation on political party funding and asset declaration systems planned by end-June 2014.
- Performance criteria and structural benchmarks: 14 prior actions implemented to enable fifth review; proposed new structural benchmarks through March 2015 spanning fiscal sustainability, financial stability, growth and transparency.

### Program financing, exceptional access, and capacity to repay
- Program continues to satisfy substantive criteria for exceptional access with little to no margin (Box 4).
- Financing assurances and liquidity actions for the fifth review include:
  - Market re-access: 5-year bond issuance of €3 billion at yield of 4.95 percent.
  - Buyback of bank preference shares: Alpha and Piraeus repurchased €940 million and €750 million respectively; corresponding Pillar I bonds cancelled.
  - Intra-governmental repo borrowing framework to draw up to €3 billion.
  - Cancellation of uncalled guarantees: ~€430 million of ETEAN bonds cancelled upon maturity in August.
  - After current review, €1.9 billion remaining in committed financing from European partners; alternative resources mobilized.
- Staff assessment: Greece’s capacity to repay the Fund remains adequate conditional on continued euro area support; if support were withdrawn and program went irretrievably off-track, capacity to repay would likely be insufficient.

### Monitoring, reporting, and TMU (Technical Memorandum of Understanding)
- Extensive monthly and quarterly reporting requirements to EC/ECB/IMF across: MoF, Bank of Greece, SGPR (tax revenue), social funds, HRADF, HFSF, and justice system.
- Key program performance criteria and indicative targets set for 2014–15 (e.g., Floor on modified general government primary cash balance; Ceiling on state primary spending; Ceiling on central government debt; Ceiling on domestic arrears).
- Schedule of proposed IMF purchases under Extended Arrangement (2012–16) with exact SDR disbursement amounts and percent of quota for each review; total 2012–16: 23,785.3 Millions of SDRs; 2,158.8 percent of quota; €28.0 Billion of euros.

### Staff appraisal — findings and recommendation
- Fiscal adjustment: Greece moved from weakest to strongest cyclically-adjusted fiscal position in the euro area in four years; more fiscal adjustment needed to restore debt sustainability; primary surpluses above 4 percent of GDP likely required over a full political cycle.
- Structural reforms: progress uneven; product and service market liberalization advanced; labor market reforms delayed; need to eliminate restrictions on collective dismissals and allow defensive lockouts.
- Banking and NPLs: NPLs pose a serious threat; staff emphasize realistic loss recognition and robust recapitalization to avoid prolonged deleveraging.
- Debt sustainability: debt-to-GDP yet to peak; EU partners’ reaffirmed commitments and contingent relief essential.
- Recommendation: staff supports completion of the fifth review, waiver on missed performance criterion on domestic arrears clearance, and re-phasing of three purchases evenly over remaining reviews in 2014.

*Source: IMF staff report excerpts and Annexes (May 14–16, 2014).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Extended Arrangement and Program Financing
- On March 15, 2012, the Executive Board approved a four-year arrangement in the amount of SDR 23.79 billion (2,159 percent of quota; €28 billion).
- Purchases totaling SDR 7.2 billion (€8.1 billion) have been made so far, and a purchase in the equivalent of SDR 3 billion (€3.5 billion) is proposed to be released on the completion of the review.
- Euro area countries have so far disbursed €139.9 billion since this program’s approval (of €144.6 billion committed), of which €48.2 billion was for bank recapitalization.

### Developments: Macroeconomic Adjustment and Remaining Challenges
- Significant progress toward rebalancing:
  - Fiscal primary and external current account balances are in surplus by end-2013.
  - Investor sentiment has improved; the government successfully placed a medium-term bond.
  - The economy is poised to grow in 2014 after six years of deep recession.
- Key outstanding challenges:
  - The real exchange rate remains overvalued; the CPI-based REER remains over-valued by about 10 percent.
  - Non-tourism exports are relatively weak; exports excluding tourism and oil (about 2/3rds of total exports) have lagged other euro area “periphery” countries.
  - Banks face a mountain of bad loans requiring adequate capital and oversight; without cleanup, prolonged deleveraging risks undermining recovery.
  - Fiscal gaps are projected for 2015–16, and public debt remains very high.

### Context and Historic Adjustment
- Pre-crisis imbalances and indebtedness:
  - Overall fiscal deficit of 15½ percent of GDP at end-2009.
  - External current account deficit of 11 percent of GDP.
  - Public debt of nearly 130 percent of GDP.
- By end-2013:
  - Primary fiscal and external current account balances were in surplus.
- Social and output consequences:
  - Real output has declined by close to 25 percent since 2007.
  - Unemployment around 26½ percent; over two-thirds are long-term unemployed.
  - Share of population at risk of poverty increased from 20 to 23 percent over 2009–12.
  - Gini coefficient rose from 33 to 34 percent over 2009–12.
- Political environment:
  - Coalition government majority reduced to two seats in the 300-member parliament, making bold reform implementation difficult.

### Recent Developments: Activity, Prices, External Sector, and Financial Conditions
- Growth and activity:
  - Real GDP fell by 3.9 percent in 2013 (better than the 4.2 percent contraction projected at the last review).
  - Q1 GDP flash estimate was -1.1 percent year-on-year.
  - PMI in manufacturing exceeded 50 for the first time since mid-2009.
  - Unemployment has declined slightly in recent months but remains the highest in the EU.
- Internal devaluation and competitiveness:
  - Private sector nominal wages have fallen by about 16 percent since 2009.
  - ULC-based REER improved considerably; CPI-based REER remains over-valued by about 10 percent.
  - GDP deflator and nontradables prices are falling but not commensurate with wage declines due to product and service market rigidities.
- External current account:
  - Registered a surplus in 2013 for the first time in decades.
  - Improvement driven by strong tourism receipts, oil exports, and large EU transfers; underlying structural external current account estimated deficit of 4 percent of GDP in 2013.
  - Most adjustment since 2009 has been due to import compression rather than export strength.
- Fiscal outturns:
  - Primary fiscal surplus of 0.8 percent of GDP in 2013 (target was zero), reflecting underspending, one-off adjustments, and higher revenue including frontloading EU funds of €0.7 billion.
  - State spending lower than budgeted by €0.8 billion; carryover of over-performance to 2014 is small.
  - Greece now has the highest cyclically-adjusted primary balance in the euro area.
  - Note: the surplus is smaller than the estimate reported in the April 2014 WEO and Fiscal Monitor owing to statistical adjustments by Elstat and Eurostat.
- Financial conditions and banking sector:
  - Financial conditions index points to easier financial conditions but still tighter than neutral.
  - Reliance on central bank funding declined by over €95 billion from its peak in 2012 to €62 billion at end-April 2014; emergency liquidity assistance declined to €3 billion.
  - Deposit rates declined from a peak of 3 percent in 2012 by 120 bps.
  - Average lending rates declined by 80 bps and now stand at 5.5 percent.
  - Credit contracting at an annual rate of 4 percent; deposits have not been returning beyond an initial recovery.
  - Yields on long-term Greek government bonds have fallen below pre-program levels; the government raised €3 billion in 5-year bonds at a yield of 4.95 percent in mid-April.
  - Banks: Alpha and Piraeus raised private capital, and NBG and Eurobank raised substantial private capital to cover baseline needs identified by the stress test; Piraeus and NBG issued in markets in 2014.
- Bank balance sheet vulnerabilities:
  - NPLs and restructured loans reached 40 percent of total loans by end-2013.
  - Coverage ratio (provisions over NPLs) was 49 percent.
  - NPLs net of provisions exceeded banks’ capital (138 percent).
  - Collateral values continue to fall.
  - Part of banks’ capital is low quality (negative goodwill and deferred tax assets).

### Policies, Reform Implementation, and Institutional Reforms
- Fiscal policy:
  - Authorities over-performed on the 2013 fiscal primary balance target (0.8 percent of GDP).
  - Authorities are on track to achieve the 2014 fiscal target, though carryover from 2013 over-performance is small.
- Structural reforms:
  - Acceleration in product and service market liberalization after lagging progress.
  - Labor market reforms: program is falling short of targets despite past important progress.
  - Tax code reforms legislated to simplify the system and ease tax administration.
  - Authorities need to guard against pressures to rollback progress.
- Financial sector policy and resolution:
  - Following the Bank of Greece’s stress tests, the HFSF buffer has been set aside to safeguard financial stability.
  - Ambitious steps are planned to strengthen the private debt resolution framework.
- Fiscal institutions and public administration:
  - Tax administration KPIs improved in 2013 relative to 2012 but fell short of targets due to staffing delays, political interference, and slow local tax office reform rollout.
  - Public financial management: legislative and IT improvements reduced payment delays and reporting discrepancies; arrears clearance delayed.
    - Stock of general government arrears fell from €8.2 billion at end-2012 to €3.9 billion at end-2013, compared with targeted elimination, due in part to lack of funds from delayed program reviews and €3.4 billion in new arrears accumulation (including social budget and hospitals).
    - End-2013 performance criterion on narrowly-defined domestic arrears and indicative target on broadly-defined stock were missed.
  - Public administration headcount reduced by 161,000 since 2010 (19 percent reduction).
  - Mobility and exit scheme targets reportedly met as prior actions, but exits were mostly from narrow groups and not based on performance.
  - Constitutional restrictions against mandatory, performance-based dismissals remain an impediment.
  - New annual performance system passed to limit the share of employees receiving a top grade.

### Staff Engagement and Review Process
- Discussions for the review were held during September 17–29, November 5–20, December 4–5 and 11–16, 2013, and February 24–March 18, 2014.
- The mission met with the Minister of Finance, Governor of the Bank of Greece, other cabinet ministers, and staff in these and other ministries; private banks, think tanks, and employer associations.
- IMF staff team included P. Thomsen (head), R. Goyal, J. Bersch, G. Gottlieb, N. Hobdari, A. Kangur, W. Maliszewski and M. Shamloo (EUR); I. Petrova and H. Jin (FAD); B. Rayner (SPR); O. Frecaut and D. Monaghan (MCM); W. Bergthaler, G. Esposito, A. Gullo, N. Rendak and A. Rosha (LEG), and M. Alves (STA). W. McGrew, S. Eble, M. Athanasopoulou, G. Gatopoulos, and M. Kalimeri (IMF resident representative office) assisted the mission. J. Manning and C. Piatakovas (EUR) assisted from headquarters. T. Catsambas (OED) participated in some meetings.

*Source: EXECUTIVE SUMMARY (May 16, 2014).*

### 12. Key structural reform commitments are being implemented, but with delays, while

### 12. Key structural reform commitments are being implemented, but with delays, while

### Reform implementation and program performance
- Greece has had one of the largest improvements since the crisis on the World Bank’s Doing Business indicator and the OECD’s overall Product Market Regulations index, but improvements are from a low base and Greece remains far from the euro area average.
- Key program commitments targeted for the second half of 2013 were implemented as prior actions:
  - OECD competition assessment (“toolkit”) to liberalize four key sectors.
  - Reduction in social security contribution (SSC) rates to lower the high tax wedge.
  - Nuisance tax reform.
  - Opening regulated professions.
- Other commitments, mainly related to the labor markets, are being re-phased to late 2014.
- All but one end-2013 program performance criteria were met; however:
  - All indicative targets and most structural benchmarks were missed (MEFP Tables 1 and 2).
  - The authorities have requested a waiver of nonobservance for the missed quantitative performance criterion on domestic arrears clearance.
  - Several missed structural benchmarks are being implemented as prior actions or re-phased, or corrective actions are being taken (MEFP Tables 3 and 6).

### Outlook and macroeconomic framework
- The macroeconomic framework is largely unchanged given developments broadly in line with the program (Table 11).
- Growth projections:
  - Growth is projected to pick up to about ½ percent in 2014.
  - Over the medium term, growth is projected above the estimated long-term potential growth of about 2 percent per year, assuming strong reform implementation.
- Inflation and GDP deflator projections for 2014 have been revised to:
  - Inflation: -0.8 percent for 2014.
  - GDP deflator: -0.7 percent for 2014.
- Output gap projection:
  - The output gap is not projected to close before 2019.
- External current account:
  - Expected to remain strong in 2014 on the back of another good tourism season and a recovery in shipping.
  - Likely to face headwinds in 2015 as imports rebound with domestic demand, official interest payments increase, and EU funds fall with the new cycle.
- Growth risks:
  - Near-term upside: faster improvement in investor interest boosting investment.
  - Medium-term downside risks: domestic political instability, slippages in reform implementation, failure to address bank balance sheet vulnerabilities, longer than expected deflation, lower euro area growth, monetary tightening reducing global risk appetite, potential escalation of the crisis in Ukraine affecting trade.
- Public debt dynamics (Annex I):
  - Debt peaks at about 174 percent of GDP this year.
  - Debt expected to decline to 128 percent of GDP in 2020 and 117 percent of GDP in 2022, before additional contingent relief measures from Greece’s European partners.
  - This decline assumes primary surpluses of over 4 percent of GDP being achieved and sustained for several years and relatively high nominal GDP growth.
  - Sustainability subject to notable downside risks: fiscal slippages, delayed structural reforms, and higher than expected deflation.

### Policy priorities and structural reforms
- Main priorities:
  - Ensure the financial sector is adequately capitalized to start extending credit and supporting the economy rather than continue deleveraging.
  - Implement structural reforms to improve the investment climate and boost productivity.
  - Redouble efforts on product and service market reforms where progress has lagged.
- Risks of inaction:
  - Absent acceleration of reforms, wage adjustment is likely to overshoot to compensate for limited price adjustment.
  - Greece risks remaining stuck in a low-growth trap over the medium term.
- Fiscal policy focus:
  - Ensure an adequate basis for meeting fiscal targets in line with the agreed debt sustainability framework.
  - Modernize the tax system and fiscal institutions.

### Fiscal policy stance and measures
- 2014 primary surplus target:
  - Authorities are on track to achieve the 2014 primary surplus target of 1.5 percent of GDP (MEFP ¶4).
- One-off “social dividend”:
  - Gross cost of €525 million, comprising largely well-targeted cash transfers to low-income households, plus €38 million for the homeless and uninsured and €37 million for security personnel.
- SSC rate reductions and nuisance charges:
  - Lowering SSC rates and eliminating some nuisance charges at a net cost of about ¼ percent of GDP.
- Fiscal space measures to meet the 2014 target include:
  - Revising spending ceilings in the 2015–18 Medium-Term Fiscal Strategy (€320 million).
  - Structural measures worth about €220 million, including reducing spending ceilings of extra-budgetary funds (€100 million) and scaling back military procurement (about €50 million).
  - Continuing implementation of the new Income Tax Code (over €350 million) that tightens depreciation rules and shifts professionals and small businesses under a new tax status.
  - Applying a withholding tax on pensions (over €400 million) that brings forward tax collection to yield one-off revenue gains phased over two years.
- Risks to the 2014 fiscal outlook:
  - Upside: higher-than-projected tax buoyancy as the economy recovers; possibility of over-performance due to past under-execution of budgets.
  - Downside: adverse court rulings on past wage cuts and property levies, uncertain impact of new tax policy initiatives, potential shortfalls in property taxes (new regime effective only earlier this year), and health sector spending.
  - Authorities reaffirmed commitment to take compensating measures if downside risks materialize.
- Gaps in 2015–16:
  - Preliminary staff estimates indicate a gap of around 1 percent of GDP in 2015 relative to the primary surplus target of 3 percent of GDP.
  - If the 2015 gap were closed with permanent measures, there would be a further gap of around ¾ percent of GDP in 2016 relative to the 4.5 percent of GDP target.
  - Authorities estimate smaller gaps, given more optimistic projections of tax administrative gains; staff and authorities agreed to re-visit projections during 2015 budget preparations.
  - Authorities reaffirmed commitment to implement necessary policies, including extending expiring measures as needed.

### Tax policy, tax administration, and social protection
- Income tax and tax procedures codes (MEFP ¶9):
  - Codes amended to simplify policy, broaden the base, make tax administration easier, and combat evasion.
  - Emerging pressures to roll back progress, including new exemptions (e.g., revamping the capital gains tax on properties to exempt most of the base) and reinstating or introducing further exemptions to target specific groups.
  - Need to close remaining loopholes, overhaul incentives, and address significant procedural bottlenecks.
- New property tax (MEFP ¶11):
  - Introduced at end-2013 on a broader base that includes commercial buildings, non-urban land, and industrial and agricultural properties.
  - Includes a progressive wealth tax component levied on total value of property rights above €300,000.
  - Transaction tax on properties reduced from 10 to 3 percent.
- VAT reform (MEFP ¶7):
  - VAT system contains preferential rates and exemptions that distort consumption choices and provide poorly-targeted subsidies; a sizeable policy gap exists.
  - Authorities committed to reform VAT policy and administration.
- Reducing the labor tax wedge:
  - Cutting SSC rates (MEFP ¶6):
    - Employers’ non-pension contributions (to IKA) cut by 2.9 pp in one step.
    - Employees’ non-pension contributions cut by 1 pp in one step.
    - Review of need for further cuts scheduled for mid-2015.
    - Broadening the base and strengthening collections through mandatory declarations, penalties, and reminders expected to yield about €400 million annually.
  - Nuisance charges (MEFP ¶7):
    - A number of small nuisance charges on particular transactions abolished to improve efficiency and transparency.
    - More work needed to identify the full set of charges, including excessive ones with important fiscal implications.
- Pension reform:
  - Authorities will review need to further reform pensions to ensure viability and increase actuarial fairness (MEFP ¶6).
  - Current concerns:
    - Pension spending around 17 percent of GDP, among the highest in the EU, requiring very large state subsidies.
    - Weak link between contributions and benefits, diminishing incentives to contribute.
    - Fragmented pension system with varying contribution payment and benefit rules, especially in the self-employed fund.
  - Authorities committed to address these concerns in the coming months.
- Social safety net:
  - Strengthening has been subject to delays (MEFP ¶8).
  - Pilot project on a means-tested income support scheme expected to start in September 2014 (delayed from early 2014).
  - To enable national rollout in 2015 as targeted, authorities will conduct by end-June 2014 a review of social protection and assistance systems and identify savings to create fiscal space for additional targeted support.
  - Social community work program targeting the long-term unemployed in jobless households is being expanded by another 50,000 persons.

### Transparency, public administration, and fiscal institutions
- Steps to increase transparency of government financial operations and reduce fiscal risks (MEFP ¶12):
  - Restructuring state-owned enterprises (ELVO, HDS, and LARCO).
  - Energy sector actions: arrears cleared; financial sustainability being restored to the renewable energy sector; energy prices to be adjusted to ensure full cost recovery and reduce cross-subsidies; structural measures to reduce costs (¶42).
  - Health sector reforms to address structural inefficiencies, including reducing excessive profit margins of pharmacies, reducing prices of medicine and diagnostic tests, and setting prescription budgets for doctors.
  - Budgetary ceiling increased by €100 million to accommodate additional spending on vaccinations and medicines for the uninsured.
- Public administration reform:
  - Authorities oppose setting further quantitative targets for exits (MEFP ¶13), viewing them as distracting from other reforms.
  - Commitments made for the coming months:
    - Determine appropriate size of the wage bill and employment within the public sector.
    - Decompress the wage distribution in a fiscally-neutral way.
    - Align non-wage benefits with best practices in the EU.
    - Undertake exits to meet this year’s target of 11,000 workers and an indicative estimate of 2,000 exits in Q1 of 2015.
    - Review whether to formally set targets going forward and outsource some activities to the private sector.
- Revenue administration (MEFP Annex I ¶2–4):
  - New organizational structure and grading and promotion systems adopted.
  - Ongoing weaknesses: inadequate staffing, insufficient budgetary autonomy, incomplete legal framework for merit-based and open hirings of senior managers, diversion from core activities, large taxpayers’ unit understaffed and diverted to transfer pricing cases, political interference, lack of clarity on potential personal liabilities of tax officials.
  - Steps to tackle tax evasion, improve debt collection, and better process tax refunds (MEFP Annex I ¶3):
    - Amendments adopted to facilitate information exchange between the revenue administration and the Financial Intelligence Unit to investigate possible money laundering related to tax evasion and freeze assets.
    - Joint SSC debt collection center operational but lacks full complement of staff and requires social security funds to transfer collectible debt.
    - Authorities committed to resist pressures to weaken payment installment schemes and to improve processing of tax refund claims using a risk-based approach.
  - New KPIs established for 2014 (MEFP Annex I ¶4):
    - 2014 targets maintain positive momentum from 2013.
    - Full-scope audits of large taxpayers re-defined to focus auditing resources on major taxes.
    - New KPIs in tax refunds and anti-money laundering to track servicing taxpayers and tackling tax evasion.
    - New KPIs to monitor progress in improving SSC collection capacity and information infrastructure.

*International Monetary Fund staff summary of program discussions and fiscal/structural developments as presented in the referenced IMF staff report.*

### 30. The authorities are strengthening the budget framework, streamlining payment

### The authorities are strengthening the budget framework, streamlining payment processes, and improving reporting

### Budget framework, payment processes, and reporting
- Binding multi-year expenditure ceilings are being set for line ministries and the health sector.
- Binding balanced budget targets are being introduced for local governments.
- Performance targets are being set for state-owned enterprises.
- The organic budget law will be amended later this year to bring it further in line with best international practice.
- The public investment budget will be reformed to develop integrated monitoring with the ordinary budget over the medium term.
- On payment processes, authorities committed to:
  - enhance support for line ministries;
  - modernize information systems;
  - reduce ex-ante audit volumes.
- On reporting:
  - The first monthly fiscal report with complete above-the-line data for all subsectors of general government was recently published.
  - Next steps include reducing the discrepancies between the above- and below-the-line items.

### Social sector arrears and health sector actions
- Arrears in the social sector are a particular challenge.
- EOPYY (health-insurance fund) has launched external audits on claims of private entities (hospitals, clinics, diagnostic centers), but has not been paying claims to public hospitals on time.
- Causes identified include lack of funding and unclear rules of health insurance premium transfers from the social security funds to EOPYY.
- Public hospitals have been dis-incentivized to submit claims, expecting lump-sum grants from the government to cover losses ex post.
- To rebuild validation and payment processes, authorities are developing a comprehensive action plan, including a new law to ensure electronic submission of claims from all hospitals to EOPYY starting 2015.

### KPIs (Key Performance Indicators)
- KPIs have been re-designed to focus on more challenging areas of public financial management.
- A new KPI has been established on the timely payment of invoices.
- Three social sector KPIs introduced to monitor:
  - timeliness of the health insurance premium transfer from social security fund IKA to EOPYY;
  - public hospitals’ submission of claims to EOPYY;
  - EOPYY’s audits of private entities’ claims.

### Financial sector: private debt overhang and bank capital needs
- Greece faces a major challenge resolving its private sector debt overhang after six years of deep recession, ongoing deflation of wages and prices, rising tax burdens, and shrinking credit.
- Greece has one of the highest levels of NPLs globally; the REER is overvalued and non-tourism exports are stagnant.
- Stress test (Bank of Greece estimates):
  - capital needs at €6.4 billion under the baseline scenario;
  - capital needs at €9.4 billion under the adverse scenario.
- Staff sees upside risks to these estimates from higher credit loss projections in the adverse scenario and weaknesses in the payment culture.
- Common practice is to recapitalize banks to the adverse scenario; however, following the SSM, the baseline scenario is used to determine capital needs in Greece, effectively using the lower end of capital needs estimates.
- Assessment of approaches:
  - The baseline-based approach may prevent an acute crisis (banks currently exceed prudential solvency requirements) but is unlikely to be robust enough to ensure NPLs are written down and prolonged deleveraging is avoided.
  - Regulatory forbearance can spread NPL resolution over many years and allow banks to extract oligopolistic profits at the expense of the real economy.
  - Staff preferred a more robust approach with larger upfront recapitalization to enable expeditious NPL write-downs and restore banks’ ability to extend new credit.
- Authorities committed to:
  - intensify supervision (MEFP ¶18);
  - preserve the HFSF buffer by setting aside resources expected to remain in the HFSF after the current recapitalization round and potential resolutions of some small non-core banks.
- The SSM comprehensive assessment in late 2014 will revisit capital needs.

### Improving NPL resolution framework and banks’ capacity
- Framework for private debt resolution (MEFP ¶19) — three key reforms:
  - design an out-of-court debt restructuring framework based on international best practices to complement the formal in-court system;
  - introduce a new code of conduct to regulate banks’ engagement with debtors and type of restructuring tools;
  - review household and corporate insolvency laws to identify and close gaps that inhibit rapid rehabilitation of viable entities and quick liquidation of non-viable entities.
- Institutional strengthening needs, including establishing a profession of insolvency practitioners that is adequately supervised, monitored, and appropriately incentivized.
- Banks’ strategies and capacity:
  - Following BlackRock’s Troubled Asset Review of September 2013, banks are improving internal organization through specialized units to manage NPLs.
  - Planned improvements include affordability assessment techniques and new products for long-term loan restructuring.
  - As a major shareholder, the HFSF is seeking to employ staff with commercial banking and NPL resolution experience to engage more actively via key committees (MEFP ¶20).

### HFSF law amendments and state involvement
- HFSF law amended to allow for further official assistance to banks and to improve HFSF effectiveness (MEFP ¶15, 20).
- New recapitalization law provides for full voting rights with new state investments and implements European state-aid rules on burden sharing.
- Law better reflects the HFSF’s status and binds it explicitly by MEFP commitments within its remit, reflecting the need for political involvement and accountability in major decisions.

### Privatization performance and remedial actions
- Performance on privatization in 2013:
  - Receipts for 2013 were just over €1 billion, short of the €1.6 billion indicative target.
- Factors causing delays include:
  - de facto lack of control of HRADF over some assets;
  - gaps in tools for sale of minority stakes;
  - hurdles in preparing real estate (clearing land titles, granting permits);
  - lengthy regulatory processes and need for regulatory structures for network industries;
  - need for sustained support from different ministries.
- Progress noted:
  - conclusion of the tender for the old Hellenikon airport;
  - launching of the tender process for Piraeus port;
  - other tender processes nearing completion (regional airports and the Thessaloniki water company).
- Authorities committed to remedial actions (MEFP ¶23) focused on:
  - corporate governance (strengthen HRADF control over corporate assets, augment HRADF independence and tools);
  - real estate (review land use policies, near-term actions such as reforms of the forestry and spatial planning laws, strengthen public property management company to accelerate transfer of properties to HRADF);
  - stronger government support (completion of 8 government actions as a prior action under the review).
- 2014 target revision:
  - 2014 target scaled down from €2.7 billion to €1.5 billion, with most reduction expected to be recovered in 2015–16.
  - Overall projections through 2022 were lowered by €3.9 billion to €22.4 billion.
- New monitoring tools agreed with the authorities will provide continuous tracking of progress.

### Structural reforms: product and service markets, energy, professions, and labor market
- Emphasis on product and service market reforms to build a critical mass for sustained growth (Table 12, MEFP ¶25).
- Collaboration with OECD and World Bank on design and monitoring of conditionality for growth-critical reforms.
- Promoting competition:
  - Authorities committed to address nearly all 329 recommendations of the OECD regarding liberalization of four key sectors—tourism, retail trade, building materials, and food processing.
  - Some measures yielding significant consumer benefits are being implemented only partially (e.g., elimination of advertising charges; removal of excessive restrictions on milk; liberalization of prices and channels of distribution of over-the-counter drugs and food supplements; liberalization of Sunday trading).
  - Authorities committed to review the impact of these reforms during 2014 and take steps as needed to achieve intended benefits by Q1 2015.
  - Authorities committed to review restrictions in four other sectors and liberalize as needed in late 2014.
- Reducing red tape:
  - Authorities committed to simplify the investment licensing regime.
  - Adopted some OECD recommendations to reduce administratively burdensome procedures in 13 sectors (overall recommendations aim at reducing burdens by about 25 percent); remaining measures to be implemented by end-June.
- Liberalizing rentals:
  - Reduced minimum contract duration of commercial rentals (binding only for owners) from 16 years to 3 years.
  - Reduced restrictions on duration of leases for short-term tourist rentals and committed to take additional measures to align the framework with EU best practice.
- Liberalizing transport:
  - Steps to reduce excessive operating costs in maritime and air transport.
  - Maritime reforms include suspending sectoral labor agreements while strengthening firm-level agreements.
  - Air transport measures to cut costs (limiting public sector obligations only to the non-tourist season) and increase competition (leveling the playing field for entry in the domestic market by non-domestic airlines).
- Energy sector reforms (MEFP ¶26):
  - ADMIE (electricity transmission company) split off from Public Power Company (PPC) and will be privatized to facilitate investment to connect islands to the mainland and reduce costs.
  - PPC will be split into two generation and retail companies; the “small PPC” will take about 30 percent of PPC assets and will be privatized.
  - Government will sell 17 percent share in the legacy PPC, reducing its holdings to 34 percent.
  - The “capacity payment” system for gas-fired producers is being reformed to facilitate a more efficient production mix.
  - Gas market is being liberalized: three local gas distribution monopolies will be opened to competition, and the gas transmission company has been sold (deal awaiting regulatory approval).
  - Note: Gas consumption in Greece is among the lowest in the EU in per capita or per GDP terms.
- Regulated professions (MEFP ¶27):
  - Authorities taking steps to open up the mediation profession, eliminate remaining excessive restrictions relating to lawyers, eliminate excessive reserved activities for engineers, and adopt secondary legislation for professions including electricians, actuaries, and chartered valuers.
  - Future follow-up reviews will address professions not fully liberalized.
- Labor market reforms (MEFP ¶28–29):
  - Authorities were unable to deliver on most labor market reform commitments given political realities.
  - Collective dismissals:
    - Disputed collective dismissals are de facto not allowed; they require approval of the Minister of Labor (no such approval granted since 1982).
    - Administrative change moved approval from the Minister of Labor to the Secretary General.
    - Legislative change is needed to establish simple statutory requirements, remove Ministerial approval, and ensure employers internalize social costs.
  - Industrial action:
    - Strike rules unchanged for over three decades; Greece prohibits lockouts.
    - Rules for trade union operations will be reviewed and brought in line with EU best practices by end-October.
  - Minimum wage and maturity allowances:
    - Statutory minimum wage in Greece varies from €684/month for employees without work experience to €889/month for those with more than 9 years of work experience.
    - The statutory minimum wage consists of a base wage and maturity allowances that add from 10 percent for 3 years of experience up to 30 percent for employees with 9 or more years of experience.
    - Maturity allowances will not be part of the statutory minimum wage from 2017.
    - As a transitory step, authorities are cutting the maturity allowance for long-term white-collar unemployed workers by 50 percent.

*Source: IMF staff report excerpt (MEFP references as cited in the source text).*

### 45. Judicial reform and anti-corruption efforts are starting to yield results (MEFP ¶30).

### 45. Judicial reform and anti-corruption efforts are starting to yield results (MEFP ¶30)

### Judicial reform and anti-corruption outcomes
- Administrative courts’ backlog (including tax cases) is being reduced steadily.
- Civil courts’ backlog continues to increase.
- Authorities committed to adopt by end-May 2014 a new and modern Code of Civil Procedure to address structural problems preventing civil courts from working efficiently.
- Court fees will be increased selectively (while upholding access to justice principles).
- New anti-corruption legislation was recently adopted, aligning the legal and regulatory framework with international standards.

### Program modalities and monitoring
- The authorities have implemented 14 prior actions to set the stage for Board consideration of the fifth review (MEFP Table 3). These measures aim to ensure the program remains on track toward achieving its objectives.
- Prior actions to restore fiscal sustainability:
  - Revising expenditure ceilings in the 2015–18 MTFS (MEFP ¶4).
  - Restoring fiscal sustainability of the RES account (MEFP ¶12).
  - Placing 25,000 staff into the mobility scheme and achieving 5,000 exits (MEFP ¶13).
- Prior actions to strengthen fiscal institutions:
  - Adopting secondary legislation on the ITC and TPC (MEFP ¶10).
  - Taking steps to implement the new structures for the revenue administration (MEFP Annex I ¶2).
  - Implementing a repo borrowing framework with general government entities to help alleviate financing constraints in 2014 (MEFP Annex I ¶5).
- Prior actions to preserve financial stability:
  - Adopting legislation governing the injection of public resources into banks through the HFSF (MEFP ¶15).
  - Improving the debt resolution framework (MEFP ¶19).
- Prior actions to support privatization:
  - Adopting legislation to strengthen HRADF’s control in companies in which it is the majority shareholder, implementing pending government actions in the privatization process, and launching the tender process for Thessaloniki port (MEFP ¶23).
- Prior actions to support structural reforms:
  - Legislating a reduction of SSC rates by 3.9 p.p. (MEFP ¶6).
  - Abolishing nuisance taxes (MEFP ¶7).
  - Adopting OECD recommendations to promote competition (MEFP ¶25).
  - Liberalizing the legal profession (MEFP ¶27).
  - Adopting minimum wage legislation to increase incentives to hire long-term unemployed workers (MEFP ¶29).
- New structural benchmarks are proposed (MEFP Table 6) broadly aimed at:
  - Securing fiscal sustainability.
  - Preserving financial stability.
  - Supporting growth and competitiveness.
  - Promoting employment.
  - Enhancing fiscal transparency.
- Authorities request a re-phasing of reviews:
  - Reduction to 12 reviews and re-phasing of three purchases evenly over the remaining reviews in 2014.
  - Sixth review scheduled on or after August 31, 2014; seventh review on or after November 30, 2014 (Table 13).
  - Quantitative performance criteria proposed for three subsequent test dates, through end-2014.

### Exceptional access criteria, financing assurances, and capacity to repay
- The program continues to satisfy the substantive criteria for exceptional access with little to no margin (Box 4). Delays in implementation of structural reforms raise concerns about capacity to implement the program in a difficult political environment; adherence to core fiscal goals and strong prior actions mitigate these concerns.
- Continued commitment of euro area member states to support Greece, including by providing additional official financing and further debt relief as necessary, is essential to meeting the criteria.
- Financing assurances for the fifth review (Table 14–15):
  - The program is fully financed for the next 12 months.
  - With only €1.9 billion remaining in committed financing from European partners following the completion of the current review, the authorities have mobilized alternative resources to meet prospective gross financing needs, including through:
    - Market re-access: 5-year bond issuance of €3 billion at yield of 4.95 percent (about half of the issuance was reportedly purchased by asset managers and about one-third by hedge funds).
    - Buyback of bank preference shares: Alpha Bank and Piraeus Bank raised enough new private capital in March 2014 to repurchase preference shares held by the government for €940 million and €750 million, respectively. A corresponding amount of the Pillar I bonds falling due in May will therefore be cancelled.
    - Intra-governmental borrowing: repo framework using state government assets as collateral to draw on excess liquidity in general government subsectors for up to €3 billion.
    - Cancellation of uncalled guarantees: government cancelled about €430 million of the ETEAN bonds upon maturity in August.
  - The Eurogroup’s commitments (February and November 2012, reiterated April 1, 2014) to provide adequate support to Greece during the life of the program and beyond provide good prospects that future financing gaps can be closed.
- Greece’s capacity to repay the Fund remains adequate (Table 16). The macroeconomic outlook, debt service to the Fund, and peak access remain broadly unchanged. Capacity to repay depends on:
  - Continued commitment of euro area member states to an official support package that will help keep debt on a sustained downward path as long as Greece adheres to all program policies.
  - If the program were to go irretrievably off-track and euro area member states did not continue to support Greece, the capacity to repay the Fund would likely be insufficient.

### Staff appraisal — key findings and risks
- Fiscal adjustment:
  - Greece has gone from having the weakest to the strongest cyclically-adjusted fiscal position within the euro area in four years.
  - More fiscal adjustment is needed to restore debt sustainability.
  - Once debt sustainability is restored, the primary surplus will have to be maintained at above four percent of GDP over the full political cycle for many years to come.
  - The strategy leaves no scope for notable increases in wages and pensions from current levels in the run-up to national elections in 2016.
  - With tax rates already high and discretionary spending compressed, additional fiscal adjustment without further cuts in wages and social transfers will only be possible with a dramatic improvement in public sector efficiency.
  - Progress in tax administration shows signs of improvement but still disappoints; this remains a critical risk to the program.
- Structural reforms:
  - Progressing, although unevenly.
  - Product and service market liberalization efforts have been redoubled and are welcomed.
  - The reduction of the tax wedge by cutting social security contributions in one go is a major step forward.
  - Labor market reforms are delayed. Critical needs for the next review include:
    - Eliminating restrictions on collective dismissals—no such dismissal has been approved for thirty years.
    - Affording employers the right of defensive lockouts.
  - These reforms could significantly improve the investment climate.
- Banking sector and NPLs:
  - NPLs pose a serious threat to banks’ ability to support a recovery.
  - Asset quality review revealed NPLs much above levels at which other advanced countries have found it difficult to avoid systemic crisis.
  - Bank of Greece targets for additional capital reflect optimistic assumptions about banks’ ability to grow their way out of the NPL problem as the economy recovers.
  - Staff concerned banks will struggle, face capital constraints, be forced into prolonged de-leveraging, and extract rents through excessive spreads and fees.
  - It is critical that regulators force banks to recognize losses on the basis of more realistic assumptions about loan recovery.
  - Tackling this problem could provide an early test of the new Single Supervisory Mechanism.
- Debt sustainability:
  - Debt to GDP is yet to peak; extraordinary levels projected well into the next decade suggest sustainability concerns will remain an obstacle to a durable recovery.
  - Essential that Greece’s European partners reaffirm commitments to the agreed debt strategy and stand ready to provide additional relief needed to keep debt on the targeted path.
- Outlook:
  - Recent developments suggest grounds for cautious optimism.
  - Investor sentiments are improving faster than expected; staff increasingly confident a modest recovery will take hold this year after six years of deep recession.
  - Exports have failed to become a strong driver of growth, underscoring that structural reforms are still well away from the critical mass needed for durable improvement in investor sentiment.
  - Determined implementation of structural reforms, continuation of product and service market liberalization, and repair of private and public balance sheets are needed to secure a robust, sustained, and balanced recovery.
  - Authorities should guard against complacency and avoid long delays in implementing reforms and completing program reviews.
- Staff recommendation:
  - On the basis of reforms undertaken and the government’s policy commitments, staff supports completion of the fifth review.
  - Staff supports the authorities’ requests for:
    - A waiver on the missed performance criterion on domestic arrears clearance, given the delay in program disbursements and corrective actions taken by the authorities.
    - Re-phasing of three purchases evenly over the remaining reviews in 2014.

### Box 1 — Magnitude and quality of Greece’s fiscal adjustment (summary points)
- Over the past five years Greece implemented a very ambitious fiscal adjustment; the estimated output gap swung from about +10 to -10 percent of potential output between 2008 and 2013.
- ESA deficit rose to -15½ percent of GDP by 2009; bringing the ESA balance to -3.2 percent of GDP in 2013 required significant structural adjustment.
- The adjustment has been largely expenditure led; the change in the cyclically-adjusted balance amounts to about 16½ percent of potential GDP during 2008–13.
- Revenue policy focus:
  - Direct taxes on income and wealth: steepened rate structure, streamlined income tax exemptions, introduced social solidarity surcharge, strengthened taxation of pensions and social benefits, scaled up taxes on properties.
  - Structural efforts among other revenue items included increases in the rate structure of social contributions and VAT and measures to enhance compliance.
- Spending contributions:
  - Compensation of employees and social benefits account for about half of primary adjustment in spending.
  - Compensation of employees adjusted in line with actual GDP; social benefits increased as a share of actual GDP due to automatic stabilizers.
  - Intermediate consumption and capital formation fell sharply as a share of actual GDP.
  - Public capital formation cut to 2.1 percent of GDP in 2013.
- Efficiency and equity considerations:
  - Fiscal consolidation has mixed efficiency effects; some measures support internal devaluation and growth, while higher statutory corporate income tax rate can hinder investment.
  - Overall, the fiscal adjustment in Greece has been progressive: tax-benefit simulations suggest fiscal measures counteracted increases in inequality induced by the market.
- Policy recommendations to address remaining imbalances and balance efficiency and equity:
  - Combat tax evasion, especially by high-wealth individuals and self-employed.
  - Streamline VAT reduced rates and set a sufficiently high registration threshold.
  - Introduce targeted guaranteed minimum income (GMI) program while means-testing other welfare benefits.
  - Continue structural reforms in the health sector and expand coverage to low-income households.
  - Finalize pension reforms to address fragmentation and reliance on state transfers.
  - Strengthen incentives for employment (in-work benefits, condition benefits on participation in active labor market policies, improve actuarial fairness in pensions).
  - Review and streamline all income tax exemptions, including taxation of investment vehicles and their participants.

*Source: _cr14151 - 45. Judicial reform and anti-corruption efforts are starting to yield results (MEFP ¶30).*

### Box 2. Greece: Stress Test

### Box 2. Greece: Stress Test

### Exercise overview
- Conducted by the Bank of Greece in the second half of 2013, based on end-June 2013 data.
- Results announced on March 6, 2014.
- Exercise components:
  - Asset Quality Review (AQR) of banks’ loan portfolios conducted by BlackRock.
  - Capital Needs Assessment conducted by the Bank of Greece.
  - Independent Troubled Assets Review (TAR) by BlackRock to assess banks’ handling of large NPL stocks.

### AQR and TAR methodology
- AQR was a qualitative review of lending procedures and loan portfolio quality.
- BlackRock developed statistical models using:
  - loan-level characteristics;
  - macroeconomic variables: real GDP, unemployment, and residential and commercial real estate prices.
- Models estimated credit losses over the stress test horizon and the lifetime of loans for both baseline and adverse scenarios.
- Findings of the TAR and AQR informed model design and underlying assumptions.

### Capital Needs Assessment and scenarios
- Two scenarios:
  - Baseline scenario: reflects program projections as of the fourth review.
  - Adverse scenario: developed by the Bank of Greece; assumes the economic recovery is delayed further and is weaker.
- Bank of Greece used a bottom-up approach, using banks’ restructuring plans as inputs for the stress test horizon period.
- Note: details of the adverse scenario are on the Bank of Greece’s website (as stated in the source).

### Staff concerns about key assumptions
- Proportion of lifetime losses
  - Bank of Greece used the concept of losses at the time-of-realization for capital needs under the adverse scenario, but imposed provisions for at least 85 percent of lifetime losses.
  - Staff preferred the time-of-default concept; under the adverse scenario this would imply provisions for an average of about 95 percent of lifetime losses and yields additional capital needs of over €4 billion.
- Losses on residential portfolios
  - Assumed macro and portfolio deteriorations between 2011 and 2013:
    - Peak unemployment: increased from 18 percent in 2011 to 27 percent in 2013.
    - House price peak-to-trough: increased from 22 percent in 2011 to 49 percent in 2013.
    - Starting-point NPLs: rose from 22 percent of total loan balances in 2011 to 35 percent in 2013.
  - Despite this, lifetime loss estimates implied significant recovery of NPLs in the adverse scenario; using more prudent recovery-rate estimates yields additional capital needs of at least €2 billion.
- Payment culture
  - Exercise assumed lifting of the two blanket moratoria on execution of collateral (one has already been partially extended by one more year).
  - Ongoing risk: whether deterioration in payment culture has been stemmed.

### Capital needs results (Millions of euros)
- Bank-level capital needs under the Baseline and Adverse Scenarios:
  - Alpha: 2,625 / 6,0 (entry in source appears as "Alpha262560" — preserved exactly as in source)
  - Eurobank: 2,945 / 4,980
  - NBG: 2,183 / 2,502
  - Piraeus: 425 / 757
  - Sub total: 5,815 / 8,799
  - Attica: 397 / 434
  - Panellinia: 169 / 186
  - Total: 6,382 / 9,418
- Note: The exercise showed no additional capital needs for ABB, Credicom, and IBG.
- Source listed in table: Bank of Greece.

### Main features of the 2013 Bank of Greece Stress Test Exercise (comparative notes)
- Bank of Greece Exercise vs. EBA 2014 EU-Wide Exercise (as reported):
  - Horizon:
    - Bank of Greece: 3.5 years, Jun., 2013 – Dec., 2016
    - EBA 2014: 3 years, Dec., 2013 – Dec., 2016
  - Balance sheet assumption:
    - Bank of Greece: Dynamic balance sheet
    - EBA 2014: Static balance sheet
  - Reference point:
    - Bank of Greece: Jun., 2013
    - EBA 2014: Dec., 2013
  - Binding scenario:
    - Bank of Greece: Baseline
    - EBA 2014: Baseline
  - Coverage:
    - Bank of Greece: All Greek commercial banks covering 95 percent of banking system assets.
    - EBA 2014: All "significant" credit institutions (130 banks in 18 countries covering 85 percent of euro area bank assets). Covers four core banks in Greece.
  - Pass/fail threshold:
    - Both exercises: 8 percent and 5.5 percent under the baseline and adverse scenarios, respectively
  - Capital definition:
    - Bank of Greece: Core tier 1
    - EBA 2014: Common equity tier 1
- Source for comparative table: IMF staff.

*Source: Bank of Greece; 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.
- This assessment assumes that euro area member state 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 and need for Fund financing
- 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 analysis and systemic spillover risk
- A rigorous and systematic analysis indicates that there is a high probability that the member’s public debt is sustainable in the medium term.
- Where significant uncertainties make it difficult to state categorically that there is a high probability of medium-term debt sustainability, exceptional access would be justified if there is a high risk of international systemic spillover.
- 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.
- 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.
- 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.
- The government re-accessed markets for the first time in four years, which is an important milestone.
- Near-term prospects for further market access are strong, but large issuances at relatively short maturities and generally high yields would adversely impact debt sustainability.
- 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 and implementation capacity
- 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.
- Program implementation has been difficult given the social and political environment, but the authorities have demonstrated program ownership and policy resolve through continued adherence to the core fiscal goals and 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.

*Box 4. Greece: Exceptional Access Criteria*

### 1. Direct taxes21.120.14.28.515.622.421.421.322.1

### 1. Direct taxes21.120.14.28.515.622.421.421.322.1

### Direct taxes — components and time series
- Income taxes: 13.3 11.5 1.9 5.0 9.6 13.7 14.0 14.0 14.7
- PIT: 10.0 8.0 1.4 3.1 6.3 8.9 9.4 9.2 9.6
- CIT: 1.7 1.7 0.0 0.9 1.7 2.6 2.5 2.7 2.8
- Other (income-related): 1.6 1.8 0.5 1.0 1.6 2.1 2.2 2.1 2.2
- Property taxes: 2.9 3.0 0.9 1.1 2.4 3.6 2.7 2.7 2.7
- Tax arrears collection (direct): 1.8 2.8 0.9 1.3 1.7 2.0 2.3 3.0 3.1
- Other direct taxes: 3.1 2.8 0.5 1.0 1.9 3.1 2.3 1.6 1.6

### Key observations (Direct taxes)
- Income taxes are the largest direct tax component, reaching 14.7 in the final period listed.
- PIT dominates income taxes, with values up to 9.6.
- Tax arrears collection (direct) rises to 3.1 in the final period listed.
- Other direct taxes decline to 1.6 in the final period listed.

### Indirect taxes — components and time series
- Aggregate indirect taxes: 26.1 24.5 5.4 11.0 17.1 24.1 24.8 26.0 26.7
- Transaction taxes: 15.7 14.7 3.4 6.7 10.4 14.1 14.6 15.4 15.8
  - VAT: 15.0 13.8 3.3 6.5 10.1 13.6 14.0 14.9 15.4
  - Other (transaction-related): 0.7 0.8 0.1 0.2 0.3 0.5 0.5 0.5 0.5
- Consumption taxes: 9.6 9.0 1.8 3.8 5.9 9.0 9.2 9.4 9.6
- Tax arrears collections (indirect): 0.5 0.5 0.2 0.3 0.5 0.6 0.7 0.8 0.8
- Other indirect taxes: 0.3 0.4 0.1 0.2 0.3 0.4 0.4 0.4 0.4

### Key observations (Indirect taxes)
- Indirect taxes remain a stable share, ending at 26.7 in the final period listed.
- VAT is the primary component of transaction taxes, reaching 15.4.
- Consumption taxes return to 9.6 in the final period listed.
- Tax arrears collections (indirect) increase to 0.8 by the final period listed.

### Tax Installment Scheme
- Tax Installment Scheme: 0.0 0.0 0.0 0.1 0.1 0.2 0.2 0.1 0.0

### Transfers EU
- Transfers EU: 0.2 0.2 0.0 0.0 0.1 0.3 0.2 0.2 0.2

*Source: _cr14151 - 1. Direct taxes21.120.14.28.515.622.421.421.322.1 (PDF filename: _cr14151 - 1. Direct taxes21.120.14.28.515.622.421.421.322.1; canonical URL: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2014/_cr14151.pdf)*

### 5. Nontax revenue2.22.41.11.82.32.82.62.82.9

### _cr14151 - 5. Nontax revenue2.22.41.11.82.32.82.62.82.9

### General government: Statement of Operations (GFSM 2001, flows) — headline figures 2011–16
- Revenue (Millions of euros): 2011: 88,090; 2012: 84,656; 2013: 80,163; 2014: 81,124; 2015: 81,232; 2016 (Proj.): 83,535.
- Taxes (Millions of euros): 2011: 45,161; 2012: 43,541; 2013: 42,257; 2014: 43,389; 2015: 44,406; 2016 (Proj.): 45,315.
- Social contributions (Millions of euros): 2011: 27,272; 2012: 26,435; 2013: 24,369; 2014: 24,891; 2015: 25,061; 2016 (Proj.): 25,974.
- Grants and other revenue (Millions of euros): 2011: 15,657; 2012: 14,680; 2013: 13,537; 2014: 12,844; 2015: 11,765; 2016 (Proj.): 12,246.
- Expenditure (Millions of euros): 2011: 108,183; 2012: 96,966; 2013: 85,930; 2014: 85,776; 2015: 86,743; 2016 (Proj.): 88,547.
- Interest (Millions of euros): 2011: 15,018; 2012: 9,707; 2013: 7,225; 2014: 7,613; 2015: 9,125; 2016 (Proj.): 10,136.
- Net lending (+)/borrowing (–) (Millions of euros): 2011: -20,093; 2012: -12,310; 2013: -5,767; 2014: -4,884; 2015 (Proj.): -3,488; 2016 (Proj.): -1,268.
- Primary Net lending (+)/borrowing (–) (Millions of euros): 2011: -5,075; 2012: -2,603; 2013: 1,458; 2014: 2,729; 2015 (Proj.): 5,636; 2016 (Proj.): 8,868.
- Unidentified measures (Millions of euros): 2013: 0; 2014: 000; 2015: -232; 2016: 2,022; 2016 (Proj.) additional entry: 3,744.

### General government fiscal composition (percent of GDP and program definitions)
- State overall balance (percent of GDP): -16.5; -8.5; .........; -3.3; -3.2; -3.1; -0.8 (sequence in table format).
- State primary balance (percent of GDP): -4.2; -2.1; 1.2; -0.3; 2.6; 2.6; 2.2; 2.4; 4.7 (as listed).
- General government primary cash balance (before measures) (percent of GDP): -3.6; 0.4; 1.6; 0.6; 3.6; 4.0; 3.3; 3.9; 7.0.
- Unidentified measures (percent of GDP): 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 2.0; 3.7; 1.8.
- General government primary cash balance (after measures) (percent of GDP): -3.6; 0.4; 1.6; 0.6; 3.6; 4.0; 5.3; 7.6; 8.8.
- State primary spending (program definition) (percent of GDP): 55.4; 52.4; 10.3; 21.0; 31.7; 44.4; 42.1; 40.8; 42.2.
- Memorandum — Floor on the modified general government primary cash balance: ...-0.3...0.43.15.17.5...... (as listed).
- Ceiling on state primary spending: ...53.2...21.031.844.442.1...... (as listed).
- State overall balance (after measures) (percent of GDP): -16.5; -8.5; .........; -3.3; -2.2; -1.2; 0.1.

### Detailed ordinary primary spending composition (percent of GDP)
- Ordinary primary spending (includes guarantees to entities inside the general government): 49.7; 45.8; 10.3; 20.8; 31.2; 43.7; 42.5; 42.0; 42.4.
- A. Remuneration and pensions: 20.5; 18.4; 4.6; 9.2; 13.7; 18.4; 18.1; 17.9; 18.0.
- B. Insurance and healthcare: 17.1; 15.9; 3.3; 6.8; 9.9; 13.6; 12.5; 12.2; 12.2.
- C. Operating and other expenditure: 6.4; 6.3; 1.1; 2.3; 3.7; 5.6; 5.5; 5.2; 5.1.
- D. Earmarked revenue: 3.5; 3.5; 0.9; 1.9; 2.8; 3.8; 3.9; 4.3; 4.3.
- E. Reserve: 0.0; 0.0; 0.0; 0.0; 0.3; 0.9; 1.2; 1.2; 1.2.
- F. Guarantees to entities inside general government: 0.7; 0.5; 0.4; 0.4; 0.4; 0.5; 0.4; 0.4; 0.9.
- G. Guarantees to entities outside general government: 0.1; 0.4; 0.0; 0.1; 0.2; 0.2; 0.2; 0.1; 0.2.
- H. EFSF commitment fee: 0.5; 0.1; 0.0; 0.0; 0.0; 0.1; 0.0; 0.0; 0.0.
- I. Spending on military procurement: 0.4; 0.5; 0.0; 0.1; 0.2; 0.5; 0.7; 0.6; 0.5.
- J. Arrears clearance 2/: 0.5; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0.

### Other fiscal components (percent of GDP)
- Interest: 12.2; 6.4; .........; 5.9; 5.4; 5.5; 5.5; 5.5 (sequence).
- Investment: 6.1; 6.7; 0.9; 2.2; 3.1; 6.8; 6.4; 6.7; 6.7.
  - A. Co-Financed: 0.0; 0.0; 0.9; 1.9; 2.6; 6.1; 5.7; 6.0; 6.0.
  - B. Own revenues: 0.0; 0.0; 0.1; 0.3; 0.5; 0.7; 0.7; 0.7; 0.7.
- State overall balance (percent of GDP) (as listed above): -16.5; -8.5; .........; -3.3; -3.2; -3.1; -0.8.
- State primary balance (percent of GDP): -4.2; -2.1; 1.2; -0.3; 2.6; 2.6; 2.2; 2.4; 4.7.

### Subsystem balances (percent of GDP)
- II. Balance local governments: 0.1; 0.3; 0.3; 0.5; 0.6; 0.6; 0.8; 0.9; 0.9.
- III. Balance social security funds: 0.2; 1.3; -0.1; -0.2; -0.3; -1.0; -1.6; -1.4; -1.3.
- IV. Balance of extra-budgetary funds: ......0.1; 0.2; 0.3; 1.2; 1.5; 1.4; 1.6.
- V. Balance of state-owned enterprises (incl. guarantees): 0.3; 0.9; 0.1; 0.4; 0.4; 0.6; 0.4; 0.5; 1.0.

### Fiscal cash balance and measures (percent of GDP)
- General government primary cash balance (before measures): -3.6; 0.4; 1.6; 0.6; 3.6; 4.0; 3.3; 3.9; 7.0.
- Unidentified measures: 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 2.0; 3.7; 1.8.
- General government primary cash balance (after measures): -3.6; 0.4; 1.6; 0.6; 3.6; 4.0; 5.3; 7.6; 8.8.
- General government primary cash balance (excl. PIB related to EU funds, program definition): .........0.43.15.17.5...... (as listed).

### Macro-level tables and projections (Medium-Term Macro Framework, 2012–19)
- Real GDP (annual percent change): 2012: -7.0; 2013: -3.9; 2014: 0.6; 2015: 2.9; 2016: 3.7; 2017: 3.5; 2018: 3.3; 2019: 3.6.
- Output gap (percent of potential output): -8.4; -10.5; -9.4; -6.8; -4.4; -2.6; -0.9; 0.5.
- Unemployment rate (percent) 1/: 24.2; 27.3; 25.8; 23.8; 20.9; 18.6; 15.8; 12.7.
- Gross fixed capital formation (percent change): -19.2; -12.8; 5.9; 9.7; 13.7; 11.0; 7.6; 7.1.
- Exports of goods and services (percent of GDP): 25.6; 27.6; 28.6; 29.2; 29.2; 29.5; 29.7; 29.7.
- Imports of goods and services (percent of GDP): -27.9; -27.9; -27.5; -27.1; -26.8; -26.4; -26.0; -25.7.
- Total revenues (percent of GDP): 43.8; 44.0; 44.6; 43.2; 42.4; 42.2; 42.2; 42.2.
- Total expenditures (percent of GDP) 3/: 50.2; 47.2; 47.3; 45.1; 43.0; 42.9; 43.0; 43.4.
- Primary balance (percent of GDP): -1.3; 0.8; 1.5; 3.0; 4.5; 4.5; 4.2; 4.2.
- Gross debt (percent of GDP): 157.2; 175.1; 174.2; 171.0; 160.5; 152.0; 144.6; 135.3.
- Net international investment position (percent of GDP): -109.1; -116.4; -114.1; -108.7; -101.8; -94.8; -88.5; -82.0.
- Gross external debt (percent of GDP): 233.5; 233.4; 230.3; 212.5; 198.6; 188.3; 181.7; 172.3.

### Monetary and financial sector indicators
- Aggregated balance sheet of MFIs — Total assets (Billions of Euros): 2011: 646.1; 2012: 602.5; 2013: 517.6; 2014 (Proj.): 490.9; 2015 (Proj.): 474.8.
- Broad money (Billions of Euros): 199.2; 188.4; 193.2; 196.6; 204.9.
- Credit to the private sector (Billions of Euros): 248.1; 227.3; 217.5; 209.3; 206.0.
- Credit to the private sector (annual percent change): -3.1; -4.0; -3.9; -3.7; -1.6.
- Eurosystem liquidity support (percent of total assets, MFIs excl. BoG): 16.1; 27.4; 17.9; 14.4; 10.7; 8.2 (2011–2016 sequence in Table 7 memorandum).
- Core financial soundness indicators (selected):
  - Regulatory capital to risk-weighted assets (percent): values include 11.9; 12.3; 7.0; 10.0; 11.6; 11.7; 11.7; 13.6 (quarterly sequence).
  - Nonperforming loans to total gross loans (percent): 7.8; 10.5; 16.0; 24.5; 27.8; 29.3; 31.2; 31.9 (quarterly sequence).
  - Bank provisions to nonperforming loans (percent): 42.0; 46.2; 62.9; 49.1; 48.6; 48.3; 47.4; 49.3.
  - Household debt to GDP (percent): 52.1; 60.0; 61.3; 63.7; 66.2; 65.6; 64.9; 64.9 (2009-Mar-Dec series).

### Financial balance sheet (stocks) and debt metrics 2010–13 (Millions of euros)
- Net financial worth: 2010: -209,534; 2011: -151,539; 2012: -196,868; 2013 (Prel.): -215,479.
- Financial assets: 2010: 81,500; 2011: 78,050; 2012: 124,183; 2013 (Prel.): 114,448.
  - Currency and deposits: 2010: 16,933; 2011: 14,744; 2012: 20,691; 2013: 21,643.
  - Debt securities: 2010: 741; 2011: 693; 2012: 12,732; 2013: 12,227.
  - Equity and investment fund shares: 2010: 37,533; 2011: 34,270; 2012: 65,497; 2013: 55,943.
- Liabilities: 2010: 291,034; 2011: 229,589; 2012: 321,051; 2013: 329,927.
  - Debt securities (stock): 2010: 190,632; 2011: 104,586; 2012: 79,170; 2013: 65,246.
  - Loans (stock): 2010: 75,192; 2011: 102,891; 2012: 216,255; 2013: 244,237.
- Debt at market value (Memorandum): 289,723; 227,455; 317,515; 326,030.
- Debt at face value (Memorandum): 352,408; 374,299; 325,252; 334,431.
- Maastricht debt (Memorandum): 329,514; 355,141; 303,936; 318,703.
- Change in net financial worth from other economic flows: 2010: 55,136; 2011: 77,517; 2012: -27,946; 2013: 4,528.

### State government financing requirements and external financing (2013–16 and 2011–19)
- State gross borrowing need (Billion of euros): 2013: 49.4; 2014 (Prel.): 39.7; 2015 (Proj.): 35.0; 2016 (Proj.): 18.5.
- Gross financing sources (Billion of euros): 2013: 49.4; 2014: 39.7; 2015: 22.4; 2016: 18.5.
- Official financing (including disbursed and committed) (Billion of euros): 2013: 32.1; 2014: 20.8; 2015: 7.1; 2016: 1.8.
  - IMF component (Billion of euros): 2013: 6.8; 2014: 10.6; 2015: 7.1; 2016: 1.8 (Table 14).
- External gross financing requirements (Billions of euros): 2011: 239.0; 2012: 203.7; 2013: 176.7; 2014: 135.0; 2015: 120.3; 2016: 95.9; 2017: 86.8; 2018: 82.1; 2019: 89.6.
- Current account deficit (percent of GDP): 2011: 2.6; 2012: 4.6; 2013: -1.2; 2014: -1.2; 2015: -0.3; 2016: -0.4; 2017: -1.5; 2018: -1.7; 2019: -2.7.
- Short-term debt amortization (Billions of euros): 2011: 182.9; 2012: 181.5; 2013: 163.8; 2014: 115.6; 2015: 101.9; 2016: 86.5; 2017: 78.2; 2018: 76.4; 2019: 77.1.
- Program financing (Billions of euros): 2011: 41.5; 2012: 109.9; 2013: 33.1; 2014: 22.6; 2015: 10.8; 2016: 6.4; 2017: 5.3; 2018: 5.7; 2019: 6.0.

### Indicators of Fund credit, prospective drawings and debt service (2012–26) — IMF-related numbers (Millions of SDRs / percent of quota)
- Prospective drawings (4-year EFF) (Millions of SDRs): 2012: 1,399; 2013: 5,812; 2014: 9,041; 2015: 6,027; 2016: 1,506; subsequent years: ... (table continues).
- Percent of quota (corresponding): 127; 527; 821; 547; 137; ... .
- Amortization to Fund (Millions of SDRs): 2012: 0; 2013: 1,472; 2014: 6,278; 2015: 7,299; 2016: 2,610; 2017: 592; 2018: 1,453; 2019: 2,960; 2020: 3,839; 2021: 3,964; 2022: 3,848; 2023: 3,372; 2024: 2,511; 2025: 1,004; 2026: 126.
- Interest and service charge (Millions of SDRs): 2012: 504; 2013: 455; 2014: 935; 2015: 971; 2016: 928; 2017: 875; 2018: 835; 2019: 754; 2020: 620; 2021: 458; 2022: 294; 2023: 141; 2024: 37; 2025: 9; 2026: 1.
- Total debt service to Fund (Millions of SDRs): 2012: 504; 2013: 1,927; 2014: 7,213; 2015: 8,270; 2016: 3,538; 2017: 1,467; 2018: 2,288; 2019: 3,715; 2020: 4,459; 2021: 4,422; 2022: 4,142; 2023: 3,513; 2024: 2,548; 2025: 1,014; 2026: 127.
- Outstanding stock of Fund credit (Millions of SDRs): 2012: 18,941; 2013: 26,294; 2014: 26,044; 2015: 24,772; 2016: 23,669; 2017: 23,077; 2018: 21,624; 2019: 18,664; 2020: 14,825; 2021: 10,861; 2022: 7,014; 2023: 3,641; 2024: 1,130; 2025: 126; 2026: 0.
- Outstanding percent of quota: 1,719; 2,387; 2,364; 2,248; 2,148; 2,094; 1,963; 1,694; 1,346; 986; 637; 330; 103; 11; 0.
- Debt service to Fund as percent of exports of goods and services: 1.2; 4.5; 16.3; 17.8; 7.2; 2.8; 4.2; 6.4; 7.4; 7.1; 6.5; 5.3; 3.8; 1.5; 0.2.
- Debt service to Fund as percent of GDP: 0.3; 1.2; 4.7; 5.2; 2.1; 0.8; 1.2; 1.9; 2.2; 2.1; 1.9; 1.5; 1.1; 0.4; 0.0.
- Memorandum: Exports of goods and services (Billions of euros): 2012: 50; 2013: 50; 2014 (Proj.): 52; 2015 (Proj.): 55; 2016 (Proj.): 58; 2017 (Proj.): 61; 2018 (Proj.): 64; 2019 (Proj.): 68; 2020 (Proj.): 71; 2021 (Proj.): 73; 2022 (Proj.): 75; 2023 (Proj.): 77; 2024 (Proj.): 79; 2025 (Proj.): 82; 2026 (Proj.): 84.
- GDP (Billions of euros) (Memorandum): 2012: 193; 2013: 182; 2014 (Proj.): 182; 2015 (Proj.): 188; 2016 (Proj.): 197; 2017 (Proj.): 207; 2018 (Proj.): 216; 2019 (Proj.): 228; 2020 (Proj.): 238; 2021 (Proj.): 248; 2022 (Proj.): 258; 2023 (Proj.): 268; 2024 (Proj.): 278; 2025 (Proj.): 289; 2026 (Proj.): 300.

### Structural reforms and implementation status (selected items)
- Labor market:
  - Reducing tax wedge on labor: completion of actuarial studies by September 2013 and adoption of plan by November 2013 to reduce the employer share of social security contributions by 5 ppt (budget-neutral, phased 2014–16); status: actions on social security contribution rates and nuisance taxes are being introduced as prior action (MEFP Table 3).
  - Reduce entry/exit costs: government to complete by November 2013 a study comparing regulations on temporary employment and collective dismissal rules and adopt reforms by end-2013; status: reforms on temporary employment and agencies implemented as prior action; reforms on collective dismissals rephased for end-October 2014.
- Product and service markets:
  - Liberalization of regulated professions: adopt new Code of Lawyers and study of 20 largest professions; Code of Lawyers adopted in September 2013; study completed July 2013; actions on many professions rephased.
  - Transportation services: increase flexibility of labor arrangements and reduce manning obligations in domestic shipping industry; status: adopted in context of 5th EFF review.
  - Retail trade: remove restrictions on discount sales, increase opening-day flexibility, replace fixed margins on OTC drugs with maximum margins; sale of vitamins outside pharmacies started March 2014.
  - Reduction of administrative burdens: legislative amendments based on OECD Standard Cost Model targeted end-June 2014.
- Business environment and judicial reform:
  - Trade facilitation: extend working shifts at Athens airport and Piraeus port, adopt risk-based audits, adopt e-custom system; service extended to two shifts; e-custom done.
  - Reduction of case backlog: assessment and reallocation of judges; compulsory mediation of small claims included into draft new Code of Civil Procedure.
  - Reforming the Code of Civil Procedure: initially Mar-14; rephased for end-May 2014.
- Anti-corruption:
  - Anti-corruption legislation and action plan: draft legislation and start implementation; legislation adopted March 2014 in Omnibus Law.

### Schedule of proposed purchases under the Extended Arrangement, 2012–16 (IMF financing)
- Board approval of EA: March 15, 2012 — 1,399.1 Millions of SDRs; 127.0 percent of quota; 1.6 Billion of euros.
- First and Second Reviews (Aug 31, 2012): 2,798.2 Millions of SDRs; 254.0 percent of quota; 3.3 Billion of euros.
- Third Review (Feb 28, 2013): 1,506.8 Millions of SDRs; 136.8 percent of quota; 1.8 Billion of euros.
- Fourth Review (Jul 25, 2013): 1,506.8 Millions of SDRs; 136.8 percent of quota; 1.8 Billion of euros.
- Fifth Review (Feb 28, 2014): 3,013.6 Millions of SDRs; 273.5 percent of quota; 3.5 Billion of euros.
- Sixth Review (Aug 31, 2014): 3,013.6 Millions of SDRs; 273.5 percent of quota; 3.5 Billion of euros.
- Seventh Review (Nov 30, 2014): 3,013.6 Millions of SDRs; 273.5 percent of quota; 3.5 Billion of euros.
- Eighth–Twelfth Reviews: listed disbursements of 1,506.8 or 1,506.4 Millions of SDRs in corresponding review lines.
- Total (2012–16): 23,785.3 Millions of SDRs; 2,158.8 percent of quota; 28.0 Billion of euros.

*Sources: Ministry of Finance; Bank of Greece; IMF, Government Finance Statistics; and IMF staff projections.*

### Annex I: Debt Sustainability Analysis

### Annex I: Debt Sustainability Analysis

### Summary assessment
- Public debt sustainability risks remain significant, although moderated by more favorable gross financing needs over the medium term and continued reliance on official financing.
- Under the baseline scenario:
  - Debt is projected to peak this year at around 174 percent of GDP before declining to about 128 percent in 2020 and 117 percent in 2022.
  - Gross financing needs are around 23 percent of GDP in 2014, falling to about 6 percent of GDP by 2022, rising thereafter.
- The projected improvement is fragile and conditional on continued fiscal consolidation and implementation of structural reforms.
- Key downside risks: lower nominal growth, further privatization slippages, and financial sector contingent liabilities.

### A. Public sector DSA — inputs, assumptions, and baseline realism
- Key changes relative to earlier reviews:
  - Lower output path due to a lower-than-expected deflator in 2013: increases projected 2020 debt ratio by about 1 percentage point.
  - Additional arrears clearance: clearance of about €2.5 billion in tax refund arrears in 2015 increases the 2020 debt ratio by 1 percent of GDP.
  - Lower privatization targets: raise projected 2020 debt ratio by about 0.4 percent of GDP and 2022 debt ratio by about 1.5 percent of GDP.
  - Fiscal over-performance in 2013: improved the 2020 debt level by about 1 percent of GDP.
  - Mobilization of alternative financing (buyback of preference shares and cancellation of ETEAN bonds): reduced financing needs, decreasing projected debt stock in 2020 by about 1 percent of GDP.
- Baseline projections and realism:
  - Debt levels decline from about 174 percent of GDP (peak) to about 128 percent in 2020 and 117 percent in 2022 due to fiscal effort and return to positive growth.
  - Gross financing needs: around 23 percent of GDP in 2014, declining quickly to around 6 percent of GDP by 2022 due to favorable maturity profile and projected primary surplus.
  - Bond spreads remain significant at over 400 bps against German bunds; but risk mitigated by continued reliance on official financing at favorable rates and maturities.
  - Growth: staff expects positive growth starting in 2014; growth projections are more optimistic than consensus.
  - Fiscal adjustment: program primary surplus of about 4 percent of GDP for several years is assumed but may prove difficult to maintain.

### Stress tests and shock scenarios (public DSA)
- Growth shock:
  - Real output growth rates lower by 1 standard deviation for 2 consecutive years starting in 2015; primary balance improves more slowly; debt-to-GDP increases rapidly before returning downward.
  - A permanent growth reduction of about 1 percent per year would make debt around 10 percentage points of GDP higher by 2020.
- Primary balance shock:
  - Reform momentum stalls; primary balance remains at 2.5 percent of GDP from 2015 onward; debt-to-GDP declines much more slowly and gross financing needs remain significantly above baseline.
- Interest rate shock:
  - Spreads rise by 200 bps; effect mitigated by continued official financing.
- Contingent liability shock:
  - Bailout of the financial sector that increases public expenditures by 10 percent of banking sector assets would have a significant effect on debt and financing needs, especially if combined with a real GDP growth shock (1 standard deviation for 2 years).

### B. External sector DSA — projections and risks
- External debt projections:
  - Gross external debt: currently at 233 percent of GDP, projected to decline to about 160 percent in 2020.
  - Net external debt: projected to fall from 129 percent of GDP in 2014 to 78 percent in 2020.
- Drivers of improvement:
  - Current account projected to improve as competitiveness is restored and Greece continues to rely on official loans at relatively low interest rates.
  - FDI inflows related to privatization remain an important non-debt-creating financing source.
- External shocks and slippages:
  - Larger current account deficits: a deterioration of around 1.5 percent of GDP per year (e.g., from delayed structural reforms or a terms-of-trade shock) would keep the debt ratio on a downward path but about 10 percentage points higher by 2020.
  - Deflation shock: an additional 1 percent deflation over the medium term would result in a 2020 debt ratio 5 percentage points above the baseline.
  - Privatization slippages: realizing only about half of projected privatization proceeds would raise the 2020 debt ratio by around 4 percentage points.
- Combined adverse scenario:
  - Lagged program implementation, weak competitiveness, and higher deflation together would produce substantially worse dynamics: net debt ratio reaching about 95 percent of GDP in 2020, 18 percent of GDP higher than baseline.

### Selected baseline projections and diagnostics (as presented)
- Public gross nominal debt (percent of GDP): 2013 = 175.1; 2014 = 174.2; 2015 = 171.0; 2016 = 160.5; 2017 = 152.0; 2018 = 144.6; 2019 = 135.3; 2020 = 127.7; 2022 = 117.2.
- Public gross financing needs (percent of GDP): 2013 = 21.4; 2014 = 23.5; 2015 = 20.2; 2016 = 11.9; 2017 = 11.5; 2018 = 9.9; 2019 = 11.9; 2020 = 8.7; 2022 = 6.4.
- Real GDP growth (percent): 2013 = -3.9; 2014 = 0.6; 2015 = 2.9; 2016 = 3.7; 2017 = 3.5; 2018 = 3.3; 2019 = 3.6; 2020 = 2.6; 2022 = 1.9.
- Inflation (GDP deflator, percent): 2013 = -2.1; 2014 = -0.7; 2015 = 0.4; 2016 = 1.1; 2017 = 1.3; 2018 = 1.4; 2019 = 1.8; 2020 = 1.8; 2022 = 2.0.
- Effective interest rate (percent): 2013 = 2.4; 2014 = 2.3; 2015 = 2.9; 2016 = 3.1; 2017 = 3.4; 2018 = 3.5; 2019 = 3.5; 2020 = 3.4; 2022 = 3.6.
- Sovereign bond spread (bp) over German bonds: reported at over 400 bps (specific figure noted as 551 bp in the baseline table for an earlier period); CDS (bp) noted as 494 in the baseline table.

### Stress-test scenarios presented (overview of outcomes)
- Primary Balance Shock scenario:
  - Primary balance path: 2014 = 1.5; 2015 onward = 2.5 (percent of GDP) under shock scenario versus baseline 3.0–4.5.
- Real GDP Growth Shock scenario:
  - Example path: 2015 = -1.9 (growth) under shock vs. baseline 2.9.
- Real Interest Rate Shock, Real Exchange Rate Shock, Combined Shock, Contingent Liability Shock, and Lower Growth Scenario: each scenario produces higher gross nominal public debt and gross financing needs compared with baseline; combined shocks and contingent liability shocks generate the largest adverse impacts on debt dynamics.
- Graphical and percentile diagnostics indicate wide predictive densities for gross nominal public debt and identify vulnerabilities in gross financing needs and debt level relative to benchmarks.

*Source: IMF staff estimates and projections as presented in Annex I: Debt Sustainability Analysis.*

### Annex Figure I.6. Greece: External Debt Sustainability: Bound Tests, 2009–23 1/

### Annex Figure I.6. Greece: External Debt Sustainability: Bound Tests, 2009–23

### External debt path and bound tests (summary of figure and scenarios)
- Chart focus: Net external debt in percent of GDP, 2009–23, with shaded areas representing actual/preliminary data.
- Baseline: historical and projected baseline series shown for 2009–2021.
- Scenario tests presented (each compared to baseline):
  - Non-interest Current Account Shock 2/: "Current account balance lower by 1.5 percent of GDP due to delayed program implementation and terms-of-trade shock."
  - Deflation Shock 3/: "Impact of 1pp negaitve shock to inflation rate (GDP and exports deflators). To be conservative, assumes no quantity effect."
  - FDI Shock 4/: "Decline in FDI due to reduced privatization receipts."
  - Combined Shock Scenario: simultaneous application of the above shocks.
- Gross financing needs are shown on a right-hand scale in the figure.

### Key numbers from Annex Table I.1 (Net External Debt Sustainability Framework, 2009–22) — Baseline external debt and changes
- Baseline: external debt (percent of GDP):
  - 2009: 89.6
  - 2010: 134.4
  - 2011: 148.4
  - 2012: 131.3
  - 2013: 137.2
  - 2014: 131.5
  - 2015: 122.9
  - 2016: 113.4
  - 2017: 104.1
  - 2018: 95.6
  - 2019: 86.8
  - 2020: 79.7
  - 2021: 73.4
  - 2022: 68.1
- Change in external debt:
  - 2009: -4.6
  - 2010: 12.8
  - 2011: 44.8
  - 2012: 14.0
  - 2013: -17.1
  - 2014: 5.9
  - 2015: -5.7
  - 2016: -8.6
  - 2017: -9.5
  - 2018: -9.3
  - 2019: -8.6
  - 2020: -8.8
  - 2021: -7.1
  - 2022: -6.3
  - 2023: -5.2

### Identified external debt-creating flows (4+8+9) and components (percent of GDP)
- Identified external debt-creating flows:
  - 2009: 9.2
  - 2010: 12.5
  - 2011: 16.7
  - 2012: 12.4
  - 2013: 3.2
  - 2014: -5.9
  - 2015: -9.1
  - 2016: -10.2
  - 2017: -10.2
  - 2018: -10.0
  - 2019: -10.8
  - 2020: -7.7
  - 2021: -6.9
  - 2022: -5.9
- Current account deficit, excluding interest payments:
  - 2009: 6.0
  - 2010: 4.9
  - 2011: 3.7
  - 2012: -1.6
  - 2013: -4.2
  - 2014: -5.2
  - 2015: -5.2
  - 2016: -5.5
  - 2017: -6.4
  - 2018: -6.6
  - 2019: -6.9
  - 2020: -6.2
  - 2021: -5.7
  - 2022: -5.6
- Deficit in balance of goods and services:
  - 2009: 7.8
  - 2010: 6.8
  - 2011: 6.0
  - 2012: 2.3
  - 2013: 0.2
  - 2014: -1.1
  - 2015: -2.1
  - 2016: -2.4
  - 2017: -3.1
  - 2018: -3.6
  - 2019: -4.0
  - 2020: -4.1
  - 2021: -4.1
  - 2022: -4.1
- Exports (percent of GDP):
  - 2009: 18.3
  - 2010: 20.5
  - 2011: 23.4
  - 2012: 25.6
  - 2013: 27.6
  - 2014: 28.6
  - 2015: 29.2
  - 2016: 29.2
  - 2017: 29.5
  - 2018: 29.7
  - 2019: 29.7
  - 2020: 29.7
  - 2021: 29.4
  - 2022: 29.2
- Imports (percent of GDP):
  - 2009: 26.2
  - 2010: 27.3
  - 2011: 29.5
  - 2012: 27.9
  - 2013: 27.9
  - 2014: 27.5
  - 2015: 27.1
  - 2016: 26.8
  - 2017: 26.4
  - 2018: 26.0
  - 2019: 25.7
  - 2020: 25.6
  - 2021: 25.4
  - 2022: 25.1
- Net non-debt creating capital inflows (negative):
  - 2009: 0.0
  - 2010: 1.4
  - 2011: 0.3
  - 2012: -0.3
  - 2013: -2.8
  - 2014: -3.5
  - 2015: -2.6
  - 2016: -2.0
  - 2017: -1.8
  - 2018: -1.9
  - 2019: -2.0
  - 2020: -2.1
  - 2021: -2.1
  - 2022: -1.2

### Automatic debt dynamics (percent of GDP) and contributions
- Automatic debt dynamics:
  - 2009: 3.2
  - 2010: 6.2
  - 2011: 12.7
  - 2012: 14.3
  - 2013: 10.1
  - 2014: 2.8
  - 2015: -1.3
  - 2016: -2.7
  - 2017: -2.0
  - 2018: -1.5
  - 2019: -1.9
  - 2020: 0.6
  - 2021: 1.0
  - 2022: 1.0
- Contribution from nominal interest rate:
  - 2009: 2.5
  - 2010: 2.6
  - 2011: 3.9
  - 2012: 2.6
  - 2013: 2.0
  - 2014: 2.7
  - 2015: 2.9
  - 2016: 3.1
  - 2017: 3.2
  - 2018: 3.2
  - 2019: 3.0
  - 2020: 2.8
  - 2021: 2.5
  - 2022: 2.3
- Contribution from real GDP growth:
  - 2009: 2.4
  - 2010: 4.6
  - 2011: 10.2
  - 2012: 11.2
  - 2013: 5.4
  - 2014: -0.8
  - 2015: -3.7
  - 2016: -4.3
  - 2017: -3.8
  - 2018: -3.3
  - 2019: -3.3
  - 2020: -2.2
  - 2021: -1.5
  - 2022: -1.3
- Contribution from price and exchange rate changes 2/:
  - 2009: -1.7
  - 2010: -1.0
  - 2011: -1.4
  - 2012: 0.5
  - 2013: 2.8
  - 2014: 0.9
  - 2015: -0.5
  - 2016: -1.4
  - 2017: -1.4
  - 2018: -1.5
  - 2019: -1.6
  - 2020: -1.5
  - 2021: -1.5
  - 2022: -1.4
- Residual, incl. change in gross foreign assets (2-3):
  - 2009: 3.6
  - 2010: 32.2
  - 2011: -2.7
  - 2012: -29.5
  - 2013: 2.7
  - 2014: 0.2
  - 2015: 0.5
  - 2016: 0.7
  - 2017: 0.9
  - 2018: 1.4
  - 2019: 2.0
  - 2020: 0.6
  - 2021: 0.6
  - 2022: 0.7

### External debt ratios and gross financing needs
- External debt-to-exports ratio (percent):
  - 2009: 489.6
  - 2010: 655.3
  - 2011: 633.7
  - 2012: 512.3
  - 2013: 496.2
  - 2014: 459.9
  - 2015: 421.4
  - 2016: 388.3
  - 2017: 353.2
  - 2018: 322.0
  - 2019: 291.7
  - 2020: 268.5
  - 2021: 249.2
  - 2022: 233.3
- Gross external financing need (billions of euros):
  - 2009: 194.4
  - 2010: 216.2
  - 2011: 239.0
  - 2012: 203.7
  - 2013: 176.7
  - 2014: 135.0
  - 2015: 120.3
  - 2016: 95.9
  - 2017: 86.8
  - 2018: 82.1
  - 2019: 89.6
  - 2020: 86.1
  - 2021: 78.6
  - 2022: 69.6
- Gross external financing need (percent of GDP):
  - 2009: 84.1
  - 2010: 97.3
  - 2011: 114.6
  - 2012: 105.3
  - 2013: 97.1
  - 2014: 74.2
  - 2015: 64.1
  - 2016: 48.7
  - 2017: 42.0
  - 2018: 38.0
  - 2019: 39.3
  - 2020: 36.1
  - 2021: 31.7
  - 2022: 27.0

### Key macroeconomic assumptions underlying baseline (selected)
- Real GDP growth (percent):
  - 2009: -3.1
  - 2010: -4.9
  - 2011: -7.1
  - 2012: -7.0
  - 2013: -3.9
  - 2014: 0.6
  - 2015: 2.9
  - 2016: 3.7
  - 2017: 3.5
  - 2018: 3.3
  - 2019: 3.6
  - 2020: 2.6
  - 2021: 2.0
  - 2022: 1.9
- GDP deflator (change in percent):
  - 2009: 2.3
  - 2010: 1.1
  - 2011: 1.0
  - 2012: -0.3
  - 2013: -2.1
  - 2014: -0.7
  - 2015: 0.4
  - 2016: 1.1
  - 2017: 1.3
  - 2018: 1.4
  - 2019: 1.8
  - 2020: 1.8
  - 2021: 1.9
  - 2022: 2.0
- Nominal external interest rate (percent) 6/:
  - 2009: 3.3
  - 2010: 2.8
  - 2011: 2.7
  - 2012: 1.6
  - 2013: 1.4
  - 2014: 1.9
  - 2015: 2.3
  - 2016: 2.6
  - 2017: 3.0
  - 2018: 3.2
  - 2019: 3.3
  - 2020: 3.3
  - 2021: 3.2
  - 2022: 3.3
- Growth of exports (euro terms, percent):
  - 2009: -21.5
  - 2010: 7.7
  - 2011: 7.2
  - 2012: 1.4
  - 2013: 1.6
  - 2014: 3.4
  - 2015: 5.3
  - 2016: 5.0
  - 2017: 5.9
  - 2018: 5.4
  - 2019: 5.7
  - 2020: 4.2
  - 2021: 3.1
  - 2022: 3.1
- Growth of imports (euro terms, percent):
  - 2009: -25.2
  - 2010: 0.3
  - 2011: 1.4
  - 2012: -12.1
  - 2013: -6.1
  - 2014: -1.5
  - 2015: 1.9
  - 2016: 3.8
  - 2017: 3.2
  - 2018: 3.3
  - 2019: 4.2
  - 2020: 3.9
  - 2021: 3.1
  - 2022: 2.7
- Current account balance (percent of GDP):
  - 2009: -11.2
  - 2010: -10.1
  - 2011: -9.9
  - 2012: -2.4
  - 2013: 0.7
  - 2014: 0.7
  - 2015: 0.2
  - 2016: 0.2
  - 2017: 0.7
  - 2018: 0.8
  - 2019: 1.2
  - 2020: 0.7
  - 2021: 0.7
  - 2022: 0.9
- Net non-debt creating capital inflows (percent of GDP):
  - 2009: 0.0
  - 2010: -1.4
  - 2011: -0.3
  - 2012: 0.3
  - 2013: 2.8
  - 2014: 3.5
  - 2015: 2.6
  - 2016: 2.0
  - 2017: 1.8
  - 2018: 1.9
  - 2019: 2.0
  - 2020: 2.1
  - 2021: 2.1
  - 2022: 1.2

### Notes on definitions and methodology (as presented)
- 1/ Automatic debt dynamics derived as [r - g - r(1+g) + ea(1+r)]/(1+g+r+gr) times previous period debt stock, with r = nominal effective interest rate on external debt; r = change in domestic GDP deflator in euro terms; g = real GDP growth; e = nominal appreciation (increase in dollar value of domestic currency); and a = share of domestic-currency denominated debt in total external debt.
- 2/ Contribution from price and exchange rate changes defined as [-r(1+g) + ea(1+r)]/(1+g+r+gr) times previous period debt stock.
- 3/ For projection, line includes the impact of price and exchange rate changes.
- 4/ Gross external financing need defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.
- 5/ Scenario with key variables at their historical averages uses key variables: real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.
- 6/ "The external DSA is based on net external debt while the interest rates in the public sector DSA are based on gross debt. Nevertheless, average interest rates generally follow a rising trend, and are more closely correlated at the end of the projection period, as more new debt is contracted at higher interest rates."
- 7/ Debt-stabilizing non-interest current account: long-run, constant balance that stabilizes the debt ratio assuming key variables remain at their levels of the last projection year.

### Selected policy actions and program context (from Letter of Intent / MEFP excerpts)
- Program objectives: restore fiscal and external sustainability, safeguard financial stability, strengthen growth and job creation, protect the vulnerable.
- Fiscal policy and targets:
  - Achieve a primary fiscal surplus of 1.5 percent of GDP in 2014.
  - Committed to adopting policies consistent with a primary surplus of 3 percent of GDP in 2015.
  - Locked in €320 million of lower spending from permanent savings in 2013 by revising binding expenditure ceilings in the 2015–18 MTFS (prior action).
  - Transferred €500 million (over 30 percent of 2013 general government primary balance over-performance) to a segregated account earmarked for debt reduction.
  - Use up to €525 million in gross terms of one-off income support to around 730,000 households and 75,000 security personnel.
- Fiscal risks and court rulings:
  - Constitutional court ruling reversed wage cuts of judges since August 2012, increasing gross spending by wages and pensions by €168 million in 2014, including a permanent annual increase of €70 million accommodated in the plan.
- Social security and pensions reforms:
  - Legislated reduction in SSC rates of IKA by 3.9 p.p. effective July 1, 2014 (mostly reducing employer-paid non-pension contributions by 2.9 p.p.).
  - Review by end-June 2015 of impact on wages, employment and public finances; assess case for further cut of 1 p.p. in employer contributions in a budget neutral way.
  - Offsetting measures estimated to yield about €230 million in fiscal savings in 2014 (eliminating OAED family benefits, reducing OAED training programs, rationalizing OAEE exemptions, offsetting VAT and income tax refunds against SSFs’ debts).
  - Plan to prepare by September 2014 (in consultation with EC/ECB/IMF) a comprehensive plan to unify and streamline SSC policies and better target lower-end contributions; implement by end-2014.
  - Pensions policy commitments include consolidating pension fund administration, ensuring actuarial balance of the consolidated system, containing pension spending to align with short- and medium-term fiscal targets, and establishing close links between contributions and benefits.
  - Specific timetable on pensions:
    - Prepare draft comprehensive proposal on SSF consolidation and harmonize procedures by June 2014.
    - Complete an actuarial study of the whole pension system by September 2014.
    - Agree on specific design and parametric improvements with EC/ECB/IMF by October 2014.
    - Legislate changes by November to take effect January 1, 2015 (structural benchmark).
    - Integrate supplementary pension funds in ETEA by June 2014 and adjust benefits to contributions pro-rata starting January 1, 2014; fiscal sustainability factor applied to supplementary funds integrated into ETEA from July 1, 2014.
    - All supplementary pension funds to be financed only by own contributions starting January 1, 2015; similar rules to be legislated for funds that cannot be merged into ETEA by end-June 2014.
    - Lump-sum pension reform effective since January 1, 2014; remaining lump-sum funds to be incorporated under law 4052/2012 by June 2014, effective January 1, 2015; from January 1, 2015 all lump-sum funds financed only by own contributions.
- Financial stability:
  - Asset quality review and stress test identified need to strengthen bank capital and accelerate repair of bank and private sector balance sheets.
  - Bank of Greece required banks to raise identified capital by end-June 2014; HFSF buffer preserved as backstop; all four systemic banks completed capital increases.
  - Accelerate reforms of corporate and household insolvency frameworks and strengthen bank supervision.
- Structural reforms and growth:
  - Adopted key OECD recommendations to eliminate regulatory restrictions to competition in four sectors.
  - Implemented several actions supporting the privatization program and frontloaded reduction of the labor tax wedge.
  - Additional reforms to open restricted professions, improve competition in the energy sector, ease administrative burdens on business, and improve quality of public services.
- Financing and program requests:
  - Program fully financed through the next twelve months; firm commitments in place thereafter from euro area partners conditional on compliance with program.
  - Request for completion of the fifth review under the EFF arrangement and a purchase of SDR 3 billion.
  - Request for waiver of nonobservance for end-2013 quantitative performance criteria on government arrears and establishment of performance criteria and indicative targets for subsequent dates.

*Source: Annex Figure I.6 and Annex Table I.1; Letter of Intent and Attachment I: Memorandum of Economic and Financial Policies (selected excerpts).*

### 7.      We are further optimizing the tax structure to improve the business climate.

### 7.      We are further optimizing the tax structure to improve the business climate.

### On nuisance taxes
- Prior actions:
  - Abolished 40 charges at an annualized cost of €245 million, of which:
    - 9 are abolished effective July 1, 2014, at the latest;
    - 27 that finance social security funds are abolished effective January 1, 2015;
    - 4 charges amounting to about €60 million accrue to entities outside the general government and do not impact the budget effective immediately.
  - Removed revenue earmarking of 12 taxes amounting to €1.4 billion effective January 1, 2015.
- Further actions and timetable:
  - By end-May 2014: update the list of nuisance charges that accrue to the general government and to entities outside the general government (including public service announcements and inviting anonymous reporting).
  - By end-June 2014: abolish as many as possible, in consultation with the EC/ECB/IMF, effective January 1, 2015.
  - By end-June 2014: abolish all charges that finance auxiliary pensions (that fall under the Ministry of Labor), effective January 1, 2015, financed by adjusting pension spending in these funds or contributions consistent with the 2012 pension reform.
  - By September 2014: review and by November 2014 legislate the phasing out of nuisance charges that finance main pensions, congruent with the pension timeline, and determine mode of financing (whether SSCs should be increased or spending reduced). This includes addressing advertising nuisance taxes that finance pensions as identified in the OECD competition assessment.
  - By September 2014: comprehensively review all reciprocal charges; legislate their phasing out by November 2014.
  - By end-August 2014 (as part of the study of regulated professions, ¶27): review transaction-related charges, including stamp duties, to replace the most distortionary ones with more efficient taxes.
  - By end-September 2014 (in consultation with EC/ECB/IMF): decide which of these charges should be reduced, abolished, have revenue earmarking removed, or be replaced; take corresponding legislative actions by November 2014.

### Comprehensive VAT reform
- Commitments and timetable (in consultation with the EC/ECB/IMF):
  - Review VAT policy and administration by June 2014.
  - Reduce administrative burdens and streamline the VAT refund system by July 2014, including allowing companies with a fully compliant filing and payment history and absence of past tax evasion for the past two years to receive refunds without audit.
  - Legislate comprehensive reform of VAT policy and administration through primary legislation and other instruments by October 2014 to take effect from January 1, 2015 (structural benchmark).

### Employment programs and social safety net (summary of related actions)
- Employment programs:
  - Extend the social community work program by offering at least a further 50,000 places in 2014.
  - Launch the youth guarantee scheme by December 2014.
- Social protection:
  - Launch by September 2014 a pilot means-tested income support program (guaranteed minimum income) in two municipalities; roll out nationally in 2015 if financing is available.
  - Conduct by end-June 2014 a review of social protection and assistance systems.
  - Streamline tax- and expenditure-related benefits in the context of the 2015 budget to create fiscal space for increased, targeted support to vulnerable groups within overall fiscal targets.

### Income Tax Code (ITC) — pending high-priority actions
- In consultation with the EC/ECB/IMF, commitments and deadlines:
  - If the surcharge is to be extended (¶5), assess redesigning the solidarity surcharge for individuals in a revenue neutral manner, reduce reconciliatory tax returns, rationalize exemptions introduced in 2014, and integrate it into the ITC by September 2014.
  - By end-July 2014: conduct a comprehensive review of collective investment vehicles not affected by ITC provisions (Article 72, ¶18), identify best practice for taxing these vehicles and their participants, and prepare draft legislation to integrate these taxation principles fully in the ITC.
  - By end-July 2014: identify all income tax incentives across different legislative documents, including those introduced in the ITC in 2014, and quantify them as tax expenditures.
  - Structural benchmark — by end-September 2014, adopt legislation to be implemented by January 2015 at the latest to:
    - (a) integrate taxation principles on collective investment vehicles fully into ITC;
    - (b) map and fold identified tax exemptions into the newly adopted ITC, eliminating incentives deemed inefficient or inequitable;
    - (c) following a review, improve the capital gains tax on real estate, including comprehensive approach to valuation of acquisitions and broadening the tax base;
    - (d) limit the withholding tax on technical services (ITC Article 64, ¶1.d) to profit shifting situations, in line with best practice in the EU.
  - By end-September 2014: bring the capital gains tax on portfolio shareholders in line with best practice in the EU.
  - By end-September 2014: conduct a comprehensive review of all remaining legislation that are in conflict with or related to the new ITC and map these legislative acts to the ITC.

### Tax Procedures Code (TPC) — commitments and timetable
- By end-June 2014: ensure the revenue administration’s capabilities to conduct timely audits at taxpayer’s premises by developing fast-track procedures for authorization of entry and search requests, particularly in fraud cases; change administrative procedures or amend legislation as necessary in consultation with the EC/ECB/IMF.
- By end-September 2014: following a review of rights of designated tax collection officials to enter tax debtors’ business premises to verify asset and liquidity position and identify assets for enforcement, amend the TPC as necessary to ensure rights sufficient for enforcement purposes.
- By June 2014: undertake a comprehensive review of tax fraud and evasion provisions to amend by September 2014 the Special Penal Law 2523/1997 and any other relevant legislation with a view to, inter alia:
  - (a) broaden the definition of tax fraud and evasion to all taxes;
  - (b) ensure the review does not reduce the scope of tax crimes that are currently predicate offenses to money laundering.
  - Following these amendments, repeal Article 55, ¶s 1 and 2, of the TPC by September 2014 (structural benchmark).
- By July 2014: prepare to bring the inheritance and gift taxes under the scope of TPC (Article 66, ¶29).
- By end-June 2014 (in consultation with EC/ECB/IMF): modernize the revenue administration’s procedure for enforced sale of assets at public auctions to ensure advance public announcement, accept bids exceeding the cost of the auction irrespective of debt owed, set bid levels to allow effective and timely disposal; debt amounts not covered by auction proceeds shall remain enforceable.
- By end-June 2014: review legislation for procedures for withholding agents and, by September 2014, fold these into the TPC as general procedural rules for all withholding agents.
- By end-June 2014: conduct a comprehensive review of remaining legislation that conflict with or relate to the new TPC and map these acts to the TPC.
- Transitional and enforcement measures:
  - Ensure that until end-2014 the current practice of levying multiple penalties will be limited to a fixed cap.
  - By end-September 2014, ensure that effective January 1, 2015, violations involving non-issuance or incorrect issuance of retail receipts will be treated as a single but serious procedural violation for VAT, whereas not having a reliable accounting system will remain a single violation for direct taxes.
  - Prepare tax administration, with technical assistance, to apply modern auditing techniques to counter tax evasion.
  - Ensure fines on offences committed or detected before the entry into force of the new TPC are in line with best practices in the EU and legislate any changes by end-September 2014.

### Code of Public Revenue Collection (KEDE)
- By June 2014: map KEDE to identify conflicts with the ITC and TPC and amend any conflicting provisions.
- By June 2014 (in consultation with EC/ECB/IMF): conduct a comprehensive review of KEDE to align with international best practice, with an initial draft bill available by September 2014, to be legislated in October 2014.

### Modernizing accounting standards and transparency
- By end-May 2014: adopt a new act on Greek Accounting Standards and Tax Accounting Rules to replace the existing Tax Recording Code and provide a modern and consistent set of accounting and tax accounting rules covering all enterprises.
- By May 2014: establish a working group within SGPR to develop a roadmap and timetable for implementation of new accounting standards, including:
  - (i) necessary secondary legislation;
  - (ii) tax compliance documents and forms;
  - (iii) preparations by businesses, especially SMEs.
- By June 2014: produce and publish an electronic consolidated version of primary tax legislation, including ITC and TPC, and update the publication regularly as appropriate.

### Secondary legislation to ensure prompt implementation of ITC and TPC (prior actions)
- Issued secondary legislation to:
  - (i) define taxpayers professionally engaged in trading securities in regulated markets (Law 4172/2013, Article 21, ¶3);
  - (ii) clarify rates and procedures for implementation of tax withholding (Law 4172/2013, Article 60, ¶4);
  - (iii) clarify the base for the solidarity surcharge either by issuing an MD (Law 3896/2011, Article 29, ¶6) or a clarification circular;
  - (iv) determine the content of transfer pricing documentation (Law 4174/2013, Article 21, ¶6);
  - (v) determine requirements for electronic notification of documents (Law 4174/2013, Article 5, ¶6).

### Unified property tax (ENFIA) preparations and valuation reform
- Preparations and operational steps:
  - Created a property tax implementation team refocusing the organizational structure toward collection of main taxes, including property tax.
  - Specified staffing requirements at 15 (excluding DOYs) to implement ENFIA effectively.
  - Completed filing software testing and final changes to the E9 forms forming the basis of the new tax database.
  - By end-May 2014: finalize filing of the E9 forms so billing of the new property tax can commence in June 2014.
  - Launched a communication campaign to enhance understanding of filing requirements and specifics of the new tax.
  - By September 2014: review exemptions from ENFIA introduced in 2014 and eliminate starting January 2015 those deemed inefficient or inequitable.
- Valuation reform timetable:
  - By July 2014: develop a medium-term reform plan outlining actions, including setting up a project team, needed to:
    - (i) by January 2015, set up an experienced real property valuation unit, collect data on real estate market conditions to adjust zone prices to reflect market conditions, and determine the nature of value-based and valuation methodologies relevant to individual property categories;
    - (ii) by September 2015, review valuation of commercial properties and adjust zone prices to reflect market conditions;
    - (iii) by January 2016, issue a real estate market value index and ensure full identification of ownership with properties through a cadastre and cross-checking of ownership interests with properties;
    - (iv) by January 2017, align all property assessment values with market prices.

### Transparency and limiting fiscal risks: guarantees, SOEs, energy, health
- Guarantees and contingent liabilities:
  - Starting from Q1 2014: publish on the Ministry of Finance website on a quarterly basis the stock and flows of all general government guarantees, including ones provided by ETEAN, but excluding those to the financial sector (financial sector guarantees will continue to be published in aggregate form in the monthly general government bulletin).
  - By Q3 2014: publish a comprehensive list of all outstanding public-private partnership contracts.
- State-owned enterprises (SOEs):
  - Actions taken and commitments:
    - Passed legislation to close or merge the toll company together with 21 other companies.
    - Commenced restructuring of public law entities under supervision of relevant Ministries with an objective of downsizing employment by 1000 by end-2014.
    - For Hellenic Aerospace Industry (HAI): launched restructuring process and possible introduction of external investment; adopt and initiate a restructuring strategy by end-September 2014 based on external expert advice.
    - For Hellenic Post: appointed external advisors to identify options and make recommendations for privatization to be prepared by June 2014 and implemented immediately in accordance with agreed privatization schedule.
  - In consultation with EC/ECB/IMF: by end-May 2014 identify SOEs that need restructuring considering financial position and policy purpose; develop concrete restructuring proposals for implementation by end-September 2014.
- Energy sector
  - Renewable energy account (RES) — prior actions and measures to restore sustainability and eliminate the account debt by end-2014:
    - Aligned terms of power purchasing agreements for existing contracts to a reasonable rate of return—reducing tariffs paid to solar producers by about 28 percent on average and to other renewable producers by 5.4 percent on average.
    - Imposed a one-time contribution on renewable producers by writing down net arrears owed to them by €310 million (a 28.7 percent reduction for solar producers and 10 percent for others).
    - Increased the RES levy by €4.8 per MWh.
    - Introduced a 200 MW annual cap on new solar installations receiving incentives.
    - Exceptionally for 2014 only: an additional 300 MW cap for fast track projects approved in earlier years, with feed-in tariffs at current levels.
  - Public Power Company (PPC):
    - Established a quarterly tariff adjustment mechanism, with a first adjustment effective July 1, 2014; tariffs subject to monitoring by RAE.
    - Will make public justification for quarterly PPC tariff proposals based on cost and revenue considerations while avoiding inappropriate disclosure of confidential PPC data (published data will include PPC operating and capital costs and realized and projected revenue flows from electricity sales and other sources).
  - Structural measures by July 2014:
    - Put in place measures (such as reduced capacity payments, elimination of variable cost recovery, auctions of a portion of PPC’s generation output, and demand side measures) to address competitiveness concerns of energy-intensive users without burdening PPC’s finances or creating fiscal risks, strengthening prospects for PPC’s privatization and improving energy market efficiency.
    - Consult with the EC/ECB/IMF before considering further actions that benefit specific groups of energy consumers at the expense of other consumers or market participants.
  - Clearing arrears:
    - Government will clear all public sector arrears through 2013 to PPC—general government arrears have been cleared or resources transferred to entities owing the arrears and will be cleared by end-June 2014; the rest, including transportation, irrigation and water supply companies will be cleared by end-2014.
    - Arrears of Larco will be dealt with in the context of its liquidation.
    - Aim to provide adequate liquidity to begin clearing arrears in the system, including among PPC, producers, ADMIE, LAGIE, RES producers, and DEDDIE.
    - Monitor clearance of arrears with goal of substantial reduction by mid-2014 and elimination of all arrears by end-2014.
- Health sector
  - Pharmaceutical spending:
    - Increased the original claw back target for 2014 by about €100 million to €2 billion to create space for spending on vaccinations and medicines for the uninsured; increase financed by equivalent offsetting measures in primary care spending.
    - Extended the claw back target to 2015.
    - Measures taken totaling €625 million, including:
      - (a) reducing the price of off-patent drugs to 50 percent and generics to 32.5 percent of the patent price;
      - (b) establishing a minimum prescription target of generics of 60 percent for doctors, on average, with suspension in cases of non-compliance;
      - (c) expanding the OTC list;
      - (d) establishing price-volume agreements with companies;
      - (e) introducing evidence-based prescription guidelines and new protocols.
    - Introduce regressive profit margins for pharmacies and reduce them to 15 percent starting June 2014.
    - Introduced new drugs in the reimbursement list based on objective and strict medical and cost-effective criteria; any future inclusions will be consistent with taking sufficient offsetting measures to keep spending (before the claw back) at €2 billion.
    - Overall price level of generics will need to be assessed in the context of the next review.
  - Clinics and diagnostics:
    - Collect the 2013 claw back on private clinics and diagnostic tests by end-May; complete associated audits by June and September 2014, respectively; final settlement of outstanding claims by end-October 2014.
    - Extended the claw back at the 2013 spending ceiling of €890 million through 2015.
    - Structural measures include setting budgets for diagnostic tests to doctors, reducing prices, and requiring ex ante approval of private hospital treatment plans; stand ready to take further measures as needed to bring actual spending close to the claw back ceiling.

*Source: _cr14151 - 7.      We are further optimizing the tax structure to improve the business climate.*

### 13.      We are progressing with public administration reforms, including downsizing

### 13.      We are progressing with public administration reforms, including downsizing

### Staffing and compensation
- On track to reduce employment by 150,000 by end-2015.
- Monitoring framework actions:
  - Bring all employees of central and local governments, legal entities of public law, and legal entities of private law under Chapter A into the Census Database by end-June and the Single Payment Authority by October 2014.
  - Contractual staff will be reported in full time equivalent terms by end-July 2014.
- Review and reporting:
  - Undertake, in consultation with the EC, ECB and IMF, a broad review of government employment levels and the remuneration structure and prepare a report by end-May 2014 as a basis for long-term staffing targets.
- Wage grid reform and rationalization:
  - Identify by July 2014 further implementation issues related to the wage grid reform and the rationalization of the public sector wage structure in a fiscally neutral way, including comprehensive application of the wage grid reform across the public sector and decompressing the wage distribution in both directions in connection with skill, performance and responsibility of staff, in consultation with the EC/ECB/IMF.
  - These will be legislated by end-October 2014 and made effective from January 1, 2015 (structural benchmark).
- Non-wage benefits:
  - Undertake a comprehensive review of all non-wage benefits (working hours, leave arrangements, per diems, travel allowances, unemployment benefits and perks) by end-July, and align them with best practices in the EU by end-September 2014 (structural benchmark), effective from January 1, 2015.

### Mobility and availability
- Target and scheme adjustments:
  - To catch up to the end-2013 target of 25,000 employees in the “availability” scheme (prior action), rationalize staffing across the general government; employees reallocated during the re-organization of the tax administration (which started before the scheme was put in place) will count toward the target.
  - A further 3,000 employees will be shifted into the scheme from municipalities by September 2014.
- Scheme design and rules:
  - The availability scheme will remain in place to facilitate future organizational restructuring, including downsizing and outsourcing of services.
  - Employees placed in the scheme will have their wages reduced by 25 percent, and will be assessed, within a centrally-defined evaluation framework, before reallocation to new positions, or exit.
  - Payments during the time in availability will count against any severance entitlements.
- Distinction from mobility scheme:
  - The availability scheme is distinguished from a new “mobility” scheme, which is a permanent mechanism for voluntary and mandatory transfers to better allocate personnel within the public administration.
  - The mobility scheme will not be connected to exits nor will it require placing employees under the availability scheme and reducing their remuneration.
  - Establish an internal job market within the public administration by March 2015, while implementing mandatory rotation within the public sector beyond the ongoing restructuring exercise to facilitate continuous renewal of skills.

### Exits
- Progress toward targets:
  - To meet the end-March 2014 target of 5,000 exits (prior action), actions include processing disciplinary cases and identifying illegal conversion of temporary contracts to permanent staff, facilitated by removal of the need for ex-ante approval by the Council of State and other legislative initiatives; merging, downsizing or closing private law entities with overlapping or obsolete functions and excessive staffing.
  - Terminated contracts of 1,700 staff whose appeal to judicial litigation to obtain permanent positions was rejected.
- 2014 exit plans:
  - The additional 10,000 exits targeted for 2014 will originate predominantly from the availability scheme, and the liquidation and downsizing of public entities of private law.
  - Estimate (indicative) of 2,000 exits by Q1 2015 from disciplinary cases, incapacity, and illegal hirings (including illegal conversion of temporary contracts into permanent ones).
  - Assess by end-September 2014, in consultation with the EC/ECB/IMF, and taking into account the results of the public administration reforms, whether to formally define targets.
- Re-hiring conditions:
  - Any re-hiring of former ERT staff to the new broadcaster will be consistent with preserving exit targets and done through ASEP, with an open and transparent procedure.

### Rationalization
- Outsourcing and abolition of positions:
  - Comprehensive assessment of services that can be provided more efficiently and at lower cost by the private sector by end-December 2014 and outsource some of those activities, together with abolishing the corresponding positions and staff from the civil service by end-June 2015.
  - These dismissals will not be counted toward the 1:1 rule.

### New hiring
- Hiring ceilings and temporary contracts:
  - New hiring through 2015 will remain within the 1:5 ceiling, and temporary employment contracts each year will be reduced by about 10 percent relative to the previous year.
  - In case past targets have been exceeded, the reduction rules will be re-adjusted accordingly.
- Mandatory exits and replacement:
  - For mandatory exits (excluding outsourcing), hire new staff (1:1 rule) with critical skills to serve the public and ease pressure in the private labor market, consistent with the government’s overall employment ceilings.
- Probation and performance assessment:
  - Strictly enforce the probation period for new staff of two years, including through a comprehensive performance assessment at the end of the first year, and before being granted permanent employment status.

### Performance
- Legislation and assessments:
  - Passed legislation to revise the current system for performance assessments, and will complete the 2013 assessment by July 2014 using the revised system.
  - Establish a new performance evaluation system by end-2014 to assess 2014 performance by end-March 2015.
- Management appointments:
  - Revise by May 2014 the criteria for the appointment of managers to move toward qualification and performance-related factors, rather than seniority.
  - Fill all senior appointments by end 2014 and heads of units by end-June 2015.

---

### Financial Sector Policies (selected measures related to the stress test, supervision, and debt resolution)

### Stress test timeline and recapitalization
- Banks have until end-June 2014 to meet their capital needs under the baseline scenario, based on capital-raising plans submitted for approval by mid-April 2014.
- Banks have until end-May 2014 to submit capital-raising plans addressing the adverse scenario, for approval by the Bank of Greece by end-June 2014.
- HFSF resources set aside as a buffer against possible capital shortfalls in the stress test horizon or as a result of the SSM comprehensive assessment exercise.
- Recap law (prior action):
  - Legislation passed governing injection of public sector resources into banks through the HFSF; HFSF will provide capital to viable banks that fail to meet capital needs determined by the stress tests.
  - Capital support subject to prior implementation of burden-sharing measures, in accordance with EU rules.
  - Shares subscribed by the HFSF will bear full voting rights; subscription price determined by the HFSF General Council, based on reports by two independent advisors as prescribed in the law.

### Bank of Greece liquidity and funding plans
- Commitment to preserve sufficient banking system liquidity in line with Eurosystem rules.
- Bank of Greece stands ready to continue disbursing emergency liquidity support if needed, while expecting banks to achieve a sustainable funding model over the medium term.
- Banks have submitted funding plans to the Bank of Greece and will be required to update their plans on a quarterly basis.

### Supervision, NPLs and institutional reviews
- KPIs and reporting:
  - Introduce KPIs to monitor banks’ progress in reducing their large NPL portfolios; banks will begin gradual reporting under these KPIs by end-June 2014, with full reporting to commence from end-December 2014.
- Forbearance and provisioning:
  - Report on appropriateness of banks’ loan forbearance practices and recognition of income from NPLs by end-July 2014.
  - Based on the ECB’s comprehensive assessment, assess need to introduce impairment provisioning guidelines similar to other EU supervisory authorities; if necessary, introduce them in time for consideration in the 2014 end-year accounts.
- Asset recovery and liquidation:
  - Evaluate options for improving recovery from assets under liquidation and implement by end-June in full the recommendations of technical assistance.
- Supervisory model review:
  - Undertake a review of the Bank of Greece’s supervisory model, legal powers, governance structures and enforcement toolkit by end-June 2014, in consultation with EC/ECB/IMF staff, and introduce appropriate legislative or regulatory changes by end-September 2014.
  - Prepare the Basel Core Principles (BCP) self–assessment by end-June, and request IMF staff to complete an assessment of supervisory practices against specific and pre-agreed BCPs by end-September 2014.
- Immediate supervisory improvements:
  - Addressed restrictions on hiring experienced staff while preserving staff autonomy and Bank of Greece’s financial independence.
  - Revise organizational structure and internal governance processes by September 2014, in preparation for transfer of supervisory responsibility to SSM.
  - Engage specialists to assist with supervision of NPL portfolios by end-May.
  - Assess impact of EBA guidelines on definitions of NPLs and forbearance and require banks to adopt the guidelines by end-June 2014.

### Debt resolution framework and Government Council for the Management of Private Debt
- Council established to coordinate legal and institutional reforms to enhance corporate and personal debt resolution frameworks; as a prior action the Council has agreed its expenditure budget for 2014; engaged project management, public relations, and technical specialists; and adopted definitions of a cooperative borrower and reasonable living expenses for use in and out-of-court debt workouts.
- Key deliverables and timelines:
  - Introduce a binding Code of Conduct for banks specifying terms of engagement between creditors and debtors by end-May 2014 (structural benchmark). Banks required to pilot and implement long-term debt restructuring tools by end-October 2014 and be compliant with the Code by end-2014.
  - Design out-of-court debt restructuring tools for enterprises, including a multi-creditor coordination mechanism inspired by international standards, by end-May 2014; specify by end-May a similar coordination mechanism for SMEs; adopt and implement both mechanisms, inter alia, by making necessary legislative changes, by end-July.
  - Review personal and corporate insolvency laws by end-June 2014, and implement necessary changes to improve in-court insolvency procedures by end-October 2014 (structural benchmark), including establishing a regulated profession of insolvency administrators not restricted to any specific profession and in line with EU best practice.
  - Launch by end-July educational services and public awareness campaigns to inform debtors of their options and rights and educate small businesses on financial and credit management.
  - Develop a coherent plan for a means-tested social safety net for vulnerable home owners by July 2014.
  - Implement supportive measures including better data collection (by May 2014), reducing costs of the property auction process (by June 2014), and introducing residential and commercial real estate transaction price registers (by October 2014).
  - Set up a monthly data collection process to monitor the effectiveness of the transition debtor-protection scheme enacted in December 2013; based on incoming data, the Council will by end-June 2014 prepare a report assessing the effectiveness of the new law and its impact on strategic default behavior and propose measures to ensure effective implementation in case of shortcomings.

### HFSF governance and cooperative sector strategy
- HFSF governance enhancements:
  - Employ personnel with international experience in commercial banking and NPL resolution.
  - Review internal safeguards on conflict-of-interest rules and related-party transactions and make appropriate changes by end-May 2014.
  - Increase the number of General Council members to 9 and members with international experience to 7.
  - Based on a broad review of governance arrangements concerning HFSF’s participation in banks by end-May 2014 in consultation with EC/ECB/IMF, adopt appropriate legislative and operational steps by June 2014 to ensure financial institutions are run on a sound, commercial basis; examine options to step up oversight arrangements over banks’ performance and clean up of balance sheets, including through revision of relationship framework agreements.
- Cooperative sector:
  - Prepare a comprehensive strategy on the cooperative sector, taking into account the role of Panellinia bank.
  - Examine by end-July 2014, in consultation with EC/ECB/IMF, all modalities (including further consolidation or review of modus operandi) to ensure sector stability and adherence to international best practices.
  - Implement the strategy by end-September 2014.

### Fiscal and policy constraints
- Banks will not be required or permitted 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 Bank of Greece has given its consent confirming compatibility with preservation of adequate capital buffers and liquidity going forward.
- Government will not impose unilateral debt relief solutions for any particular group of debtors.
- Government will take no fiscal policy actions that would undermine the solvency of banks.

*Source: IMF staff report text.*

### 23.      We are redoubling our efforts to tackle the obstacles to privatization, as

### 23.      We are redoubling our efforts to tackle the obstacles to privatization, as

### Corporate governance (HRADF)
- Provide the HRADF with all necessary authority to effectively control companies it is responsible for privatizing while strengthening accountability, transparency and operational autonomy.
- Specific actions and deadlines:
  - The HRADF will complete by end-June 2014 an assessment of the management and board members of companies in its portfolio and take all appropriate steps (including by terminating the relevant appointment) with respect to those that are not performing well or whose actions are not aligned with the HRADF’s goal of privatization. The assessment will be completed by the Board of Directors of the HRADF based on a set of clear objectives and criteria.
  - The HRADF has appointed at least one board member of companies in its portfolio where it is not currently represented, and has approved transparent criteria for the selection and appointment of Board members in which HRADF is a shareholder.
  - As a prior action, legislation (adopted in consultation with the EC/ECB/IMF) requires the HRADF to exercise its shareholders’ powers in companies where the HRADF is a majority shareholding according to a framework of cooperation setting out objectives and criteria in line with the privatization process. The framework of cooperation shall be designed and adopted by the HRADF Board of Directors by June 2014.
  - Amendments to the HRADF law to enhance operational functioning include: ensure uninterrupted operations if the chair is vacant; provide personal contracts to the executive members of the BoD; narrow grounds for dismissal of HRADF Board members; introduce greater flexibility in tools and procedures for asset sales; legislate that super/extraordinary dividends (i.e., in excess of profits of the previous year) or reductions in share capital from entities under privatization are paid to the HRADF (and within 10 days to the segregated account); and exempt HRADF from requirements under Law 4111/2013 regarding submission and monitoring of monthly/quarterly targets.
  - Reporting requirements of the HRADF under Article 78 of Law 2362/1995 limited to: (i) annual budget (expenditure and revenue) and any changes to it made during the year (forward looking); (ii) monthly submission of budget execution and financing (backward looking); (iii) monthly submission of wage bill data (backward looking); and (iv) monthly submission of commitment registry summary (backward looking on a monthly basis, forward looking for annual budget spending).
  - The HRADF will review by June 2014 current legislation that applies to general government entities, including the organic budget law (Law 2362/1995), to identify legal provisions that hamper its ability to operate efficiently or contradict aspects of its law; authorities will, in consultation with the EC/ECB/IMF, take action to address these by October 2014 (with the amendment of the organic budget law).
  - A review, including an independent third-party assessment, will be undertaken to establish strong conflict-of-interest, related-parties transactions and insider trading rules, strict incompatibility criteria for HRADF Board members, and review internal governance arrangements. Legal and operational changes to reflect these improvements will be introduced, in consultation with the EC/ECB/IMF, by June 2014.

### Real estate privatization
- Undertake comprehensive reform of land use restrictions and urban planning at local, regional, and national levels (including zoning, environmental, energy, forest, coastal lands, and building coefficient requirements and approval processes).
  - Prepare an action plan, including dates for passage of needed legislation, by end-September 2014 to improve legal clarity and drastically reduce time and procedural requirements to secure rights to develop land, while preserving needed safeguards.
- ETAD (assets management):
  - Review of mission, objectives, and staffing of ETAD undertaken to strengthen effectiveness in managing and maturing assets ahead of transfer to HRADF.
  - Review unutilized properties under ministries that have been transferred to ETAD by June 2014 to identify omissions; require that ministries identify and transfer remaining unutilized properties to ETAD by end-September 2014.
  - HRADF has evaluated all income-generating properties in ETAD’s portfolio and assessed whether they can be privatized.
- Adopt, in consultation with the EC/ECB/IMF, legislation by end-May 2014 to propose to current illegal or unauthorized occupants of government-owned properties to purchase such properties on market terms.

### Government support for privatization
- Recognize that many actions required to conclude privatization transactions are the responsibility of government ministries and entities; active engagement is essential.
- Prior actions and processes:
  - As a prior action, implement, in consultation with the EC/ECB/IMF, pending government actions (TMU Annex Table I.3) (these include inter alia the issuance of MD on setting up tolls on Egnatia Odos and the establishment of the port regulator); and launch the expression of interest for the sale of shares in Thessaloniki port concession.
  - Establish an inter-ministerial working group led by a Secretary General of the Ministry of Finance or by the PM’s office, with participation of the HRADF, to meet bi-weekly to review new and existing pending government actions and ensure expeditious completion; authorities will review this list of actions with the EC/ECB/IMF on a monthly basis.
  - HRADF to prepare detailed project plans and timelines for completion of sales of major assets and report monthly to the EC/ECB/IMF on progress starting in April 2014. Remedies to be put in place and projections adjusted where slippages are detected.
  - HRADF to publish quarterly reports on steps taken to proceed with privatization (expressions of interest, any needed legislative approvals, tenders, and regulatory approvals) and financial accounts (including a profit and loss statement, a cash flow statement, and the balance sheet), no later than 60 days after the conclusion of every calendar quarter.
  - Legislation passed to establish a mechanism to monitor privatization projects after contracting to ensure proper functioning of contracts and resolve issues as they arise.

### Adjusted privatization targets
- Targets for privatization proceeds have been adjusted to be more realistic given institutional constraints and delays.
- Authorities note that while steps outlined should improve prospects for revenues, previous program targets are not feasible at this time, in particular relating to real-estate sales.
- Revised program targets aim to be ambitious but more realistic; progress will be monitored via quarterly indicative targets and performance criteria for September and December 2014 (Table 5).
- Maintain awareness of upside risks (from heightened investor interest) and downside risks (from continuing significant hurdles to privatization).

### Structural reforms — promoting competition and easing business environment
- Product and service market reforms focused on promoting competition and reducing administrative burden.
- OECD review identified 329 regulatory distortions in four sectors (tourism, retail, building materials, and food processing); 43 have been addressed to date; authorities committed to address virtually all remaining ones (adopt most OECD recommendations in full, except those specified in Table 5).
- Prior actions and commitments:
  - Adopt 237 recommendations as a prior action: (i) 212 in an omnibus law; (ii) 15 in two new laws (on licensing and outdoor trade); and (iii) 10 as part of several sectoral laws and ministerial decisions. Measures include reforming licensing for shopping malls and outlets; removing several restrictions on ownership and operation of pharmacies; abolishing barriers to entry in building materials; eliminating barriers to investment in tourism activities.
  - By end-June 2014, adopt all necessary secondary legislation to fully implement the reforms above, except for two codes of best practice on sales and offers and on foodstuff traditional definitions that will be implemented by end-September.
  - Adopt another 32 recommendations: (i) 18 in the context of nuisance tax reform (¶7); (ii) 6 by end-June 2014 and 1 by end-2014 through several sectoral laws (maritime and tourism); and (iii) 7 by end-2014 to align technical specifications with EU standards.
  - Conduct follow-up studies, including: (i) assess evolution of OTC prices and, if no substantial reduction by end-June 2014, commit to liberalize immediately retail channels for all OTC products; (ii) review liberalized Sunday trading experience and decide by March 2015 whether to roll out changes across the country; (iii) evaluate by end-2014 the impact of milk pasteurization and sale procedure changes and make additional legislative changes immediately if milk prices remain high; (iv) following consultation with the EC/ECB/IMF, adopt legislative amendments as needed to bring legal framework related to 6 of the remaining recommendations in line with EU best practices by end-2014.
  - Request OECD to review wholesale trade, manufacturing, telecommunications, and e-commerce by October 2014; launch process and agree terms of reference with EC/ECB/IMF by end-May 2014; adopt by end-November 2014 specific measures to promote competition and price flexibility in these sectors following final OECD recommendations (structural benchmark).

### Reducing red tape and simplifying licensing
- OECD screened laws and regulations in 13 sectors, identifying procedures that can be streamlined to reduce administrative burdens by 25 percent while safeguarding public interest.
  - Adopt recommendations by end-June 2014 (structural benchmark).
  - A first set of changes already adopted to simplify burdensome administrative procedures identified by the OECD.
- Licensing regime reform:
  - With World Bank assistance, strategy to shift from ex-ante licensing to largely self-compliance system based on established standards.
  - Adopted a licensing framework law with very few and specifically defined exceptions requiring ex-ante licensing (no further exceptions to be granted); plan to have all secondary legislation in place by end-2014 (structural benchmark).
  - Submitted a presidential decree on pending secondary legislation to implement Law 3982/2011 on technical professions and will do so for Law 4014/2011 on environmental licensing by end-September 2014.

### Sector-specific liberalizations
- Rentals:
  - For commercial properties, adopted law reducing minimum duration requirements for new rental contracts to 3 years.
  - For tourism rentals, adopted legislation to facilitate short-term rentals and reduce informality by: (i) reducing the tourist lease threshold from 3 to 1 month; (ii) substantially reducing minimum space requirements for villas classified as “tourist leases”; and (iii) by June 2014 replace EOT approval with a simple registration for rentals less than one month subject to minimal quality and safety standards.
  - Review framework for tourist leases by end-July and prepare by end-September 2014 necessary legislative changes in discussion with the EC/ECB/IMF to align with best EU practice.
- Transport:
  - Ferry transport: allowed companies to distribute freely across fleet days they can stop operations during winter; eliminated requirement to declare maximum prices; adopted legislation allowing optional firm-level labor agreements in domestic ferry sector and suspending the favorability clause and extension of collective agreements while respecting international and European legislation; aligned mandatory discounts for ferry tickets for new PSO lines with commercial lines.
    - By end-September 2014, in consultation with the EC/ECB/IMF, (i) adopt legislative changes to align manning requirements for domestic services with international lines while respecting safe manning and best-practice principles; and (ii) review applicability of changes on favorability clause and extension of collective agreements to international line segment and adopt legislative changes as appropriate.
  - Air transport: rationalize PSO contracts, including restricting them to the non-tourist season, review alternatives (e.g., infrastructure investment), and take measures to ensure participation in tendering of non-domestic airlines by October 2014.
- Trade facilitation:
  - Introduced an electronic submission system for all import declarations.
  - Require check payments for all customs charges and ceased to accept cash payments; make all payments electronically by end-September 2014, except for small payments by individuals.
  - With World Customs Organization assistance, adopt optimized procedures in Athens airport and Piraeus port customs offices for exports by end-May 2014, including full implementation of risk-based system and alignment of control levels with EU best practices.
  - Roll-out optimized procedures to all other customs offices for exports by end-June 2014 and imports by end-2014.

### Energy sector reforms
- Electricity market:
  - Adopted law to privatize ADMIE, the transmission system operator.
  - Submitted law to create and sell a new generation and retail company out of PPC.
- Gas market:
  - Established a roadmap to transition Greece to a more mature market model, increasing competition at all levels and transferring advantages to the broadest set of consumers.
- Any changes to existing arrangements will be fiscally neutral. (See MOU, §6.1.5 for more details.)

### Regulated professions and professional liberalization
- Continued opening up of regulated professions and assessment of implementation (TMU Table 4).
  - Issued implementing legislation to complete liberalization of professions including day care clinics, electricians, actuaries, chartered valuers, and geo-technicians.
  - As a prior action, adopted legislation opening the mediator’s profession to non-lawyers; repealed provisions relating to severance pay upon voluntary separation of private sector salaried lawyers and introduced a provision treating unilateral adverse alteration harmful to the lawyer as termination on behalf of the employer; clarified reference in the Code of Lawyers to minimum wage for salaried lawyers relative to statutory national minimum wage.
  - Further assessment of fees and reserved activities for notaries and adoption of legislation to align with best EU practices by end-September 2014.
  - Consistent with HCC’s opinion, adopt by end-June 2014 amendments to remove unjustified and/or disproportionate requirements on reserved activities for engineers.
  - Hire a highly reputable external consultant by June 2014 to review comprehensively by end-August 2014 all professions under each ministry; agree with the EC/ECB/IMF by end-September on actions to remove remaining excessive restrictions; take necessary legislative steps by end-October 2014.

### Labor market reforms and related measures
- Collective dismissals:
  - Administrative steps taken in consultation with social partners on framework for collective dismissals.
  - Undertake an assessment by end-September 2014, in consultation with the EC/ECB/IMF and the ILO, on whether the collective dismissal system replicates EU best practices effectively and durably; if in doubt, take appropriate legislative action to align framework with EU best practices by end-October 2014 (structural benchmark).
- Address excessive restrictions in hiring and dismissals:
  - Review excessive mandatory requirements on wages, benefits and payments or other restrictions by May 2014 and adopt necessary legislation to align with EU best practice by August 2014.
- Industrial action:
  - By end-June 2014, review existing framework against best practices; after consultation with social partners, prepare by end-September 2014 necessary legislative changes in discussion with the EC/ECB/IMF to bring framework in line with EU best practice; adopt changes by end-October 2014 (structural benchmark).
- Temporary work:
  - Abolished restriction that temporary work agencies (TWAs) can provide services only for “transitory, extraordinary, or seasonal” positions.
  - Reduced restrictions on hiring via TWAs following redundancies for economic reasons: from 6 to 3 months for individual redundancies, and from 12 to 6 months for collective dismissals.
  - Removed restriction for use of TWAs in large public works contracts.
  - Reduced the list of hazardous positions where TWAs are not allowed to provide employees.
- Reporting requirements and Labor Code:
  - Simplified labor reporting requirements, including implementing several OECD administrative burden review recommendations.
  - Commit to further steps to address ILO, other stakeholder, and remaining OECD recommendations by end-September 2014.
  - Compile a comprehensive list of all labor legislation across sectors by end-June and address inconsistencies in consultation with the EC/ECB/IMF; compile on this basis by end-2014 a comprehensive Labor Code.
- Minimum wage:
  - As a prior action, adopted legislation that sets the statutory minimum wage system (statutory minimum wage and maturity allowances) for white-collar workers above the age of 25 years who have been unemployed for more than one year at the base minimum wage plus maturity allowances equivalent to 5 percent of the base minimum wage for every three years of work experience, up to a maximum of 15 percent.
  - Clarified that the statutory minimum wage under the new minimum wage mechanism, effective on January 1, 2017, will be a single rate.
- Education sector application:
  - Repealed provisions in previous laws (Law 682/1977, Articles 30 and 33; and Law 1351/1983, Article 11, ¶1) inconsistent with recent changes in general labor law to remove uncertainty on application of law 4046/2012 on severance payments and Cabinet Act (FEK 38/28-2-2012) to private education sector.

*IMF staff report excerpt (content unit)._cr14151 - 23.*

### 30.      We continue to advance judicial reforms and are improving the anticorruption

### _cr14151 - 30.      We continue to advance judicial reforms and are improving the anticorruption framework.

### Judicial reforms and anticorruption measures
- Judicial reforms have started to yield results by reducing case backlog and eliminating unnecessary restrictions for lawyers.
- Backlog remains very high overall; additional short-term measures proposed to reduce the backlog of tax cases.
- Commitment to adopt, in consultation with the EC/ECB/IMF, a revised Code of Civil Procedures by end-May (structural benchmark).
- Based on the study of court fees delivered in November 2013, and in full accordance with the constitutional principle of the citizens for access to justice, the government will propose a selective increase of court fees by end-September 2014, in consultation with the EC/ECB/IMF.
- New anti-corruption legislation adopted.
- Planned legislative submissions to parliament, in consultation with the EC/ECB/IMF, by end-June 2014:
  - (i) Legislation on the funding of political parties.
  - (ii) Legislation providing for an enhanced system of published declaration of assets, interests, and incompatibilities by public and elected officials, as well as members of government, and for independent risk-based audits.

### Key quantitative performance outcomes (September–December 2013)
- Performance criteria (Dec-13 / Sep-13 comparison shown in Table 1):
  - Floor on the modified general government primary cash balance 1/: Prog. -0.8, Actual 3.0; Prog. -0.3, Actual 0.4.
  - Ceiling on state budget primary spending 1/: Prog. 38.8, Actual 36.1; Prog. 53.2, Actual 52.4.
  - Ceiling on the overall stock of central government debt: Prog. 335.0, Actual 321.9; Prog. 335.0, Actual 326.6.
  - Ceiling on the new guarantees granted by the central government 2/: Prog. 0.0, Actual 0.0; Prog. 0.0, Actual 0.0.
  - Ceiling on the accumulation of new external payments arrears on external debt contracted or guaranteed by general government 3/: Prog. 0.0, Actual 0.0; Prog. 0.0, Actual 0.0.
  - Ceiling on the stock of domestic arrears (narrow definition): Prog. 1.0, Actual 2.0; Prog. 0.0, Actual 1.3.
- Indicative targets:
  - Ceiling on the stock of domestic arrears (general government definition): Prog. 1.5, Actual 5.8; Prog. 0.0, Actual 3.9.
  - Floor on privatization receipts 4/: Prog. 1.5, Actual 0.2; Prog. 1.6, Actual 1.0.
  - Mandatory exits (employees in thousands) 5/6/: Prog. 2.0, Actual 3.2; Prog. 4.0, Actual 3.5.
  - Transfers to the mobility scheme (employees, in thousands) 5/: Prog. 12.5, Actual 8.4; Prog. 25.0, Actual 15.9.
  - Floor on the stock of employees in the mobility scheme that will exit: Prog. 5.0, Actual 2.1; Prog. 11.0, Actual 5.0.
- Notes from table:
  - 1/ Applies cumulatively from start of the target's calendar year.
  - 2/ Applies cumulatively from October 1, 2012.
  - 3/ Applies on a continuous basis from program approval.
  - 5/ Cumulative from January 1, 2013.
  - 4/ For 2012, cumulative from program approval. For 2013, cumulative from January 1, 2013.
  - 6/ Actuals are gross exits and do not exclude individuals within three years of early retirement.
  - (Billions of euros, unless otherwise indicated)

### Structural benchmarks (September–December 2013) — implementation status highlights
- End-September 2013:
  - 1. Ministry of Finance to produce a comprehensive list of nuisance taxes and levies, and eliminate them or transfer them to the central government budget: Not observed. Re-phased including part as a prior action.
  - 2. Adopt legislation on a new property tax regime: Not observed. Law adopted in December 2013.
  - 3. Banks to update restructuring plans and submit them for validation by DG-Competition: Observed.
  - 4. Government to meet quarterly KPIs for revenue administration: Not observed. Nine out of ten KPIs missed.
  - 5. Government to meet quarterly KPIs for public financial management: Not observed. One out of three KPIs missed.
- End-October 2013:
  - 6. Approve new organizational structure of the Revenue Administration, staffing numbers, grading system and classification, and qualification and appointment processes: Not observed. Most actions completed with delays; staffing numbers to be approved in May 2014.
  - 7. Adopt all secondary legislation needed to implement the tax procedures code: Not observed. Prior action.
- End-November 2013:
  - 8. Adopt legislation to reform social security contributions to broaden base, simplify schedule, and reduce contribution rates by 3.9 percentage points, fully phased in by January 1, 2016, revenue neutral and preserving actuarial balance: Not observed. Upfront social security rate reduction is a prior action; steps to broaden base underway; harmonization rephased for end-June 2014.
- End-December 2013:
  - 9. Government to meet quarterly KPIs for revenue administration: Not observed. All ten KPIs missed.
  - 10. Government to meet quarterly KPIs for public financial management: Not observed. One out of three KPIs missed.
  - 11. Bank of Greece to complete a follow-up stress test for banks based on end-June 2013 data and update banks’ capital needs: Observed. Stress tests completed, but results not agreed with staff.
  - 12. Ministry of Finance to complete a targeted audit of general government accounts payable and review compliance with conditions set for clearing arrears: Not observed. Clearance of pre-2012 arrears rephased for Q3 2015; completion of audit rephased for end-2015.

### Prior actions (selected from Table 3)
- Fiscal measures:
  - 1. Government to lock in lower spending of €320 million from permanent savings in 2013 by revising binding expenditure ceilings in the 2015-18 MTFS. (Macro critical relevance: Fiscal sustainability (budget))
  - 2. Implement several measures to eliminate RES debt by end-2014. (Macro critical relevance: Fiscal sustainability (spending))
  - 3. Government to place additional public sector employees in the mobility scheme to reach 25,000 employees, and to achieve 5,000 exits in the public sector. (Macro critical relevance: Fiscal sustainability (spending) and government efficiency)
- Fiscal institutional reforms:
  - 4. Adopt secondary legislation to the Income Tax Code and the Tax Procedure Code. (Macro critical relevance: Fiscal sustainability (revenue))
  - 5. Government to submit presidential decree to consolidate revenue administration functions, and to transfer to SGPR all revenue-related functions of SDOE, and SGPR to adopt the final organizational structure of the revenue administration. (Macro critical relevance: Fiscal sustainability (revenue))
  - 6. Implement an interim borrowing framework within the general government. (Macro critical relevance: Fiscal financing)
- Financial sector:
  - 7. Adopt legislation governing the injection of public resources into banks via the HFSF. (Macro critical relevance: Financial stability)
  - 8. Government Council for the Management of Private Debt to take steps to enhance corporate and personal debt resolution frameworks. (Macro critical relevance: Financial stability)
- Privatization:
  - 9. Adopt law to strengthen HRADF’s control in companies it is majority shareholder, and implement pending government actions in support of the 2014 privatization program. (Macro critical relevance: Fiscal sustainability (budget) and economic efficiency)
- Structural reforms (selection):
  - 10. Reduce IKA’s SSC rates by the equivalent of 3.9 pp effective July 1, 2014. (Macro critical relevance: Strengthen competitiveness and promote employment)
  - 11. Abolish 40 charges with an annualized cost of €245 million. (Macro critical relevance: Strengthen competitiveness and promote employment)
  - 12. Adopt 237 of the OECD recommendations to remove barriers to competition in four sectors (tourism, retail, building materials, and food processing). (Macro critical relevance: Strengthen competitiveness and promote employment)
  - 13. Adopt legislation to open mediator’s professions to non-lawyers, repeal provision on severance pay of lawyers upon voluntary separation, and clarify the reference on the minimum wage for lawyers. (Macro critical relevance: Strengthen competitiveness and promote employment)
  - 14. Adopt legislation to reduce minimum wage for long-term unemployed. (Macro critical relevance: Strengthen competitiveness and promote employment)

### Schedule of proposed purchases under the Extended Arrangement (Table 4)
- Board approval of EA, March 15, 2012: 1,399.1 Millions of SDRs; 127.0 Percent of quota; 1.6 Billions of euros 1/
- First and Second Reviews, August 31, 2012: 2,798.2 Millions of SDRs; 254.0 Percent of quota; 3.3 Billions of euros 1/
- Third Review, February 28, 2013: 1,506.8 Millions of SDRs; 136.8 Percent of quota; 1.8 Billions of euros 1/
- Fourth Review, July 25, 2013: 1,506.8 Millions of SDRs; 136.8 Percent of quota; 1.8 Billions of euros 1/
- Fifth Review, February 28, 2014: 3,013.6 Millions of SDRs; 273.5 Percent of quota; 3.5 Billions of euros 1/
- Sixth Review, August 31, 2014: 3,013.6 Millions of SDRs; 273.5 Percent of quota; 3.5 Billions of euros 1/
- Seventh Review, November 30, 2014: 3,013.6 Millions of SDRs; 273.5 Percent of quota; 3.5 Billions of euros 1/
- Eighth Review, February 28, 2015: 1,506.8 Millions of SDRs; 136.8 Percent of quota; 1.8 Billions of euros 1/
- Ninth Review, May 31, 2015: 1,506.8 Millions of SDRs; 136.8 Percent of quota; 1.8 Billions of euros 1/
- Tenth Review, August 31, 2015: 1,506.8 Millions of SDRs; 136.8 Percent of quota; 1.8 Billions of euros 1/
- Eleventh Review, November 30, 2015: 1,506.8 Millions of SDRs; 136. (Percent of quota unclear in table), 81.8 Billions of euros (table entry formatting anomaly)
- Twelfth Review, February 29, 2016: 1,506.4 Millions of SDRs; 136.7 Percent of quota; 1.8 Billions of euros 1/
- Total: 23,785.3 Millions of SDRs; 2,158.8 Percent of quota; 28.0 Billions of euros 1/
- Note: Source: IMF staff projections. 1/ Exchange rate of January 5, 2012.

### Program quantitative performance criteria, 2014–15 (Table 5) — selected entries
- Performance criteria (billions of euros, unless otherwise indicated):
  - Floor on the modified general government primary cash balance 1/: Jun. PC 0.4; Sep. PC 3.1; Dec. PC 5.1; Mar. Indicative 1.2; Dec. Indicative 7.5.
  - Ceiling on state budget primary spending 1/: Jun. PC 21.0; Sep. PC 31.8; Dec. PC 44.4; Mar. Indicative 10.1; Dec. Indicative 42.1.
  - Ceiling on the overall stock of central government debt: Jun. PC 335; Sep. PC 335; Dec. PC 335; Mar. Indicative 340; Dec. Indicative 340.
  - Ceiling on the new guarantees granted by the central government 2/: all quarters 0.0.
  - Ceiling on the accumulation of new external payments arrears on external debt contracted or guaranteed by general government 3/: all quarters 0.0.
  - Ceiling on the stock of domestic arrears of the general government: Jun. PC 3.2; Sep. PC 2.6; Dec. PC 1.9; Mar. Indicative 1.9; Dec. Indicative ...
  - Floor on privatization receipts 4/: Sep. PC 2.1; Dec. Indicative 4.7 (not all cells shown).
  - Mandatory exits (employees, in thousands) 5/: Jun. PC 9.0; Sep. PC 14.0; Dec. PC 15.0.
- Notes:
  - 5/ Cumulative from April 1, 2013. Includes further targets for July 2014 of 10,500 and August 2014 of 12,000.
  - 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.

### Structural benchmarks through March 2015 (Table 6)
- End-May 2014:
  - 1. Government to introduce a new Code of Conduct for banks. Status: Proposed. (Macro critical relevance: Financial stability)
  - 2. Adopt changes to the Code of Civil Procedure. Status: Proposed. (Macro critical relevance: Growth/competitiveness (business environment))
- End-June 2014:
  - 3. Address recommendations of the OECD study on administrative burdens. Status: Proposed. (Macro critical relevance: Growth/competitiveness (business environment))
- End-September 2014:
  - 4. Adopt legislation to integrate into ITC the taxation of collective investment vehicles as well as all income tax expenditures (eliminating inefficient or inequitable ones). Status: Proposed. (Macro critical relevance: Fiscal sustainability (revenue))
  - 5. Adopt legislation to broaden definition of tax fraud and evasion, and repeal Article 55 ¶s 1 and 2 of TPC. Status: Proposed. (Macro critical relevance: Fiscal sustainability (revenue))
  - 6. Align public sector’s non-wage benefits with EU best practices. Status: Proposed. (Macro critical relevance: Government efficiency)
- End-October 2014:
  - 7. Adopt VAT reform to streamline rates and simplify administration. Status: Proposed. (Macro critical relevance: Fiscal sustainability (budget) and business environment)
  - 8. Adopt wage grid reform to become effective January 1, 2015. Status: Proposed. (Macro critical relevance: Fiscal sustainability (budget))
  - 9. Adopt amendments to the Organic Budget Law. Status: Proposed. (Macro critical relevance: Fiscal sustainability (budget))
  - 10. Government to enhance the personal and corporate insolvency framework. Status: Proposed. (Macro critical relevance: Financial stability)
  - 11. Adopt legislation to align framework on collective dismissals with EU best practices. (Macro critical relevance: Strengthen competitiveness and promote employment)
  - 12. Adopt legislative changes to bring Greece’s framework on industrial actions in line with EU best practice. Status: Proposed. (Macro critical relevance: Strengthen competitiveness and promote employment)
- End-November 2014:
  - 13. Adopt pension reform package based on actuarial studies completed in September on the whole pension system including supplementary and lump-sum funds. Status: Proposed. (Macro critical relevance: Fiscal sustainability (budget))
  - 14. Adopt legislation to address all identified issues in the follow-up OECD report on legislative barriers to competition in wholesale trade, manufacturing, telecommunications, and e-commerce. Status: Proposed. (Macro critical relevance: Strengthen competitiveness and promote employment)
- End-December 2014:
  - 15. Adopt all secondary legislation on investment licensing law. Status: Proposed. (Macro critical relevance: Growth/competitiveness (business environment))
- End-March 2015:
  - 16. Adopt revisions to the government Chart of Accounts. Status: Proposed. (Macro critical relevance: Fiscal transparency)

### Annex I — Fiscal institutional reforms: Revenue administration (implementation focus)
- Reform focus in 2014 on implementation of the new legal framework.
- New structure and prior actions:
  - Adopt legislation to: (i) consolidate the revenue administration functions and competencies of the General Directorate of Taxation and the General Directorate of Tax Audits and Collection into a new General Directorate of Tax Administration under the SGPR; (ii) close the General Directorate of Financial Inspection within SGPR and replace with the Internal Affairs Department of SGPR, effective end-June 2014; and (iii) issue the Secretary General Decision to establish the new SGPR structure.
  - Re-organized processes so that the 61 local tax offices with debt collection and audit responsibilities focus on major taxes (income, VAT, and property taxes) by requiring filing of most returns/declarations to be done electronically or as self-assessments (consistent with ITC, Article 67, ¶1).
  - By end-May 2014, ensure other public bodies provide only detailed fact sheets to the tax administration to perform audits and investigations.
- Transfer of audit and investigation competences:
  - Amended legislation to transfer all tax-related audit and investigation competences from the Financial and Economic Crimes Unit (SDOE) to SGPR.
  - As a prior action: (i) revoked provisions of Article 6 of Law 3943/2011 on the origin of SDOE personnel being ex-tax and customs officers; and (ii) of the 200 staff transferred to SGPR effective October 31, 2013, replaced those who have not yet taken up their positions with an equivalent transfer of highly-skilled personnel.
  - By end-May, assess with reputable international experts in financial crime prosecution SDOE objectives, staffing needs, and organizational structure.
  - By end-October, assess all pending cases to determine those that need further investigation and those that can be closed without investigation.
  - Until new SDOE objective and staffing needs are approved in consultation with the EC/ECB/IMF, new hirings of SDOE will be undertaken only to the extent needed in cases requested by the prosecutor and without distracting resources from SGPR.
- Grading and promotion reform:
  - Approved job descriptions for general directors and HQ directors to start implementing the new grading and promotion system.
  - Issue all necessary amendments to the legal framework, including amending law 4093/2012 if needed, and issue all decisions governing the new system by June 2014.
  - Approve a strategy for migration of existing staff to the new system by June 2014 with a view to transfer all audit positions and staff by March 2015.
- Budget:
  - Staffed the budget office of the Strategic Planning and Financial Control Directorate to make it functional.

*Source: IMF staff report excerpt (pages and tables as provided).*

### 3.      We are taking steps to strengthen debt collection, improve performance of

### _cr14151 - 3.      We are taking steps to strengthen debt collection, improve performance of

### Debt collection and tax administration measures
- Tax debt collection reforms to be adopted in conjunction with the revised organic budget law:
  - Abolish the requirements to pursue systematically collection efforts of all debts without regard to their collectability by end-June 2014.
  - Clarify rules for prosecutions of tax debtors and repeal the systematic and compulsory referral of debts smaller than €60,000 by end-September 2014 (see ¶9, second bullet, iii).
- Evaluation and automation:
  - Evaluate implementation of rules for writing off debt with technical assistance by July 2014, with a follow-up evaluation by October 2014 to propose further simplification if needed.
  - Automate tax debt collection functions by June 2014.
  - Complete a new work flow management system for all debt collection offices by September 2014.

### Personal liability, audits, and staffing
- Personal liability:
  - Issue by end-May 2014 an explanatory circular clarifying the personal liability of SGPR staff and management, consistent with the existing legal framework.
- Audit program:
  - Complete at least 400 partial audit remittance cases by May 2014 using the new partial audit methodology.
  - Completed 5 audit reports based on indirect audit methods; complete another 10 by the end of June and at least 40 in total by end-2014, using the AML framework where needed.
  - By June 2014, define criteria for a risk-based approach to selection for audit of SGPR managers and officials, and revise audit standards to ensure appropriate documentation to justify individuals’ assets.
- Staffing:
  - Transfer 160 appropriately skilled staff from the Municipal Police to the revenue administration by May 2014.
  - Complete a revised staffing plan for the SGPR by May 2014 to identify additional staffing needs and determine the schedule for further recruitments through 2014.
  - Ensure that at least 1,600 of about 2,100 new MOF vacancies for 2014 will be positioned in the SGPR in addition to the transfer of municipal police staff, subject to the MOF staffing ceiling.
  - External hiring of 300 auditors by June 2014.

### Filing, refunds, and installment schemes
- Filing tax returns:
  - Identified weak elements in the portal infrastructure and strengthened and optimized the platform.
  - Legislated a common payment schedule for PIT regardless of filing date to remove incentives for late filing.
  - ITC amendments smooth the filing schedule; communication strategy in place for future portal problems.
- Tax refunds:
  - Optimizing VAT refund risk criteria and issued guidance to local tax offices for refund audits.
  - Introduced a risk analysis system for processing income tax refunds, prioritizing the largest refund claims.
  - Started monitoring and reporting the age of tax refund claims (see TMU).
  - Steps aim to monitor and reduce interest costs for claims older than 90 days that accrue from January 2014 on claims requested as of this date.
- Installment schemes:
  - Adopted installment scheme framework to improve payment compliance; committed to strengthen enforcement.
  - Debtors dropping out of tax or SSC schemes will be subject to immediate action to secure collection.
  - Publish monthly the monitoring framework for the tax and SSC installment schemes starting April 2014.
  - Complement monitoring with information on number of taxpayers and associated debt who dropped out and enforcement measures undertaken.

### AML, SSC collection, and integration
- AML and information sharing:
  - From April 2014, SGPR started publishing monthly information about cases transmitted to the FIU for failure to pay confirmed debt over €50,000, including number of cases and related aggregated amounts by maturity.
  - Introduced KPIs on the number of AML on-site inspections by the Bank of Greece (TMU Table 2A).
  - Create necessary legal framework by June 2014 to strengthen coordination and information sharing for investigations of financial and economic crimes.
- SSC collection and KEAO:
  - Completed comprehensive review of SSC collection weaknesses and issued ministerial decisions to define “collectible” SSC debt cases for transfer to KEAO from OAEE, ETAA, and OGA (consistent with KPI definition).
  - Refrain from extending payment deadlines for SSC.
  - For KEAO functionality:
    - Assigned 350 full-time staff to KEAO (will assign another 250 by June 2014).
    - Created a single SSC debt database.
    - Established an advisory board incorporating heads of major funds, KEAO, and MOL leadership.
  - Issue secondary legislation to quarantine uncollectable debt by end-June 2014.
  - Issued decisions between MOF and MLSSW, started matching PAYE and APD data, and initiated off-setting of VAT and income tax refunds against SSF debts.
- Integration timeline for SSC into tax administration:
  - Commit to integrating SSC filing, payment and collection into the tax administration by July 2017.
  - Complete by September 2014 the business case for integration of filing, payment and collection.
  - Implement by December 2015 a central registry of contributors.
  - Harmonize by December 2016 the contribution base across major funds and with PIT.

### Customs revenue collection
- Strengthen customs law enforcement at SGPR by end-May 2014:
  - Establish specialist teams dealing with tobacco.
  - Strengthen surveillance teams’ capability to track illegal trade to its final destination.
- Anti-smuggling strategies:
  - Develop comprehensive anti-smuggling strategies to contain revenue losses from tobacco smuggling by June 2014.
  - Develop anti-smuggling strategy for fuel by end-September 2014.
  - Acquire modern technical detection and surveillance equipment by end-2014.

### KPIs and monitoring of 2014 priorities
- Refined 2014 KPIs to focus on areas likely to yield revenue gains and maintain strong improvement momentum from 2013.
- Introduced three new indicators on tax refunds to serve taxpayers more efficiently.
- For SSFs with weak collection performance:
  - Established payment compliance and debt transfer targets for individual SSFs.
  - Established debt collection and enforcement targets for KEAO (Table 2B).
- Performance relative to targets will be published on a monthly basis.

### Public Financial Management (PFM) reforms: budget legislation and process
- Two-stage approach to reform the organic budget law (OBL):
  - First stage: submitted OBL to transpose the Fiscal Compact, including requirements that the MTFS set binding multi-year expenditure ceilings for line ministries and the health sector, introduce a binding balanced budget target for local governments and performance targets for SOEs, adopt provisions to freeze 10 percent of discretionary appropriations in the first half of the year, and impose penalties for government entities that fail to provide timely reporting.
  - Second stage:
    - Complete a full review of the budget process legislation by September 2014, including ensuring budgetary independence of regulatory and other independent bodies.
    - Amend the OBL by October 2014 (structural benchmark) to align with the ongoing PFM reform program and good international practice.
  - Discuss and agree with the EC, ECB and IMF a specific rule on revenue over-performance effective after the program period for inclusion in the OBL and decide whether windfall revenue and fiscal over-performance allow for a greater spending envelope subject to no projected gaps.
- GAO working group:
  - Defined terms of reference of a qualified working group in GAO to coordinate with senior management of the Ministry of Finance and line ministries on implementing PFM reforms; make it operational by June 2014.
- Budget process review:
  - By September 2014, review the internal MTFS and budget preparation processes for conformity with revised legislation.
  - By March 2015, revise the government Budget Classification structure and Chart of Accounts to prepare the 2016 budget (structural benchmark).

### Fiscal Council, GDFS, payment processes, and hospitals
- Fiscal Council:
  - Submitted legislation to establish an independent Fiscal Council; appoint the Board by end-July 2014.
  - Council to assess macro forecasts and assumptions for budget and MTFS preparation, monitor compliance, and provide independent ex ante analyses.
- GDFS:
  - Set up a specialized unit in GAO to support Accounting Officers and GDFS staff.
  - By end-June 2014, GAO to establish and run a capacity-building program for GDFS staff.
  - Fully staff the GDFSs in line ministries by June 2014.
- Streamlining payment processes and FMIS:
  - Reviewed and strengthened the disaster recovery plan; conduct system audits and testing in high volume conditions by September 2014.
  - Review PIB financial processes by June 2014 to ensure conformity with the Late Payment Directive; streamline PIB execution procedures consistent with international best practices.
  - Submit to the Council of State a Presidential Decree in May 2014 following HCA plenary approval to increase the ex ante audit threshold from €15,000 to €30,000 for State budget spending; review impact and re-submit an amendment by November 2014 to increase the threshold for general government expenditures to €45,000, subject to HCA plenary approval.
  - Submitted legislation to expand pre-contractual audits by the HCA.
  - Re-prioritized medium-term action plan to meet Late Payment Directive requirements; after testing, extend the use of the FMIS to line ministries’ GDFSs and the HCA, including electronic transfers of documents, by end-2014.
  - Implement necessary IT applications by October 2014.
- Hospital claims and EOPYY:
  - Pass legislation by June 2014 to ensure all hospital medical claims submitted electronically to EOPYY starting January 2015.
  - Develop a comprehensive plan by June 2014 to clarify transfers from SSFs to EOPYY.
  - Establish a timetable to conduct full audits on all claims from January 2014, so that grants from MOF to cover public hospital deficits and EOPYY payments to public hospitals will be settled afterwards based on fully audited claims.

### Cash management, arrears clearance, and reporting
- Cash management interim measures (prior action):
  - Implemented an interim repo borrowing framework to help alleviate the state’s financing needs in 2014, allowing the Bank of Greece to enter into repo transactions with the PDMA, in compliance with the monetary financing prohibition.
  - Analyze cash balances of SSFs and EBFs in the Bank of Greece and commercial banks to identify resources that could be lent to the state, and reinvest maturing EFSF bonds held by SSFs in government securities; contracts must specify these securities cannot be further traded for the duration of the contracts by counterparties.
  - Complete a review of the accounts of the state in commercial accounts by end-May and recommend closure of unnecessary accounts by end-July 2014.
  - By end-July 2014, develop a plan for cash management reform to be fully implemented as of January 1, 2015, after assessing relevant legal frameworks.
- Arrears clearance:
  - Reduced arrears from €9.4 billion at end-2012 to €4.7 billion at end-2013.
  - Committed to clearing arrears from existing resources for 2012–13 while preserving resources from the special allocation for clearing the pre-2012 stock.
  - Extending timeline for clearance of pre-2012 arrears to Q3 2015; complete a targeted audit of general government accounts payable by end-2015.
  - Launched external audit of EOPYY’s liabilities: complete by end-June 2014 for inpatient care liabilities and by September 2014 for outpatient care liabilities; finalize audit of all pre-2013 EOPYY liabilities by end-2014.
- Reporting improvements:
  - Published, for the first time, a monthly fiscal report including complete above-the-line data for all subsectors of general government, based on the new Monthly Fiscal Reporting System and in line with GFSM2001/ESA95 classifications.
  - Steps to address statistical discrepancies between above- and below-the-line government finance data.
  - By May 2014, Statistics Department of the Bank of Greece and GAO to sign an MOU to implement at least a quarterly comparison exercise between individual government units’ deposits and loans data for monetary and financial statistics and GAO’s Monthly Fiscal Reporting System.
  - First comparison exercise finalized by September 2014 for end-June data of about 60-100 entities.
  - No individual data shared with GAO without explicit consent of affected individual units provided to the Bank of Greece.
  - Institutional coverage reference will be the government units’ registry of the National Statistical Service (ELSTAT).

### New PFM KPIs for 2014
- Introduced new KPIs to focus on speed of processing government payments and social sector PFM issues.
- New targets include:
  - Timely payment of invoices received by the state government.
  - Three KPIs on PFM in the social sector to ensure:
    1. Timely transfers of health insurance premium collection from IKA to EOPYY.
    2. Timely claims submission from public hospitals to EOPYY.
    3. Timely full audits of medical claims at the EOPYY.
- Quarterly targets are in Table 3.

### Technical Memorandum of Understanding (TMU) highlights and MGGPCB definition
- TMU effective date: May 14, 2014 (heading of Attachment II).
- Program exchange rates (prevailed on January 31, 2012):
  - €1 = 1.3176 U.S. dollar
  - €1 = 100.63 Japanese yen
  - €1.1772= 1 SDR
- General government definition for program purposes:
  - Includes all units classified as government units in the registry of the National Statistical Service (ELSTAT), in accordance with ESA95 and the ESA95 Manual on Government Deficit and Debt.
- Floor on the Modified General Government Primary Cash Balance (MGGPCB) — definition:
  - MGGPCB = modified general government cash balance (MGGCB) minus general government interest payments.
  - MGGCB = sum of the cash balances of the state budget and the changes in the net financial assets of local government, social budget entities (including pension funds, employment funds, health insurance, and hospitals), extra budgetary funds (EBFs), and state owned enterprises (SOEs).
- Measurement specifics:
  - Ordinary state budget cash balance measured from above the line based on: (i) gross ordinary budget revenues (recurrent and non-recurrent), minus tax refunds; minus (ii) ordinary budget expenditures as published monthly by the General Accounting Office.
  - Public investment budget cash balance measured from above the line based on investment budget revenues minus investment budget expenditures as published monthly by the General Accounting Office and in line with corresponding line items in the investment state budget.
  - Changes in net financial assets of other sectors measured from below the line, adjusted for valuation changes, based on Bank of Greece data; further adjusted for interest payments and changes not traced by the Bank of Greece (net foreign financial assets, changes in Loan and Consignment Bank accounts relating to LGs).
- Adjustments excluded from MGGPCB:
  - The part of the public investment budget related to EU structural funds and their co-financing.
  - All transfers related to the Eurogroup decisions of February 21, 2012 and November 26, 2012 regarding income of euro area national central banks stemming from their investment portfolio holdings of Greek government bonds.
  - Receipts from privatization; exception: sales of gaming licenses, telecom licenses, sales of aircrafts, and extension of the airport concession established in the context of the May 2010 SBA program or the 2011 budget (Second Review) will be recorded as cash revenue receipts and taken into account for the MGGPCB criterion.
  - Payments related to support of the banking system that are part of the program’s financial sector strategy.
  - 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.
  - Any payments from banks that would undermine their solvency or liquidity, unless the Bank of Greece confirms compatibility with preservation of adequate capital buffers and liquidity going forward, including consistency with banks’ business plans as included in the stress test (two exceptions: the capital concentration tax and the guarantee fee structures currently in place).
  - Any flows related to the special appropriation for arrears clearance.

*Source: Attachment II: Technical Memorandum of Understanding, May 14, 2014 (TMU) and accompanying section on debt collection and PFM reforms.*

### 5.      Supporting material: All of the following will be provided within four weeks of the end

### _cr14151 - 5.      Supporting material: All of the following will be provided within four weeks of the end

### A. Reporting and Supporting Material (monthly reporting)
- Timing: All items to be provided within four weeks of the end of each reporting month.
- Central government, EBFs, SOEs:
  - Ministry of Finance (MoF) will provide to the European Commission, ECB and IMF detailed monthly information on:
    - monthly revenues and expenditures;
    - domestic and foreign debt redemptions;
    - new domestic and foreign debt issuance;
    - change in the domestic and foreign currency cash balances of the central government at the central bank of Greece;
    - all other sources of cash financing including capital transactions.
- Local governments:
  - MoF, in collaboration with the Ministry of Interior, will provide monthly data on revenues and expenditures, as collected in the Ministry databank.
- Social budget:
  - Minister of Finance, in collaboration with the Ministry of Labor and Ministry of Health, will provide monthly data on revenues and expenditures in the social security funds, the central healthcare fund (EOPYY) and public hospitals.
- Interest expenses:
  - For EBFs, SOEs, local government, and the social budget, MoF in collaboration with other ministries will provide monthly data on interest expenses.
- Bank of Greece:
  - Will provide detailed monthly data on net acquisition of assets and liabilities of all non-State subsectors of the General Government as defined: local authorities, social budget entities, extra-budgetary funds, and state enterprises included in the definition of general government.

### B. Ceiling of State Budget Primary Expenditure (Performance Criterion)
- Definition:
  - State budget primary spending = ordinary state budget expenditure minus interest paid by the state budget, minus any arrears payments made related to the special appropriation for arrears clearance.
  - Ordinary state budget expenditure includes called guarantees to entities inside and outside the general government.
- Adjustments:
  - Excludes payments related to support of the bank system that are part of the program’s financial sector strategy.
  - Excludes expenditures related to EU structural funds and their co-financing.
- Supporting material:
  - General Accounting Office of the Ministry of Finance will provide monthly expenditure data as defined above.

### C. Ceiling on the Stock of Domestic Arrears (Performance Criterion)
- Definition:
  - Domestic arrears = (i) unpaid invoices of the general government as defined by El Stat that are 90 days past their due date; plus (ii) the entire stock of tax refund claims that have received an AFEK but excluding those under legal dispute.
  - If no due date specified, an unpaid commitment is in arrears 90 days after receipt of the invoice.
- Supporting material:
  - Monthly data on arrears of the general government provided by the Ministry of Finance within four weeks after the end of each month.
  - Ministry of Finance will publish this information on its website.
  - Expenditure arrears data will continue to be based on survey data until commitment registers are assessed by IMF, EC, 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 (including age of claims) based on General Secretariat for Information Systems and General Secretariat for Public Revenue.
  - MoF will fill out the tax refund template provided on a monthly basis.

### D. Ceiling on the Overall Stock of Central Government Debt (Performance Criterion)
- Definition:
  - Overall stock refers to central government gross debt as defined in the Excessive Deficit Procedure (EDP), covering the state, extra budgetary funds and state owned enterprises consistent with the registry of ELSTAT.
  - Holdings of intra-government debt consolidated.
  - Ceiling reflects total outstanding gross liabilities in the form of deposits, debt securities, and loans; excludes accounts payable; measured at nominal value as defined in the EDP.
  - Program exchange rates apply to all non euro-denominated debt.
- Adjuster:
  - Ceiling adjusted upward (downward) by the amount of any upward (downward) revision to the stock of end-December 2013 EDP central government debt of €326.6 billion.
- Supporting material:
  - Data on total stock of central government debt provided by the General Accounting Office consistent with the EDP no later than 30 days after the end of each quarter.

### E. Ceiling on New General Government Guarantees (Performance Criterion)
- Definition:
  - Includes all new guarantees granted by any entity classified under general government (ESA95, GFSM 2001), but exclude guarantees to entities whose debt is covered under the ceiling on the stock of general government debt.
  - Includes guarantees to the Institute for Growth.
  - Exclusions:
    - (i) guarantees related explicitly to financial stability goals of the program (e.g., government-guaranteed bank bonds or emergency liquidity assistance (ELA));
    - (ii) guarantees related to EIB financed loans;
    - (iii) guarantees related to guarantees provided by the EIB through the trade finance facility up to an outstanding amount of €500 million;
    - (iv) guarantees granted by ETEAN up to a total outstanding amount of €50 million provided these are fully backed by an equivalent amount of bank deposits;
    - (v) guarantees granted under a risk sharing instrument of the EU structural funds (see COM (2011) 655 final) that do not create contingent liabilities for the Greek State;
    - (vi) guarantees granted for natural disasters to individuals and businesses which have been proven suffered damages less any amounts benefitted as compensation insurance up to an outstanding amount of €30 million.
  - New guarantees = guarantees extended during the current fiscal year; for maturity extensions beyond initial contractual provisions, only 50 percent of the full value will be 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 reported in detail, identifying amounts and beneficiaries.
  - General Accounting Office will provide data monthly within three weeks after the end of each month.
  - Non-state entities classified under general government shall report new guarantees they extended to the General Accounting Office monthly within three weeks after the end of each month.

### F. Non-Accumulation of External Debt Payment Arrears (Continuous Performance Criterion)
- Definition:
  - External debt payment arrear = a payment on debt to non-residents contracted or guaranteed by general government units, not made within seven days after falling due.
  - “Falling due” = date external debt payments are due according to contractual agreement, including contractual grace periods.
  - Criterion applies on a continuous basis throughout the program period.
- Supporting material:
  - Stock of external arrears of the general government provided by the General Accounting Office with a lag of not more than seven days.

### G. Floor on Privatization Proceeds (Indicative Target and Performance Criterion)
- Definition:
  - Privatization proceeds = cash receipts from asset sales carried out by HRADF, direct government sales, and sale of any bank participations through HFSF, HRADF, or from the government directly.
  - Included transactions: sale of equity (listed or non-listed) and banks, shareholdings in public infrastructure, 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 the proceeds of concessions), super/extraordinary dividends from entities under privatization paid to HRADF.
  - Proceeds valued in Euros and measured as inflows of cash received related to those transactions and deposited in the Segregated Account at the Bank of Greece within 10 days after the settlement of the transaction.
- Supporting material:
  - Monthly information on cash receipts from asset sales into the segregated account made available by the GAO, in collaboration with HRADF, within 30 days after the end of each month.

### H. “Program” Deficit and Overall Monitoring and Reporting Requirements
- Definition:
  - For program purposes, primary balance = general government EDP balance (EDP B.9) minus ESA 95 general government consolidated interest payable (EDP D.41), adjusted for factors delineated in paragraph 20.
- Adjustments:
  - Accrual revenue from the real estate levy collected through the PPC of a given year includes cash receipts within the year plus amounts pertaining to the given year received through March of the following year.
  - EDP deficit (EDP B.9) will exclude:
    - sale of non-financial assets such as land, buildings, and other concessions or licenses, unless agreed in the context of the program;
    - costs related to banking support as defined in MGGPCB above;
    - all transfers related to the Eurogroup decisions of February 21, 2012 and November 26, 2012 regarding income of euro zone national central banks stemming from their investment portfolio holdings of Greek government bonds;
    - any other transactions related to debt-reducing measures agreed in the program context, such as reduction of GLF interest margin counted below the line in the debt sustainability analysis;
    - 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;
    - any payments from banks that would undermine their solvency or liquidity, unless the Bank of Greece confirms compatibility with preservation of adequate capital buffers and liquidity going forward, including by verifying consistency with banks’ business plans as included in the stress test.
  - Two exceptions to the payments-from-banks restriction: the capital concentration tax and the guarantee fee structures currently in place.
- Overall monitoring and reporting:
  - Performance monitored from data supplied on a quarterly basis to EC, ECB, and IMF by ELSTAT, MoF, GAO, and Bank of Greece.
  - Authorities will transmit any data revisions to IMF, EC, and ECB staff in a timely manner.

### I. Floor on Mandatory Exits (Indicative target)
- Definition:
  - Employees counted as mandatory exits to the private sector originate from those:
    - (i) employed by the general government (ESA95 definition) on a permanent employment contract or on a contract of indefinite duration; and
    - (ii) have no entitlement to early retirement within the next 3 years.
  - Mandatory exit = employee leaves the public sector involuntarily; includes exits from the “availability” scheme to the private sector.
  - Mandatory exits are not entitled to severance pay or any other compensation (unless provided under legislative framework as of April 2014).
  - Payments during time in availability count against severance entitlements.
  - Exclusions:
    - employees leaving because their entity is being privatized under HRADF;
    - employees leaving as part of restructuring ahead of such privatization.
  - Employees separated whose jobs are outsourced will not qualify to be replaced under the 1:1 hiring rule.
  - Mandatory exits cannot be rehired into the public sector except via a merit-based selection procedure by ASEP, open to external candidates.

### J. Floor on Entrants for Future Exit in the “Availability” Scheme
- Definition:
  - Employees counted have no entitlement to early retirement within the next three years and eight months and qualify as entrants to the availability scheme (paragraph 24).
  - After April 1, 2014, if previous exit targets 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.

### K. Floor on Entrants to the Availability Scheme
- Definition:
  - Employees counted as transferred to the availability scheme are employed by the general government (ESA95) on a permanent or indefinite contract.
  - Exceptionally includes tax authority employees from MoF who were subject to mandatory transfers without entering the availability scheme.
  - Entrance defined when employee’s payment is reduced to:
    - 75 percent of remuneration in the case of “availability”;
    - one-third of remuneration in the case of “disciplinary suspension.”
  - Does not include employees belonging to entities being privatized under HRADF or part of restructuring ahead of such privatization.
  - Reference: See TMU Tables 1A and B.
- Supporting material:
  - MAREG will report monthly (15 days after closing of each month) on:
    - entrants to the availability scheme (number, previous entity, reason for entry, number of entrants which will exit) and departures (number, reasons, new entity transferred to or exit);
    - stock of employees currently in the scheme (grouped by months of entrance);
    - exits (number, general government entity they came from, reason, if any);
    - stock of general government employees defined as in the Census Data Base.

### L. Benchmark on Progress in Revenue Administration (2014)
- Progress defined as reaching or exceeding targets set in TMU Table 2A.
- Key definitions and operational rules:
  - Completed audit: formally reported as finalized in ELENXIS audit case management system, signed off by audit supervisor, taxpayer assessment issued, or report states no underpayment.
  - Audit reports brought to Article 70A Committee for settlement between 1 January 2013 and 31 July 2013 are defined as completed when submitted to the committee.
  - HWI audits: audits on legal persons owned or controlled by the high wealth individual will be regarded as HWI audit cases if carried out by same auditors; audits of offshore companies to identify natural person owning/controlling them will be regarded as HWI cases and reported separately.
  - Assessment amounts from audit reports submitted to Article 70A committee until 31 July 2013 are included when reporting assessment performance for HWI and LTU audits; amounts included in collection performance only when final assessment is issued following the committee decision and adjusted for differences between audit report assessment and final assessment.
  - Risk-based audits for large taxpayers and high wealth individuals = audits selected on risk basis using ELENXIS.
  - Collection on HWI and LTU full scope and partial audits = amounts collected from such audits completed during the year or previous years.
  - Collection of tax debt excludes non-tax debts (calls on loan guarantees, fines, etc.) collected on behalf of other public sector entities.
  - In 2014, new tax debt collection includes collection of debt accrued in the month of December, 2013.
  - Large taxpayer full scope audit = audit of compliance with obligations relating to at least income tax, withholding taxes and VAT for a period of at least one income tax year.
  - Large taxpayer partial audit = large taxpayer audit not qualifying as full scope.
  - Audit of assets of a manager or official in revenue administration includes audit of all movable and immovable assets of the official and spouse, examination of financial accounts for up to 10 years, comparison with State registries, and review of acquisition of moveable assets; conducted annually by Internal Affairs Directorate of the MoF.
  - SGPR managers defined as general directors, directors and head of departments of both headquarters and local offices of SGPR; other SGPR officials defined as SGPR officials other than managers, including advisors and consultants; definitions cover both former and current officials.
  - AML on-site inspections targeted at banks at higher risk of misuse by tax evaders conducted by BoG's Banking Supervision Department to test AML/CFT implementation, particularly for customers at risk of tax evasion (section 5.15.11 Decision 281). On-site inspection tests implementation against a sample of 200 customers identified by the supervised bank as meeting the definition of section 5.15.11 Decision 281, last paragraph, and 100 randomly selected self employed.
  - As per AML Law, breaches identified during on-site inspections shall result in appropriate administrative sanctions on banks.

*GREECE    INTERNATIONAL MONETARY FUND*

### 26.      Supporting material. Monthly information on risk-based full-scope audits and partial

### _cr14151 - 26.      Supporting material. Monthly information on risk-based full-scope audits and partial

### Tax audits, collections, and reporting deadlines
- Benchmark: Monthly information on risk-based full-scope audits and partial audits of large taxpayers, self employed and high wealth individuals, and VAT non-filers, collection of assessed taxes and penalties, collection of tax debt, and audits of asset declarations by SGPR managers and officials, tax refund claims paid or rejected, will be made available by the Minister of Finance no later than two weeks after the end of each month.
- Monthly submission will 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 partial and full scope audits.
- Quarterly information on AML on-site inspections will be made available by the Bank of Greece.

### Social security contribution benchmark and definitions (M)
- Benchmark: Progress in collecting social security contribution in 2014 will be defined as reaching or exceeding the targets set in TMU Table 2B.
- Definitions:
  - Social security fund payment compliance = ratio of the amount of current year social security contribution paid to the fund divided by the amount invoiced or declared for each reporting period, expressed as a percentage.
  - Active debtor = a debtor with a debt component that is unimpeded (excluding disputes, bankruptcies, state owned entities and municipalities), less than 180 days since becoming due, with the debtor’s total debt exceeding EUR 5,000.
  - Debt transfer to KEAO: all the debt, both old and new, of the same active debtor should be transferred.
  - Advanced collection action = action taken by KEAO following the second automated notice issued by KEAO, which may include enforced debt collection or classifying the debt as un-collectible. If the taxpayer starts repaying debt after the first automated notice, the latter is also considered an advanced collection action.

### Social security funds reporting requirements (supporting material)
- For each of IKA, OAEE, ETAA and OGA, monthly submission no later than two weeks after each month-end on:
  - total amount of social security contribution paid (flow);
  - total amount of social security contribution invoiced or declared (flow);
  - total amount of active debtors’ debt transferred (measured as of the transfer date, flow);
  - total amount of active debtors’ debt held by the fund at the month-end (measured as of the month-end, stock).
- For KEAO, monthly submission no later than two weeks after each month-end on:
  - total amount of active debtors’ debt on which an advanced collection action is taken within 3 months of the transfer (flow);
  - amount of active debtors’ debt held by KEAO at the month-end (stock).

### Public Financial Management benchmark and definitions (N)
- Benchmark: Progress in implementing public financial management reforms in 2014 will be defined as reaching or exceeding the floor targets and staying at or below the ceiling targets as set in TMU Table 3.
- Definitions:
  - Invoices received by the state = invoices or equivalent documents submitted (accompanied by a submission document) by ministries to the fiscal audit offices for payment, including date when line ministries received the invoice or dates as specified in the Late Payment Directive.
  - Actual IKA-to-EOPYY transfer = amount of cash transfer to EOPYY and the expenditures paid by IKA on behalf of EOPYY during a period in 2014. Expected to be cash transfer only in 2015.
    - Amount to be transferred from IKA to EOPYY = revenue collected by IKA on behalf of EOPYY during the same period, calculated as 4 percent on the higher amount of monthly gross pensions received by each pensioner, and 6.45 percent on monthly insurable earnings of each worker.
    - Exact amount of insurable earnings is calculated ex post based on monthly filings of Analytical Periodic Declarations.
  - Medical claims submitted by public hospitals to EOPYY = claims (invoices and associated documents) using KEN-DRGs and/or hospital fees for insured patients on inpatient services with at least one night stay; no more than one claim per inpatient service.
  - Full audits by EOPYY = audits designed to reach a final decision on the validity and amount due on a submitted health insurance or medical claim; do not include pre-audits that only check patients’ insurance and tax liability information.

### Public Financial Management supporting material (monthly)
- Monthly summary information (no later than four weeks after the end of each month) on:
  - numbers and processing time of invoices received, invoices paid, and invoices rejected upon verification by the state government (including ministry of finance and line ministries);
  - invoices neither paid nor rejected since date of receipt or dates specified in Late Payment Directive for longer than the ceiling days specified in the Late Payment Directive;
  - amount of IKA-to-EOPYY cash transfer, expenditure paid by IKA on behalf of EOPYY, and revenue collected by IKA on behalf of EOPYY;
  - number of medical claims submitted by public hospitals to EOPYY, and number of inpatient services with at least one night stay;
  - number of full audits conducted by EOPYY on 2013 and 2014 claims submitted by private entities (including private hospitals, clinics, diagnostic centers, etc) for insured patients.

### Monitoring of Tax and SSC Installment Schemes (O)
- Definitions — two sections: Values-based indicators and Debtor-based indicators.
  - Values-Based Indicators:
    - Stocks: (i) outstanding stock of debt (including principal and surcharges) accumulated before end-2012; (ii) amount of this debt in the Fresh Start scheme; (iii) amount in Fresh Start scheme that has been legally “verified”.
    - Flows: (i) amount of debt that has entered the scheme during that month; (ii) increase in amount legally “verified” during the month; (iii) total amount actually paid thus far under the scheme and amount referring to upfront full payment (including principal and surcharges paid); (iv) amount that has become delinquent during the month.
  - Debtor-based Indicators:
    - Stocks: (i) current number of debtors with outstanding debt accumulated before end-2012; (ii) total number of applications for participation in the scheme thus far; (iii) total number of applications legally “verified”.
    - Flows: (i) total number of applications submitted during that month; (ii) number of applications legally verified during that month; (iii) number of debtors that made an upfront full payment, number that made their installment payment, number newly delinquent as of that month; (iv) number of debtors that have made their last installment payment.

- Supporting material:
  - For new installment schemes: weekly report (received by Tuesday after the week to which it refers) including a subset of data:
    - i) number of debtors currently in the scheme;
    - ii) total debt currently under the scheme;
    - iii) amount paid year to date;
    - iv) amount of payment contractually expected in the rest of the year based on amount of debt in the scheme at that time;
    - v) number of debtors and amount of debt that have dropped out of the installment scheme year to date.
  - SGPR and MoL: monthly report (within three weeks of the closing of each month) of the full set of indicators defined in the monitoring framework for the “fresh start” and “basic” installment schemes.
  - MoL report on SSC installment schemes will provide information on KEAO schemes and individual information for installment schemes in IKA and OAEE not covered by KEAO; includes data about old installment schemes for which repayments are still collected by the funds.

### Monitoring of SSC Debt Collection (P)
- Definitions:
  - Monitoring framework includes: (i) stock of debt and collection of SSC debt accumulated by December 31, 2013; (ii) stock of debt and collection of SSC debt incurred during the current year; (iii) number of debt assessments completed by the SSFs.
  - Monitoring framework for KEAO includes number and value of legal collection actions: letter notifying opening of enforced collection action, garnishments, seizure writs issued, immovable property seizure, movable property seizure, mortgage and liens, auctions, and bankruptcies and liquidations.
- Supporting material:
  - 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 separately for the four largest SSFs: IKA, OAEE, ETAA, OGA.

### Monitoring of SDOE Stock of Pending Audits and Investigations (Q)
- Definition:
  - Stock of pending audits and investigations = tax- and customs-related audit cases opened by SDOE through October 30, 2013 related to tax and customs competences transferred to the SGPR.
  - As of October 31st, 2013, 10,968 such pending audits were identified.
- Supporting material:
  - SDOE will report on the stock of aforementioned pending audits on a monthly basis (one week after the closing of each month) starting from March 2014.

### Monitoring of the Performance of Commitment Registers (R)
- Definition:
  - Monitoring framework includes: (i) percentage of institutional units reporting on the E-portal of GAO all prescribed items with financial information of the circular on commitment registers at the end of each month, based on data from their commitment registers; (ii) discrepancy between total arrears to third parties of non-state general government entities reported under the E-Portal of GAO using commitment register data and total arrears reported through monthly surveys, calculated as sum across all entities of the absolute value of (arrears monthly survey less arrears E-portal) divided by total arrears.
  - Reporting institutional units include any unit under the general government as defined by ELSTAT whose overall annual spending exceeded €1 million in the most recently closed financial year.
  - Universe of reporting institutional units is updated in the 4th month after an update to the register of general government entities is published.
  - Entries under the e-portal include all fields with financial information as prescribed in the GAO circular on the maintenance of commitment registers of Feb 28, 2014 (protocol number 2/18993/DPDSM, section K); includes cumulative appropriations released, commitments made, sum of invoices received, payments made, and age profile of unpaid invoices past due date, including arrears.
- Supporting material:
  - 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 no later than four weeks after the end of each month.
  - Data submission based on surveys 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 the most recently closed financial year) will be made available by ELSTAT whenever an update to the register is being published.

### Monitoring of Unprocessed Pension Claims (S)
- Definition:
  - Unprocessed pension application = application filed by an insured or entitled person for receiving an old age, disability or survivors’ pension.
  - A pension claim is counted as unprocessed if a decision on the validity and amount due under the claim has not been reached by the end of the month following the month in which the application was filed.
- Supporting materials:
  - Monthly data on unprocessed pension applications (number and total value of claims of the application) for IKA, OAEE, ETAA, and OGA will be provided by the Ministry of Labor.

### Regulated Professions (T)
- The targets on professions are delineated in TMU Table 4 as referenced in MEFP paragraph 27.

### Key reported figures — Employment ceilings and availability scheme
- Table 1A. Greece: Annual Overall Employment Ceilings for the General Government, 2012–16 (number of persons)
  - General government: 2012: 707,609; 2013: 653,746; 2014: 635,227; 2015: 623,219; 2016: 606,170
  - Ordinary staff: 2012: 629,114; 2013: 599,207; 2014: 581,886; 2015: 570,271; 2016: 553,619
  - Other staff: 2012: 56,588; 2013: 36,372; 2014: 36,037; 2015: 36,037; 2016: 36,037
  - Chapter A entities: 2012: 20,446; 2013: 16,587; 2014: 15,723; 2015: 15,330; 2016: 14,933
  - Chapter A fixed term contracts: 2012: 1,461; 2013: 1,580; 2014: 1,580; 2015: 1,580; 2016: 1,580
  - Memorandum items:
    - Chapter A entities not classified as general government: 2012: 18,603; 2013: 17,365; 2014: 16,491; 2015: 16,093; 2016: 15,691
    - Total public sector (excluding ESPA and self financed other staff): 2012: 726,212; 2013: 671,111; 2014: 651,717; 2015: 639,311; 2016: 621,860
    - ESPA and self-financed other staff: 2012: 15,343; 2013: 47,570; 2014: 44,946; 2015: 44,946; 2016: 44,946

- Table 1B. Greece: Availability Scheme, 2013–14 (number of people)
  - 2013 Q1: Target: ... ; Actual: 0 ; Target: ... ; Actual: 0 ; Target: ... ; Actual: 0
  - 2013 Q2: Target: 211,000 ; Actual: ... ; Target: ... ; Actual: ... ; Target: ... ; Actual: 2,500
  - 2013 Q3: Target: 400,000 ; Actual: 198,991 ; Target: 12,500 ; Actual: 8,401 ; Target: 2,000 ; Actual: 704
  - 2013 Q4: Target: 207,754 ; Actual: ... ; Target: 12,500 ; Actual: 7,460 ; Target: 2,000 ; Actual: 336
  - 2013 Total 5/: 607,754 ; Actual: 409,991 ; Target: 25,000 ; Actual: 15,861 ; Target: 4,000 ; Actual: 3,540
  - 2014 Q1: Target: ... ; Actual: 167,115 ; Target: ... ; Actual: 8,011 ; Target: 1,000 ; Actual: 3,034
    - April 2014 7/: 1,470 ; Actual: 77
  - 2014 Q2: Target: ... ; Actual: ... ; Target: ... ; Actual: ... ; Target: ... ; Actual: 4,000
  - 2014 Q3: Target: ... ; Actual: ... ; Target: ... ; Actual: ... ; Target: ... ; Actual: 5,000
  - 2014 Q4: Target: ... ; Actual: ... ; Target: ... ; Actual: ... ; Target: ... ; Actual: 1,000
  - 2014 Total: Target: 0 ; Actual: 167,115 ; Target: 0 ; Actual: 9,481 ; Target: 11,000 ; Actual: 3,111
  - Sum total: Target: 607,754 ; Actual: 577,106 ; Target: 25,000 ; Actual: 25,342 ; Target: 15,000 ; Actual: 6,651
  - Notes included in table:
    - 1/ As reported by Census and data on private law legal entities.
    - 2/ 18,920 employees are excluded from the staffing plans as their employment structures can not be evaluated--for example judges and clergy.
    - 3/ As reported by SPA. The Census Database reports 25.522 employees placed under the availability status as it includes 78 temprorary injuctions and 102 employees whose wage adjustment could not be verified by SPA as they were not paid by SPA.
    - 7/ As of April 24th, 2014.
    - 6/ Actuals are gross exits and do not exclude individuals within three years of early retirement. The authorities report that they have achieved the end-March 2014 cumulative target of 5,000 exits and are in the process of verifying the employment history of these persons to ensure compliance with the TMU definition of exits.
    - 5/ As reported in the Census Database. Single Payment Authority (SPA) confirms 6,651 exits.

*Source: Excerpt from the IMF document _cr14151 - 26. Supporting material. Monthly information on risk-based full-scope audits and partial (pages provided).*

### 1.708 contracts that were terminated due to rejection of temp

### 1.708 contracts that were terminated due to rejection of temporary injunctions and 100 estimated exits

### Mobility and Staffing
- 1,708 contracts that were terminated due to rejection of temporary injunctions.
- 100 estimated exits as a result of the closure/merging of 22 entities in April 2014, according to Law 4250/2014, which is currently under implementation.
- Q3-2013 mobility numbers include 3,572 employees from the restructuring of the Tax Offices.
- Staffing Plans: Total Personnel Covered (table headings present; specific counts not provided in excerpt).

### Tax Administration: Key Performance Indicators, 2014
- Collection of tax debts as of the end of the previous year (millions of euros): End-Jun. 1,000; End-Sep. 1,500; End-Dec. 2,000.
- Collection of new debts in the current year (percent of new debt in the year): End-Jun. 16%; End-Sep. 21%; End-Dec. 25%.
- Number of risk-based full scope audits in the year: End-Jun. 250; End-Sep. 375; End-Dec. 500.
- Number of risk based partial audits in the year: End-Jun. 340; End-Sep. 510; End-Dec. 680.
- Collection of full scope audits in the year (percent of assessed tax and penalties): 65.0% (End-Jun.); 65.0% (End-Sep.); 65.0% (End-Dec.).
- Collection of partial audits in the year (percent of assessed tax and penalties): 65.0% (End-Jun.); 65.0% (End-Sep.); 65.0% (End-Dec.).
- Number of completed risk-based audits of high wealth individuals in the year: End-Jun. 30; End-Sep. 75; End-Dec. 137; (table shows entries as 30/75/137/20 formatting in source).
- Collection of assessed audits (percent of assessed tax and penalties): 50% (End-Jun.); 50% (End-Sep.); 50% (End-Dec.).
- MoF audit of assets of SGPR managers: End-Jun. 4; End-Sep. 8; End-Dec. 8; End-Dec. target 125 (table formatting indicates audits performed and targets).
- MoF audit of assets of other SGPR officials: End-Jun. 6; End-Sep. 31; End-Dec. 07; End-Dec. target 150 (as presented in table formatting).
- Percent of VAT tax refund claims paid or rejected within 90 days (for claims received on or after 1 January 2014 only): End-Jun. 70%; End-Sep. 80%; End-Dec. 90%.
- Percent of income tax refund claims paid or rejected (for claims received on or after 1 January 2014 only): End-Jun. 30%; End-Sep. 55%; End-Dec. 75%.
- Ceiling on stock of total tax refund claims (with or without AFEK) (in billions of euros): End-Jun. 2.4; End-Sep. 2.2; End-Dec. 2.0.
- Number of AML on-site inspections targeted at banks at higher risks of misuse by tax evaders: End-Dec. 369.

Notes from table footnotes (verbatim):
- 1/ Cumulative targets from January of each year.
- 2/ If the actual amount of tax and penalty assessed is less than €250 million in March, the targeted number of audits in June will be increased to ensure achievement of overall annual amount of tax and penalty assessed of at least €1000 million.
- 3/ If the actual amount of tax and penalty assessed is less than €80 million in March, the targeted number of audits in June will be increased to ensure achievement of overall annual amount of tax and penalty assessed of at least €320 million.
- 4/ If the actual amount of tax and penalty assessed is less than €72 million in March, the targeted number of audits in June will be increased to ensure achievement of overall annual amount of tax and penalty assessed of at least €288 million.
- 5/ The audit is performed by the Internal Affairs Directorate of the MoF. SGPR managers are defined as general directors, directors and head of departments of both the headquarters and the local offices of the SGPR. Other SGPR officials are defined as SGPR officials other than the managers defined above. The above-mentioned definitions cover both former and current officials.
- 6/ For claims received on or after 1 January 2014 only. The 90-day period refers to the period between a claim is made and the final payment to the claimant is completed or the claim is rejected. The percentage is calculated as follows. The numerator is the total number of tax refund claims paid or rejected within 90 days during the period. The denominator is the sum of the numerator and the total number of tax refund claims pending more than 90 days on the test date.
- 7/ In billions of euros.
- 8/ The inspection is performed by the AML Unit within the Supervision of Credit and Related Financial Institutions Department (SCFID) of the Bank of Greece.

### Social Security Contributions: Key Performance Indicators, 2014
- Percent of total invoiced or declared current-year SSC amount paid to the fund (payment compliance) — IKA: 90% (End-Jun.); ...; 93% (End-Dec.).
- OAEE: 58% (End-Jun.); ...; 70% (End-Dec.).
- ETAA: 78% (End-Jun.); ...; 85% (End-Dec.).
- OGA: 40% (End-Jun.); ...; 50% (End-Dec.).
- Collection of SSC debts transferred to KEAO (in millions of euros): End-Jun. 100; End-Sep. 200; End-Dec. 350.
- Percent of Advanced Collection Action taken within 3 months of the transfer of active debtors' debt: End-Jun. 25%; End-Sep. 35%; End-Dec. 50%.
- Timeliness of debt transfer to KEAO — Percent of active debtors' debt transferred to KEAO:
  - IKA: 95% (End-Jun.); 95% (End-Sep.); 95% (End-Dec.).
  - OAEE: 40% (End-Jun.); 60% (End-Sep.); 95% (End-Dec.).
  - ETAA: 40% (End-Jun.); 60% (End-Sep.); 95% (End-Dec.).
  - OGA: 95% (End-Jun.); 95% (End-Sep.); 95% (End-Dec.).

Notes from table footnotes (verbatim):
- 1/ Cumulative targets from January of each year.
- 2/ For each reporting period, social security fund payment compliance is calculated as the amount of current year SSC paid to the fund divided by the amount invoiced or declared, expressed as a percentage.
- 3/ In millions of euros.
- 4/ The percentage is calculated as follows. The numerator is the total amount of active debtors' debt where an advanced collection action is taken within 3 months of the debt transfer to KEAO. The denominator is the sum of the numerator, and the stock of total active debtors' debt on the test date which has been held by KEAO for more than 3 months without taking advanced collection actions. An active debtor is defined as a debtor with a debt component that is unimpeded (excluding disputes, bankruptcies, state owned entities and municipalities), less than 180 days since becoming due, with the debtor’s total debt exceeding EUR 5,000. An advanced collection action means an action taken by KEAO following the second automated notice that has been issued by KEAO, which may include enforced debt collection or classifying the debt as un-collectible. If the taxpayer starts repaying debt after the first automated notice, the latter is also considered an advanced collection action.
- 5/ The percentage is calculated as follows. The numerator is the amount of total active debtors' debt that is transferred during the period from a social security fund to KEAO. The denominator is the sum of the numerator and the stock of total active debtors' debt that has been identified but still held by the social security fund on the test date.

### Public Financial Management: Key Performance Indicators, 2014
- Ceiling on number of days (average period for expenditure payments or rejection after receipt of invoices by state government): End-Jun. 40; End-Sep. 30; End-Dec. 29.
- Floor on percentage (multiple floor metrics presented): 97% (End-Jun.); 98% (End-Sep.); 99% (End-Dec.).
- Floor on percentage (other metric): 50% (End-Jun.); 75% (End-Sep.); 85% (End-Dec.).
- Floor on percentage for 2013/2014 claims and transfers: entries include 50% (2013), 99% (2013), 0% (2014), 0% (2014), 50% (2014) as presented in table.
- Notes (verbatim):
  - 1/ Cumulative targets from January 2014 unless otherwise specified. The KPIs apply to transfers, services, invoices, claims etc provided in 2014 only unless otherwise specified. Invoices and claims provided before 2014 are excluded unless otherwise specified.
  - a. Ceiling on average period for expenditure payments or rejection after receipt of invoices by state government, including ministry of finance and line ministries.
  - 2/ Applies to each quarter only. The average period is calculated on all the invoices paid or rejected during the quarter, and invoices still pending beyond the ceiling on number of days on the test date. The period for each invoice is measured from when the invoice is received to the final payment, or to rejection upon verification, or to the test date if it is still pending beyond the ceiling.
  - 3/ The ratio in percentage is calculated as follows. The numerator for 2014 is the amount of cash transfer to EOPYY and the expenditure paid by IKA on behalf of EOPYY during the period. The denominator is the revenue collected by IKA on behalf of EOPYY during the period. It is expected that the numerator will be the amount of cash transfer only in 2015.
  - 4/ The ratio in percentage is calculated as the number of relevant claims (invoices and associated documents) using KEN-DRGs and/or hospital fees submitted to EOPYY for insured patients divided by the number of inpatient services with at least one night stay. No more than one claim is allowed for each inpatient service.
  - 5/ The June and September targets apply to the full audits of 2013 claims submitted by private entities (including private hospitals, clinics, diagnostic centers, etc), and the December target applies to the full audits of 2014 claims submitted by private entities.

### Actions on Regulated Professions (selected entries and timing)
- Actuaries
  - Amend legislation to set the certification exams to be conducted by any public or private sector body accredited by ESYD.
  - Start examinations: End-March 2014.
  - End examinations: End-May 2014.
- Technical professions (56 professions)
  - Submit to the Council of State the Presidential Decree on replacing professional experience by seminars organized by approved bodies, and on fees for the seminars replacing professional experience: End-April 2014.
- Sales of fertilizers, propagation and plant-protecting material (10 professions)
  - Submit Presidential Decrees (2) setting the standards for training courses: End-April 2014.
  - Issue secondary legislation to establish the training courses: End-May 2014.
  - Establish training courses for sales: End-June 2014.
- Geo-technicians (agronomists, foresters, geologists, ichthyologists)
  - Adopt legislation to abolish mandatory issuance of professional IDs and of membership to the Geo-Technical Chamber: End-April 2014.
  - Abolish mandatory presence of geo-technicians for municipalities of more than 5,000 inhabitants: End-March 2014.
- Lawyers
  - Clarify the reference in the Code of Lawyers to the minimum wage for salaried lawyers: Prior action.
  - Adopt legislation to abolish from the code of lawyers the severance pay in case of voluntary exit and introduce a provision similar to that of Article 7 of Law 2112/1920 in the Code of Lawyers: Prior action.
- Engineers (including architects and land surveyors)
  - Adopt legislation to amend unjustified or disproportionate requirements reserving certain activities to specific professions according to the opinion of the HCC: End-June 2014.
  - Complete a screening exercise to list all existing primary and secondary legislation that needs to be either amended or abolished: End-June 2014.
  - Submit Presidential Decrees defining standards for complex activities: End-June 2014.
  - Adopt implementing provisions consistent with the timeline foreseen in the legislation: End-November 2014.
- Firms trading Petroleum
  - Wholesale: Adopt legislation to require the installation of inflow-outflow systems throughout the refining and wholesale trading supply chain: End-April 2014.
  - Retail: Complete the installation of inflow-outflow systems in urban areas: End-April 2014; rest of Greece: End-August 2014.
- Mediators: Adopt legislation to open mediator's professions to non-lawyers: Prior action.
- Health professions (Day care clinics)
  - Adopt legislation to establish day care clinics: End-April 2014.
  - Adopt all necessary secondary legislation to define the technical standards for establishing day care clinics: End-May 2014.
  - Adopt legislation to (i) reduce minimum square requirements, (ii) allow co-establishment of all primary health care providers with the exception of chain professions necessary for a treatment of a patient: End-May 2014.
- Hairdressers/manicurists
  - Review the licensing requirements in line with EU best practices: End-April 2014.
  - Adopt legislation to align licensing requirements with EU best practices: End-June 2014.
- Stevedores
  - Establish entry-level training: End-April 2014.
  - Start entry-level training: End-July 2014.
- TV technicians: Repeal existing licensing system: End-April 2014.
- Energy inspectors: Conduct certification exams: End-May 2014.
- Pharmacies: Implement OECD recommendations on the ownership and operation of pharmacies as specified in MEFP ¶30: Prior action.
- Notaries: Assess fees and reserved activities and adopt legislation to align with EU best practices: End-September 2014.
- Court bailiffs: Review entry requirements, fixed fees and reserved activities; adopt legislation to amend unjustified or disproportionate requirements according to the opinion of the HCC: End-June 2014; End-September 2014.
- Mortgage registrars: Review entry requirements, fixed fees and reserved activities; adopt legislation to amend unjustified or disproportionate requirements: End-June 2014; End-September 2014.
- Recreational and sports centers: Review restrictions and adopt legislation to amend unjustified or disproportionate requirements: End-March 2014; End-June 2014.
- Seafarer: Review restrictions and adopt legislation to amend unjustified or disproportionate requirements including abolishing requirement to withhold the membership union fees from seafarer salaries: End-April 2014; End-April 2014.

(Source footnote in table: Source: IMF staff estimates.)

### Implementation of OECD Competition Assessment Review (selected entries)
- OTC Products
  - Agreed reforms: Maintain cap on OTC prices based on the average of the three lowest prices in EU member states, while allowing prices to move freely downwards. Allow sale outside pharmacies (including via internet) for dietary products.
  - Timing: Prior action; Prior action.
  - Next steps: If there is no substantial reduction of OTC prices by end-June 2014, retail channels will be liberalized immediately for all OTC products.
- Pharmacies
  - Agreed reforms: Abolish (i) the restriction of one pharmacy per pharmacist; (ii) all geographical restriction on minimum distances between pharmacies; and (iii) prior authorization by Prefecture for establishing a pharmacy.
  - Timing: Prior action.
  - Next steps: Review by end-September 2014 the practices in other EU countries, and legislate by end-2014 the changes needed to bring the framework in Greece on pharmacy ownership in line with EU best practices.
- Milk
  - Agreed reforms: Extend the maximum duration of milk shelf life from 5 to 7 days, while introducing an additional definition for milk packaged within 24 hours and 2-day expiration after that.
  - Timing: Prior action.
  - Next steps: Assess the impact of these reforms by end-2014, and make additional legislative changes immediately if milk prices remain high.
- Bread/bakeries
  - Agreed reforms: Allow sale of bread in convenience stores.
  - Timing: Prior action.
  - Next steps: Assess by end-September and if needed adopt by end-2014 changes that bring definition of bakeries in line with EU best practices.
- Sunday trade
  - Agreed reforms: Allow Sunday trading in 3 new tourist areas.
  - Timing: Prior action.
  - Next steps: Clarify by end-June 2014 that the 3 new tourist areas include specified areas in Southern Aegean, Central Macedonia, and Attika. Review the experience and decide by end-March 2015 on whether to roll out changes across the country.
- Retail Sales
  - Agreed reforms: Repeal various restrictions on the sales offers; introduce a code of conduct providing guidelines on sales and offers.
  - Timing: Prior action; September 2014.
  - Next steps: Assess by end-2014 restrictions on sales periods’ time and duration, and adopt by end-March 2015 changes as needed to bring in line with EU best practices.
- Olive oil
  - OECD Recommendation: Abolish prohibition to mix olive oil with other vegetable oils in Greece.
  - Agreed reforms: Do not make any changes to the existing framework.
  - Timing/Next steps: NA.

Notes:
- 1 The Greek authorities have committed to implement in full the recommendations in the OECD’s Competition Assessment Review of March 2014 (table note).
- 2 All follow-up changes will be taken in consultation with the EC/ECB/IMF.

### Historical Tax Administration Performance: 2012–13 (selected figures)
- Collection of tax debts as of the end of the previous year (millions of euros)
  - 2012 End-Dec. Actual 1,099; Target 1,140.
  - 2013 End-Jun. Actual 847; Target 1,558.
  - 2013 End-Sep. Actual 1,147; Target 1,900.
  - 2013 End-Dec. Actual 1,518.
- Collection of new debts in the current year (percent of new debt in the year)
  - 2012 End-Dec. Actual 10.5%; Target 14.0%.
  - 2013 End-Jun. Actual 13.2%; Target 19.0%.
  - 2013 End-Sep. Actual 16.2%; Target 24.5%.
  - 2013 End-Dec. Actual 18.7%.
- Number of risk-based full scope audits in the year
  - 2012 End-Dec. Actual 76; Target 176.
  - 2013 End-Jun. Actual 118; Target 386.
  - 2013 End-Sep. Actual 203; Target 596.
  - 2013 End-Dec. Actual 324.
- Number of risk based temporary audits in the year
  - 2012 End-Dec. Actual 271; Target 260.
  - 2013 End-Jun. Actual 290; Target 470.
  - 2013 End-Sep. Actual 401; Target 680.
  - 2013 End-Dec. Actual 590.
- Collection full scope audits in the year (percent of assessed tax and penalties)
  - 2012 End-Dec. Actual 64.5%; Target 65.0%.
  - 2013 End-Jun. Actual 34.9%; Target 70.0%.
  - 2013 End-Sep. Actual 45.0%; Target 75.0%.
  - 2013 End-Dec. Actual 54.6%.
- Collection temporary audits in the year (percent of assessed tax and penalties)
  - 2012 End-Dec. Actual 49.2%; Target 45.0%.
  - 2013 End-Jun. Actual 38.6%; Target 50.0%.
  - 2013 End-Sep. Actual 52.0%; Target 55.0%.
  - 2013 End-Dec. Actual 54.8%.
- Number of completed risk-based audits of high wealth individuals in the year
  - 2012 End-Dec. Actual 444; Target 280.
  - 2013 End-Jun. Actual 228; Target 550.
  - 2013 End-Sep. Actual 327; Target 910.
  - 2013 End-Dec. Actual 454.
- Collection of assessed audits in the year (percent of assessed tax and penalties)
  - 2012 End-Dec. Actual 78.4%; Target 40.0%.
  - 2013 End-Jun. Actual 40.9%; Target 55.0%.
  - 2013 End-Sep. Actual 28.9%; Target 65.0%.
  - 2013 End-Dec. Actual 22.4%.
- MoF audit of assets of managers of local tax offices (selected entries)
  - 2012 End-Dec. Actual ...; Target 50.
  - 2013 End-Jun. Actual 0; Target 80.
  - 2013 End-Sep. Actual 32; Target 110.
  - 2013 End-Dec. Actual 54.
- MoF audit of assets of auditors (selected entries)
  - 2012 End-Dec. Actual ...; Target 50.
  - 2013 End-Jun. Actual 0; Target 90.
  - 2013 End-Sep. Actual 42; Target 130.
  - 2013 End-Dec. Actual 72.

Notes from annex (verbatim):
- Sources: Ministry of Finance; and IMF staff.
- 5/ The 2012 collection rate is higher, mostly because many 2012 cases were settlement cases where immediate partial payment was required.
- 2/ The amount of tax and penalty assessed from January to September 2013 was €1,304 million (target: no less than €430 million).
- 3/ The amount of tax and penalty assessed from January to September 2013 was €177 million (target: no less than €215 million).
- 1/ Cumulative for the calendar year.
- 4/ The amount of tax and penalty assessed from January to September 2013 was €101 million (target: no less than €115 million).

*Source: IMF staff.*

### Annex Table I.2. Greece: Key Performance Indicators on Public Financial Management, 2012–13

### _cr14151 - Annex Table I.2. Greece: Key Performance Indicators on Public Financial Management, 2012–13

### Public Financial Management: Key Performance Indicators (Annex Table I.2)
- Indicators cover percent of institutional units (State and general government entities) reporting on the E-portal of GAO:
  - Reported entity coverage values shown for 2012 End-Dec. and 2013 End-Jun., End-Sep., End-Dec. include: 85%, 80%, 93%, 94%, 95%, 97%, 97% (as presented in the table).
  - Additional reported entity coverage rows include: 4%, 10%, 3%, 2%, 3%, 1%, 2% (as presented in the table).
  - Another row of entity coverage values includes: 65%, 84%, 78%, 90%, 93%, 95% (as presented in the table).
- Definitions and performance conditions (text excerpts from table notes):
  - a. Percent of institutional units reporting on the E-portal of GAO total budget allocations (including any revisions), pending outstanding commitments, unpaid commitments, and arrears data (for both ordinary and investment) at the end of each month, based on data from their commitment registers, is above the target.
  - b. Discrepancy between the total arrears to third parties of non-state general government entities reported under the E-Portal of GAO using data from commitment registers and the total arrears reported through monthly surveys, i.e. the sum across all entities of the absolute value of (arrears monthly survey less arrears E-portal) divided by total arrears multiplied by 100, is below (table truncates the comparison threshold).
  - c. Percentage of institutional units reporting on the E-portal of GAO all the prescribed items with financial information of the circular on commitment registers at the end of each month, based on data from their commitment registers, is above the target.
- Sources cited in the table: Ministry of Finance; and IMF staff.
- Note: "Includes new entities in the end-September 2012 ELSTAT register with spending above €1 million."

### Government Pending Actions in Privatization (Annex Table I.3)
- Summary of listed assets, required actions, responsible ministries, and critical date (all actions indicated with Apr-14 critical date):
  - EYATH
    - Action A/A 1: Legislation to align pricing policy of EYATH with that of other water companies.
    - Responsibility: Ministry of Environment.
    - Necessary action: Pass amendment to article 21 of Law 2937/2001, in order to align the process of the pricing policy of EYATH SA with that of the other water and sewerage services providers as provided for by Law 4117/2013 and the complementary Ministerial Decisions.
    - Critical Date: Apr-14.
  - EYATH
    - Action A/A 2: Water Regulator.
    - Responsibility: Ministry of Finance, Ministry of Administrative Reform and e-Governance; and Ministry of Environment.
    - Necessary action: Put in place full staffing and initiate operations of the Special Secretariat for Water (Regulating authority).
    - Critical Date: Apr-14.
  - ODIE
    - Action A/A 3: Legislation needed to finalize ODIE tender.
    - Responsibility: Ministry of Finance.
    - Necessary action: Pass legislation on the issues raised by investors as prerequisites to continue in the process: GGR harmonisation; and lease agreement excemption from art. 618 of civil code).
    - Critical Date: Apr-14.
  - OLP, OLTH & Ports
    - Action A/A 4: Ports Regulator.
    - Responsibility: Ministry of Shipping.
    - Necessary action: Pass law related to establishment and staffing of port regulatory authority.
    - Critical Date: Apr-14.
  - Egnatia Odos
    - Action A/A 5: Setting up additional toll stations in advance of privatization.
    - Responsibility: Ministry of Transport, Infrastructure and Networks.
    - Necessary action: Issue Ministerial Decision for the toll stations that have been specified by the technical advisers at main and vertical axes.
    - Critical Date: Apr-14.
  - TRAINOSE/ROSCO
    - Action A/A 6: Clarification of assets included in TRAINOSE, ROSCO privatization.
    - Responsibility: Ministry of Transport, Infrastructure and Networks.
    - Necessary action: Pass legislation to specify licenses and permits for railway properties and all real estate assets that will be included in the privatization perimeter of TRAINOSE, ROSCO.
    - Critical Date: Apr-14.
  - TRAINOSE/ROSCO
    - Action A/A 7: Transfer rolling stock ownership to HR.
    - Responsibility: Ministry of Transport, Infrastructure and Networks and OSE.
    - Necessary action: Issue joint Ministerial Decision for the transfer of rolling stock ownership from OSE to HR.
    - Critical Date: Apr-14.
  - TRAINOSE/ROSCO
    - Action A/A 8: Valuation of the Rolling Stock not in use owned by OSE or HR.
    - Responsibility: Ministry of Transport, Infrastructure and Networks.
    - Necessary action: Launch tender for valuation of rolling stock not in use.
    - Critical Date: Apr-14.
    - Status: Done (as noted in the table).

### Letter of Intent — Principal Fiscal and Structural Commitments (Athens, 15 April 2014)
- Signatories and recipients:
  - Letter dated: Athens, 15 April 2014.
  - Addressees: Mr. Jeroen Dijsselbloem (President, Eurogroup), Mr. Sim Kallas (Vice President, European Commission), Mr. Mario Draghi (President, European Central Bank).
  - Signed by: Antonis Samaras (Prime Minister); Yannis Stournaras (Minister of Finance); George Provopoulos (Governor of the Bank of Greece).
- Macroeconomic outlook and recent outcomes (text excerpts):
  - Recent developments suggest that the recession is bottoming out, and projection that the economy will return to growth in 2014.
  - Expectation of a significant primary fiscal surplus in 2013 in program terms, "well above target and ahead of schedule."
  - Current account showing a surplus for the first time in decades.
  - Ongoing challenges: high rates of unemployment and public debt, high non-performing loan balances, and structural current account deficits.
- Fiscal policy targets and commitments:
  - Implement policies to ensure that Greece achieves a primary fiscal surplus of 1½ percent of GDP in 2014.
  - Committed to adopting policies consistent with a primary surplus of 3 percent of GDP in 2015.
  - The draft 2015 budget will be agreed with the EC/ECB/IMF by end-September 2014.
  - Taking steps to limit fiscal risks from the energy and health sectors.
- Fiscal structural reforms (selected measures):
  - Approved legislation for a new property tax; further reformed the income tax and tax procedures codes.
  - Adopted legislation to strengthen the autonomy and improve the operations of the revenue administration (noted as a prior action).
  - Reforming public administration and catching up on agreed exit and mobility targets.
  - Streamlining payment processes to minimize the risk of further accumulation of arrears.
- Financial stability measures and timelines:
  - Asset quality review and stress test revealed need to strengthen bank capital and accelerate repairing bank and private sector balance sheets.
  - Bank of Greece is requiring banks to raise capital identified in the stress tests by end-June 2014.
  - Preserving the HFSF buffer as a backstop.
  - Commitment to urgently undertake reforms of corporate and household insolvency frameworks and to strengthen bank supervision.
- Growth-enhancing structural reforms (selected measures):
  - Adopted key OECD recommendations on eliminating regulatory restrictions to competition in four sectors (implemented in agreement with EC-ECB-IMF).
  - Prior actions implemented in support of the privatization programme; frontloaded reduction of the labor tax wedge.
  - Additional reforms: measures to open restricted professions, improve competition in the energy sector, ease administrative burdens on business, and improve the quality of public services.
- Financing request and conditionality:
  - Request for disbursement of the amount of EUR 8.3 billion under the financing arrangements with the EFSF supporting the Second Adjustment Programme for Greece.
  - Undertake to deliver the milestones due for end-May and end-June in order to qualify for the disbursement of all the sub-tranches.
- Programme governance and monitoring:
  - Implementation to 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 additional measures if needed.
- Administrative and cooperation commitments:
  - Greece commits to consult with the European Commission, the ECB and the IMF staff on policy adoptions falling within the Memorandum, allowing sufficient time for review.
  - Government to publish a quarterly report in line with Article 4 of the Council Decision.
  - Government will fully cooperate with Commission, ECB and IMF staff to strengthen programme monitoring and provide access to all relevant data and information in the Greek administration.

*Source: _cr14151 - Annex Table I.2. Greece: Key Performance Indicators on Public Financial Management, 2012–13 (excerpts and adjacent annexes and Letter of Intent as provided).*

### 6. Efficient Network Industries ........................................................................................

### 6. Efficient Network Industries

### Achieving sound public finances
- Preliminary estimates indicate Greece is expected to over-perform its primary-balance target for 2013 in programme terms by a significant margin and well-ahead of schedule.
- Key drivers of the 2013 surplus: under execution of expenditures, and over-performance of state revenues.
- Statistical validation of all 2013 data is being undertaken by Elstat and Eurostat; the degree of over-performance will be determined with the publication of the official accrual deficit by Eurostat on 23 April 2014.
- In accordance with the Eurogroup statement of November 2012, when figures are validated the authorities intend to transfer at least 30 percent of the over-performance to the segregated account earmarked for debt reduction by April 2014.
- Another part of the over-performance is expected to be used for clearing unpaid government obligations linked to the past, thereby not affecting the 2014 headline deficit.

- Programme fiscal adjustment path (targets for general government primary surpluses in programme terms):
  - EUR 2,750 million (1.5% of GDP) in 2014
  - EUR 5,650 million (3.0% of GDP) in 2015
  - EUR 8,900 million (4.5% of GDP) in 2016

- These primary surplus targets imply overall Government deficit levels:
  - 2.9% of GDP in 2014
  - 2.1% of GDP in 2015
  - 0.7% of GDP in 2016

- Definition and exclusions for the primary balance for the purpose of the program:
  - Primary balance = general government EDP balance (EDP B.9) minus ESA 95 general government consolidated interest payable (EDP D.41), adjusted for specified factors.
  - Accrual revenue from the real estate levy collected through the PPC 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.
  - Exclusions from the deficit include:
    - Sale of non-financial assets such as land, buildings, and other concessions or licenses, unless agreed in the context of the program;
    - Costs related to bank recapitalisation and other bank support measures;
    - Any payments from banks that would undermine their solvency or liquidity, unless the Bank of Greece confirms compatibility with preservation of adequate capital buffers and liquidity (with exceptions for the capital concentration tax and the guarantee fee structures currently in place);
    - 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, including the BoG, stemming from their investment portfolio holdings of Greek government bonds;
    - Any other transactions related to debt-reducing measures agreed in the context of the program (e.g., reduction of Greek Loan Facility (GLF) interest margin);
    - 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.

- Authorities’ commitments:
  - Implement in full the measures to ensure the 2014 programme target of a primary surplus of 1.5% of GDP will be met.
  - Implement structural fiscal policies to finance growth-enhancing reforms, including an ambitious cut in Social Security Contributions by 3.9% and the abolition of a range of nuisance charges.
  - Reduce binding expenditure ceilings in the MTFS 2015-18 to lock in 2013 expenditure under-execution.
  - Take offsetting actions should adverse court rulings materialize regarding special wage regimes or levies on properties.
  - For 2015, the Authorities intend to close a projected fiscal gap primarily through extension of expiring measures, including the solidarity surcharge; the 2015-18 MTFS will be voted by Parliament by May 15, 2014, and the draft 2015 budget agreed with the EC/ECB/IMF by end-September 2014.
  - If sustained revenue over-performance occurs (contingent on fiscal targets being met), the Authorities will, in consultation with the EC-ECB-IMF, consider reducing high statutory tax rates while aiming to broaden tax bases.

Other actions with fiscal impact:
- The Government will implement permanent measures to reduce hospital spending by euro 25 million in 2014 (July 2014).

Pre-disbursement fiscal measures and revenue/savings measures:
- Strengthen the collection of social security contributions (SSC) to yield about EUR 500 million by:
  - Imposing penalties on employers who do not declare accurately their SSC obligations in the Periodical Analytical Statement (APD), equivalent to penalties for failing to register employees;
  - Introducing mandatory declaration of contributions for supplementary and lump-sum pensions to ETEA and TAPIT in the APD;
  - Expanding automatic reminders to all employers who have not paid their SSC obligations in the previous month, including employers declaring contribution obligations for supplementary and lump-sum pensions through a SGPR Decision for matching of PAYE and APD data;
  - Automating the off-setting of OGA and OAEE contributions against EU subsidies.
- Undertake corrective actions to ensure implementation of the unified public sector wage grid in extra-budgetary funds (EBFs), contributing to realization of reduction in expenditure ceilings of EBFs by around 100 mn EUR to be provided in the MTFS 2015-18.
- Reduce military procurement spending to yield EUR 50 million from 2014 onward.
- Legislate automatic off-setting of VAT and income tax refunds against SSF debts, eliminate OAED family benefits, reduce OAED training programs, rationalize OAEE exemptions to offset the reduction of IKA contribution rates by 3.9 percentage points by EUR 230 million in 2014 and additional EUR 115 million in 2015.
- Eliminate the TEADY dividend as part of the supplementary pensions.

### Structural reforms with budgetary relevance — Privatisation
- Privatisation is a key pillar of the adjustment programme: contributes to reduction of public debt, reduces public subsidies/transfers/state guarantees, increases efficiency and competitiveness, and attracts foreign direct investment.
- Authorities committed to proceed swiftly with the Privatisation Plan and insulate the process from political pressures.
- Provision of basic public goods and services by privatized industries will be fully safeguarded in line with national policy goals and EU Treaty and secondary legislation.
- Authorities to establish regulatory frameworks necessary for privatisation in sectors: airports, ports, water, horse betting, consistent with EU legislation and international best practices.
- Rapid transfer of assets to the Hellenic Republic Asset Development Fund (HRADF) facilitates the privatisation process.
- Reforms of governance of the privatisation process and HRADF functions/competences are crucial to enhance effectiveness.
- Authorities/HRADF should take immediate actions to address state-aid related issues pending, as pre-condition for proceeding with privatization or restructuring/liquidation where appropriate.
- Privatisation of real estate assets is of utmost importance; government has analysed and initiated governance reform for management and privatisation of public real estate (general secretariat for Public Property in the Ministry of Finance and ETAD).
- HRADF launching a major monetisation/securitisation project during 2014 to attract international institutional and other investors and complement direct asset sales; Authorities will assess progress and may revise upwards proceeds estimates from privatisation.

Pre-disbursement actions required (selected):
- In line with the Ports Policy Paper, HRADF launches Expression of Interest for selling majority shares in master-concessionaires for Thessaloniki port.
- HRADF appoints at least one member to the Board of companies under its portfolio where it is not represented.
- Authorities transfer 17% of the shares of PPC held by the government to HRADF to start preparing privatisation of the company.
- Government implements a list of pending actions required for privatization of key entities.
- PPC launches expression of interest for selling ADMIE.
- Authorities submit to Parliament legislation for privatisation of Small PPC.
- Amend law to improve governance of HRADF and allow HRADF to control directly companies in its portfolio; adopt legislation, in consultation with the EC/ECB/IMF, to:
  - Allow the CEO to act as chairman and reduce number of Board members required to be present to hold a board meeting from 5 to 4;
  - Provide personal contracts to executive members of the BoD and narrow grounds for dismissal of the board;
  - Introduce greater flexibility in tools and procedures for asset sales;
  - Amend requirements of prior valuation of assets by providing alternative mechanisms that include a fairness opinion, while preserving strong ex-post safeguards;
  - Legislate that super/extraordinary dividends or reductions in share capital from entities under privatization are paid to the HRADF (and within 10 days to the segregated account);
  - Exempt the HRADF from requirements under L. 4111/2013 regarding submission and monitoring of monthly/quarterly targets and limit reporting requirements under art. 78 of L.2362/1995 to: i. Annual budget and any changes made during the year (forward-looking), ii. Monthly submission of budget execution and financing (backward looking), iii. Monthly submission of wage bill data (backward looking), iv. Monthly submission of commitment registry summary (backward looking on a monthly basis, forward looking for annual budget spending).
- HRADF will review by June 2014 current legislation that applies to GG entities, including the organic budget law (L.2362/1995), to identify legal provisions that hamper its ability to operate efficiently; Authorities, in consultation with the EC-ECB-IMF, will take action to address these by October 2014 (with amendment of the organic budget law).
- Require HRADF to exercise shareholders’ powers in companies where it is a majority shareholder according to a framework of cooperation setting objectives and criteria in line with the privatization process; HRADF shall ensure ongoing adherence to this framework, including taking appropriate action towards Board members and management.

Other governance and regulatory measures:
- Strengthen the independence and operational capacity of the Special Secretariat of Water by revising legislation to enable the Special Secretary to issue formal decisions on all regulatory matters, provide a fixed–term contract to ensure continuity and independence, and complete transfer of seven employees.

### PPC restructuring and privatisation (actions and conditions)
- Following the Government plan adopted 24 July 2013 (FEK 168 Α/24.7.2013), Authorities will:
  1. Adopt legislation for privatisation of Small PPC by June 2014.
  2. Conditions for State ownership of any quota of ADMIE shares (continuous):
     - Execution of the plan in strict adherence to the announced timetable and in consultation with European Commission services to ensure consistency with EU legislation, best practice, and current fiscal programme and financing targets.
     - Voting rights conferred by ownership of ADMIE shares will be exercised separately (i.e., by separate state entities) from those of the PPC or another energy company.
     - The privatisation strategy and targets of the Government are fully respected.
     - 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.

*Source: _cr14151 - 6. Efficient Network Industries*

### 3. The privatisation process of PPC, in all its phases, is undertaken in full collaboration among

### 3. The privatisation process of PPC, in all its phases, is undertaken in full collaboration among

### Privatisation framework and compliance
- The privatisation process of PPC is undertaken in full collaboration among PPC, the Ministry of Energy and Environment, the energy regulatory authority (RAE), and HRADF.
- A regular schedule of meetings is set, to which the EC and the Eurogroup participate through observers (continuous).
- The Government undertakes that whichever the outcome of the privatisation process the gas industry and electricity industry structure will be fully compliant with Directives 2009/73/EC and 2009/72/EC on the internal energy markets (continuous).

### Governance reforms for HRADF and privatisations
- Objective: provide HRADF with all necessary authority to effectively control companies it privatizes, improve the law governing HRADF, reduce legal uncertainties, while ensuring transparency and accountability.
- Key actions and deadlines:
  - HRADF to complete an assessment of management and board members of companies in its portfolio and take appropriate steps (including terminating appointments) for underperforming or misaligned persons. Assessment to be completed by the Board of Directors of the HRADF based on clear objectives and criteria by (June 2014).
  - Frameworks of cooperation with companies in which HRADF is a majority shareholder to be designed and adopted by the HRADF Board of Directors (June 2014).
  - Institute an inter-ministerial working group led by the Secretary General responsible for Public Assets, with participation of the Prime Minister’s office and HRADF, to meet biweekly; circulate a report after each meeting showing pending issues and progress; Authorities to review the list of actions with the EC, ECB, and IMF on a monthly basis to jointly assess progress (continuous).
  - HRADF to prepare and share with EC-ECB-IMF detailed project plans and timelines for completion of sales of major assets, and report quarterly on progress against this timeline (continuous).
  - HRADF will publish quarterly reports on steps taken to proceed with privatisation and financial accounts (profit and loss statement, cash flow statement, balance sheet), no later than 60 days after the conclusion of every calendar quarter (quarterly).
  - Authorities to reorganise Ministry of Finance departments to regroup supervision of government corporate and real estate assets under one Secretariat General placed in charge (June 2014).
  - Set up a post-privatisation monitoring mechanism to oversee functioning of contracts and resolve issues as they arise, particularly related to licensing and regulation (continuous).
  - HRADF to review by June 2014 current legislation applying to general government entities, including the organic budget law (L. 2362/1995), to identify legal provisions that hamper operations or contradict its law; Authorities, in consultation with EC-ECB-IMF, to take action by October 2014 (with amendment of the organic budget law).

### Real estate privatisation reforms (ETAD and HRADF)
- Complete transfer of full and direct ownership of 1000 commercially viable real estate assets to HRADF (April 2014).
- ETAD to strengthen effectiveness in managing and maturing assets before transfer to HRADF; ETAD implements its Action Plan endorsed on February 25, 2014. Milestones:
  - Launch international tender for pilot project (April 2014).
  - Pilot Project implementation to commence (September 2014).
    - 200 properties prepared by December 2014.
    - 600 properties prepared by May 2015.
    - 1000 properties prepared by September 2015.
  - ETAD’s company-wide Operational Plan to be completed by October 2014:
    - Launch Tender (April 2014).
    - Complete the Elaboration (October 2014).
  - ETAD’s Organizational restructuring: from November 2014 to February 2015:
    - Submit to Board of Directors for Approval (November 2014).
    - Implement Plan (February 2015).
  - International tendering for the six sub-projects of the Action Plan (July 2014 to June 2015).
  - High priority to preparation of real estate assets (title clearance, licencing etc.), especially the preselected 3000 assets (continuous).
- ETAD to publish quarterly progress on preparing real estate assets and transferring these to HRADF for privatisation (continuous).
- Ensure priority registration of public real estate properties in the on-going certification through the cadastre (continuous).
- Due diligence of properties:
  - Properties transferred to ETAD out of non-utilised properties previously under ministry management (June 2014).
  - Properties still not transferred by the Ministries (September 2014).
- HRADF to evaluate income-generating properties currently managed by ETAD and assess transferability to HRADF for privatisation (April 2014).
- Authorities to adopt legislation in consultation with EC-ECB-IMF to deal with illegally-held government properties (May 2014).
- No transfer or withholding of any real estate assets without prior consultation and agreement with HRADF and the EC/IMF/ECB to entities other than HRADF, including municipalities and SPVs, until assets necessary for the privatisation plan are secured (continuous).
- HRADF tasked with selling assets as quickly and effectively as possible; no further political review once an asset has been transferred to HRADF (continuous).

### Securitisation and monetisation of real estate
- HRADF to expand operations into monetization/securitisation of real estate assets and front-loading of privatization revenues from real estate, subject to three constraints:
  - (i) do not raise the debt of the Hellenic Republic,
  - (ii) do not entail any financial risks to the Hellenic Republic; and
  - (iii) are targeted at the international investor community and do not rely on the liquidity-constrained banking system.
- Deliverables and timing:
  - Delivery of a progress report on possible options and a 12-month action plan (June 2014).
  - Launch of the first transaction, based on options presented by Advisors (November 2014).

### Privatisation revenue targets
- Securing privatisation receipts cumulatively since January 2011:
  - at least EUR 4.106 billion by end-2014,
  - EUR 6.329 billion by end-2015,
  - EUR 9.681 billion by end-2016.

### Tax policy reforms — overview
- Complete reform of the Tax Codes and Property Tax via adoption of secondary legislation, administrative changes, capacity-building, and legislative harmonization to support full implementation of the TPC and ITC.

### Tax Codes (TPC and ITC) implementation tasks and deadlines
- Adopt all secondary legislation and circulars necessary to support full implementation of the TPC after consulting EC/ECB/IMF staff on specified chapters and Articles (April 2014).
- Adopt all secondary legislation necessary to support full implementation of the ITC after consulting EC/ECB/IMF staff on specified Articles and procedures (April 2014).
- Continue TPC and ITC working groups within SGPR:
  - Update and assess Implementation plan up to December 2014 (May 2014).
  - Issue and publish implementation instruments, including secondary legislation, circulars, administrative guidelines, and tax compliance documents/forms (June 2014).
  - Prepare to bring inheritance and gift taxes under TPC scope (Article 66, #29) (July 2014).
  - Publish electronically a consolidated version of primary tax legislation, including ITC and TPC, and update regularly (June 2014).

### Revenue administration, enforcement, and fines
- Ensure revenue administration capabilities to conduct timely audits at taxpayers’ premises by developing fast-track procedures for authorization of entry and search requests, particularly in fraud cases; change administrative procedures or amend legislation as necessary (April 2014).
- Amend TPC to allow designated tax collection officials to enter tax debtors’ business premises per principles in Article 25, #3, to verify assets and liquidity and identify assets subject to enforcement (April 2014).
- Fines in TPC:
  - Ensure that until end-2014 the current practice of levying multiple penalties will be limited to a fixed cap.
  - Ensure by end-September 2014 that, effective January 1, 2015, violations involving non-issuance or incorrect issuance of retail receipts will be treated as a single but serious procedural violation for VAT, whereas not having a reliable accounting system will remain a single violation for direct taxes.
  - In cooperation with technical assistance—prepare the tax administration to apply modern auditing techniques to counter tax evasion.
  - Amend TPC as necessary to ensure that no fines should be imposed on amended VAT and employer withholding tax returns if they are spontaneously submitted under normal circumstances (April 2014).

### Procedural and legislative reviews
- Review existing legislation for procedures for withholding agents (June 2014) and insert into TPC as general procedural rules for withholding agents (September 2014).
- Finance Ministry and Ministry of Justice to conduct a comprehensive review of tax-relevant legislation, including Administrative and Civil Procedure Law, to examine conflicts with or relationships to the TPC and map these acts to the TPC (May 2014).

### Tax fraud, penal law, and accounting rules
- Comprehensive review of tax fraud and evasion provisions, including Special Penal Law 2523/1997 (June 2014).
- Amend Special Penal Law 2523/1997 and other legislation to:
  - broaden the definition of tax fraud and evasion to all taxes,
  - characterize different offenses and sanctions,
  - clarify link between criminal and administrative rules regarding tax matters,
  - clarify rules for prosecutions of tax debtors and repeal the systematic and compulsory referral of debts smaller than €60,000.
  - Amendments do not reduce scope and sanctions of tax crimes that are currently predicate offenses to money laundering.
  - Following amendments to criminal law concerning tax evasion and fraud, repeal article 55 paragraphs 1 and 2 of the TPC to ensure consistency with the Criminal law in defining tax fraud and evasion (September 2014).
- Adopt proposals for Accounting Rules, including simplification and improvement of the Code of Tax Recording of Transactions and corresponding amendments in commercial and accounting legislation to come into effect by 1/1/2015, with appropriate transitional rules (May 2014).
- Establish working group (May 2014) and appoint project manager within SGPR to steer implementation of new Accounting Rules:
  - Set-up and initial roadmap (June 2014).
  - Provide necessary secondary legislation, review/replace required tax compliance documents, tax returns and forms after consultation, and resolve conflicts with ITC and TPC (June 2014).
  - Adopt action plan to ensure appropriate preparations by businesses, especially SMEs (June 2014).

### Modernisation of Code of Public Revenues (KEDE) and auctions
- Adopt legislation to modernise KEDE:
  - Undertake mapping and modernization to identify conflicts with ITC and TPC and amend conflicting provisions (June 2014).
  - Conduct comprehensive review of KEDE to align with international best practice (June 2014).
  - Initial draft of the law must be made available (September 2014).
  - The law must then be legislated (October 2014).
- Modernize revenue administration’s procedure for enforced sale of assets at public auctions to ensure:
  - auction announced well in advance in public media;
  - bids exceeding cost of the auction will be accepted irrespective of amount of debt owed by owner;
  - minimum bid must be equal to at least one-third of the objective value in case of real estate, unless a lower minimum bid has been defined;
  - debt amounts not covered by auction proceeds shall remain enforceable (April 2014).

### PAYE, surcharge, investment vehicles, incentives, and capacity building
- Provide timetable and roadmap for introduction of a final withholding PAYE tax scheme for all wages, salaries and pensions with the first stage of implementation as of from 1st January 2015 (June 2014).
- If the surcharge is to be extended, assess re-designing and take appropriate action on the solidarity surcharge for natural individuals in a revenue neutral manner, reducing reconciliatory tax returns and integrating it into the ITC (September 2014).
- Review collective investment vehicles not affected by ITC (Article 72, ¶18); identify best practice and integrate taxation principles into ITC:
  - Prepare draft legislation (July 2014).
  - Adopt draft legislation (September 2014).
- Identify and quantify all income tax incentives across legislative documents as tax expenditures (July 2014); adopt legislation to map and fold them into ITC, eliminating inefficient or inequitable incentives (September 2014).
- Comprehensive review of all remaining legislation in conflict with or related to ITC and map these legislative acts to ITC (September 2014).
- Bring capital gains tax on portfolio shareholders in line with EU Member States’ practices (September 2014).
- Develop tax policy capacity within Ministry of Finance:
  - Until Ministry organogram is approved, assign responsibilities and prepare a 12-month action plan (May 2014).
  - Set up a Tax Policy Unit reporting to Deputy Minister and appoint staff upon formal approval of the organogram (September 2014).

*International Monetary Fund — _cr14151 - 3. The privatisation process of PPC, in all its phases, is undertaken in full collaboration among*

### 21. To implement the new ENFIA property tax, the government will finalize filing of the E9

### _cr14151 - 21. To implement the new ENFIA property tax, the government will finalize filing of the E9

### Implementation of the new ENFIA property tax
- Finalize filing of the E9 forms so that billing of the new property tax can commence in June 2014 (May 2014).
- Launch a significant communication campaign to ensure better filing completion of the 2013 and 2014 wealth-based property tax and educate tax payers about the details of the new tax (Apri 2014).

### Property valuation (alignment with market values)
- Over time, fully align property assessment values with market values.
- Timeline and actions:
  - A project team to develop a medium-term reform plan in SGPR will be set up by June 2014.
  - A real estate valuation unit will be set up in SGPR to:
    - (a) determine the nature of the value basis and the valuation methodologies relevant to each sub-sector of properties and
    - (b) collect market data to adjust the zonal prices in a datatape that reflect real estate market conditions (January 2015).
  - Validated instructed valuations of commercial properties will be completed and zone prices will be adjusted to reflect more accurately real estate market conditions by September 2015.
  - A valuation agency is set up by January 2016.
  - Issue a real estate market value index, and assist in assessing revenue coefficients while cross referencing findings (b) change the tax subject (individual ownership of properties rather than aggregate holdings by individuals or holdings of property rights), ensure full identification of ownership with properties through a cadastre of properties and (c) cross-checking of all ownership interests with all individual properties by January 2016.
  - Align all property assessment values with market values (January 2017).

### Improving the VAT system
- Undertake in consultation with the EC/ECB/IMF and stakeholders a comprehensive review of VAT policy and administration (June 2014), with legislation by October 2014 for implementation by 1st January 2015.
- In consultation with EC/ECB/IMF staff consider the introduction of a VAT turnover threshold for registration that balances revenue considerations against enforcement costs from 1 January 2015 and to introduce a simplified tax scheme for businesses below this threshold (June 2014).
- Review the workings of the VAT farmers’ refund scheme and legislate any changes deemed necessary (June 2014).
- De-register inactive firms from the TAXIS database and implement new registration and deregistration procedures (June 2014).
- Set up new unit in SGPR dedicated to detection and co-ordination of activities for prevention of VAT fraud and strengthen detection and enforcement activities (June 2014).
- Reform VAT refunds system, placing greater emphasis on risk analysis, including by allowing companies with a full compliant filing and payment history and absence of past tax evasion for the past two years to receive refunds without audit, and reduce bureaucracy for firms with good compliance records (July 2014).
- Implement OECD administrative burden recommendations on VAT, inter alia redesigning and simplifying the VAT return form by June 2014; abolishing the annual VAT recapitulative statement and incorporating the VAT refund process into the periodic VAT return by September 2014.

### Revenue administration reforms — overarching objectives
- Strengthen reforms to address weaknesses, support fight against tax evasion and corruption, and increase autonomy for the Secretariat General for Public Revenue (SGPR) for day-to-day operations while leaving policy matters to the Minister of Finance.
- Key operational priorities:
  - Increase use of risk assessment techniques to focus audits on high yield targets and substantial issues.
  - Reinforce collection of revenues; conduct debt collection by a full time workforce of specialized collection staff, integrated with social security contribution collection and, as far as possible, local Government.
  - Improve management under the leadership of a Secretary General for Public Revenue.
  - Further reinforce and train SGPR staff.
  - Prioritize fighting tax avoidance, tax evasion, money laundering and corruption.
  - Make full use of technical assistance in a structured, on-going process to support legislative proposals and implementing decisions.

### 2.3.1 Organization (authorities' actions and staffing)
- Replace staff who have not yet taken up their positions out of the 200 staff transferred from SDOE to SGPR effective October 31st, 2013, with an equivalent transfer of highly-skilled personnel (April 2014).
- Complete, with reputable international experts in financial crime prosecution, an assessment of SDOE objectives, staffing needs, and organizational structure (May 2014).
- Until a new SDOE objective and staffing needs are approved in consultation with EC/ECB/IMF, new hirings of SDOE will be undertaken only in cases requested by the prosecutor and without distracting resources from SGPR (continuous until approval).
- Assess all pending cases to determine those that need to be investigated further and those that can be closed without any investigation (October 2014).
- Prepare a 2014-15 business plan for SGPR (April 2014).
- Start initial phase to implement the new grading and promotion system for SGPR, to be approved by the Minister of Finance, by:
  - Finalizing the job descriptions for general directors and headquarters directors (April 2014).
  - Approving the operational guidelines for senior-level promotions (April 2014).
  - Approving the composition and membership of promotion councils (April 2014).
  - Issuing all necessary amendments to the legal framework, in particular:
    - Amending the law 4093/2012 if needed (May 2014).
    - Issuing a Ministerial decision governing the new system (May 2014).
  - Approving a strategy for the migration of existing staff to the new structure (June 2014).
  - Transferring all audit positions and staff (March 2015).
- Prior to disbursement, ensure complete transfer of selected resources from SDOE to SGPR by:
  - Revoking provisions of Article 6 of Law 3943/2011 on the origin of SDOE personnel being ex-tax and customs officers.
  - Adopting legislation to:
    - Consolidate revenue administration functions and competencies of the General Directorate of Taxation and the General Directorate of Tax Audits and Collection into a new General Directorate of Tax Administration under SGPR.
    - Abolish the General Directorate of Financial Inspection within SGPR and replace it with the Internal Affairs Department of SGPR, effective end-June 2014.
  - Secretary General for Public Revenue to issue a Decision to establish the new structure of SGPR.
- Staff the Strategic Planning and Financial Control Directorate to make it fully functional (April 2014).
- Consolidate all tax administration functions within the Directorate General for Tax Administration (June 2014).
- Ensure that at least 1600 out of approximately 2100 new Ministry of finance vacancies for 2014, plus about 160 appropriately skilled staff coming from the municipal police, are to be recruited and positioned in SGPR (May 2014).
- Hirings for SGPR:
  - External hiring of 300 auditors (June 2014).
  - Further external hiring of 500 staff (December 2014 at the latest).
  - The remaining staff in 2015 (June 2015).
- SGPR approves the staffing plan identifying needs by main functions and recruitment schedule (May 2014).
- SGPR and the Secretary General for Service Information Systems (GSIS) sign all current "Service level agreements" (April 2014).
- Filing of most revenue returns/declarations are done electronically, or as self-assessment, except in exceptional circumstances (article 67 paragraph 1 of the Income tax code) (April 2014).
- Publish monthly information about the flows and stock of cases of the Internal review Unit (continuous, starting April 2014).
- Internal review Unit (IRU) key performance indicator targets:
  - 60% of decisions on main cases are taken before reaching the time limit (March 2014).
  - 67% (June 2014).
  - 73% (September 2014).
  - 80% (December 2014).

### 2.3.2 Fight against tax evasion, money laundering and corruption
- Complete external hiring of the 197 auditors whose hiring started in 2013 (April 2014).
- Ensure basic audit training completion for the 2,000 newly certified tax auditors and all 200 new external hires of 2013 as follows:
  - 1.200 newly certified tax auditors and 200 new external hires (June 2014).
  - All remaining staff (December 2014).
- Ensure an adequate number of supervisors in the High Wealth Individual (HWI) and Large Tax Payers Unit (LTU) (continuous).
- Optimize the process of selecting and auditing remittance cases (April 2014).
- Implement partial-audit methodology to complete at least 400 audits of remittance cases (May 2014).
- Implement indirect audit methods in high wealth individuals utilising AML framework where necessary:
  - 5 audit reports (April 2014).
  - Another 10 audit reports (June 2014).
  - And at least 40 audit reports in total (December 2014).
- Further develop the indirect bank account register with information on past financial transactions (June 2014).
- Make compulsory the use of Tax identification numbers for all official transactions with the whole public administration (April 2014).
- Introduce a system to consolidate and link all the different identification numbers now used across various Government agencies (June 2014).
- Adopt legislation to create a coordination and information sharing mechanism for investigations of financial and economic crime (June 2014), including:
  - Coordination mechanism to include at least the three units: SGPR investigation unit, SDOE and the Financial Economic Police.
  - Placement under the authority of the Financial Prosecutor and/or the Anti-corruption Prosecutor, depending on the type of case.
  - Obligation and right for SGPR investigation unit, SDOE and Financial Economic Police to exchange information as appropriate and relevant on cases that fall under the mandate of the other.
- Publish monthly on the website information about cases transmitted to the Financial Investigation Unit (FIU) for failure to pay confirmed debt over EUR 50,000, including number of cases, aggregated amount and breakdown by time in arrears (starting by April 2014, continuous, monthly).
- Publish monthly information about the number of anti-money laundering on-site inspections by the Bank of Greece (continuous, monthly).
- Perform a quantitative analysis of VAT fraud using data-mining tools drawing on international technical assistance to identify fraud patterns across economic sectors (June 2014).

### 2.3.3 Revenue and debt collection
- Implement, with support from technical assistance, a comprehensive evaluation of business processes in selected local-tax offices geared towards reengineering:
  - The evaluation of business processes starts with a first field visit (April 2014).
  - The evaluation of business processes is completed (June 2014).
- Evaluate the implementation of the rules for writing off of debt to identify possible improvement (July 2014).
- Proceed to a follow up evaluation of the rules for writing off of debt, proposing further simplification if needed (October 2014).
- Draft an Action plan to further automate the tax debt collection functions (April 2014).
- Begin implementing the Action plan to further automate the tax debt collection functions (May 2014).
- Implement automated daily payment processing and off-setting by (June 2014).
- Operate E-garnishment through a centralized batch procedure by (June 2014).
- Work out an implementation plan of an end-to-end debt management system (April 2014).
- Roll out the end-to-end debt management system (September 2014).
- Design a new work flow management system for all debt collection offices by (September 2014).
- Policy commitments to preserve payment culture and collection:
  - 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).
  - Publish the schedule for the following year for filing and payment of all taxes and levies for the State government (continuous, every December).
  - Abstain from extending deadlines for filing unless in extraordinary or exceptional circumstances beyond the control of the authorities (“force majeure”) (continuous).
  - Abstain from extending deadlines for the payment of taxes except in rare cases and after assessing fiscal implications, in particular the impact on the achievement of the fiscal targets (continuous).
  - Commit to enhance enforced collection measures (continuous).
  - Abstain from relaxing the 2013 instalment schemes (continuous).
  - Take immediate action aiming at securing collection against tax debtors dropping out of instalment schemes (continuous).
  - Publish monthly indicators to monitor performance of the fresh start and basic instalment schemes, including number of taxpayers and associated debt that have dropped out of the schemes, reminders and enforcement measures undertaken against them (continuous).

### 2.3.4 Management of the Public Revenue Service
- SGPR ensures all staff is assessed for performance on a quarterly basis under the new assessment system (continuous).
- SGPR replaces managers who do not meet performance targets (continuous).
- SGPR makes full application of paragraph 21 of 55 of law 4002/2011 to rotate the managers mentioned in the law, for those managers in place for more than three years (continuous).
- Authorities update at least monthly the website used for publication of summary statistics on key performance indicators, the number of tax evasion cases sent to prosecution by the tax administration (continuous).
- Authorities issue an explanatory circular clarifying the personal liability of tax and customs staff and management consistent with the existing legal framework (April 2014).
- The Secretary General of Public Revenue (June 2014):
  - Defines the criteria for a risk-based approach to selection for audit of SGPR managers and officials.
  - Revises audit standards to ensure appropriate documentation to justify individuals’ assets.

### 2.4 Public Financial Management Reforms (prior to disbursement)
- Adopt legislation permitting the Debt management office to conduct various market operations and amend Law n. 2469/1997 on the Common Capital Fund to allow the Bank of Greece, in its capacity as the administrator of funds belonging to public sector entities, and PDMA entering into repo transactions with respect to general government securities held by the latter, in compliance with the monetary financing prohibition.
- Adopt legislation permitting the Debt management office to conduct various market operations and allow PDMA acting on behalf of the Hellenic Republic to issue, manage, settle and then “hold in treasury” securities which can solely be sold in repo transactions with all SSFs and EBFs or be pledged as collateral with financial institutions for risk management transactions falling with the PDMA’s hedging mandate. Contracts related to these operations should specify that the securities cannot be further traded by the counterpart for the duration of the contracts and that settlement and payments should be done by the PDMA.
- Amend article G10 of law 4152/2013, to make it fully compliant with Article 10 of the Late Payments Directive.
- Submit to the Parliament an amendment to article 1 of Law 3068/2002 to remove the prohibition provided therein of obtaining an enforceable title against Greek State-bodies and bodies governed by public law in Courts.

### 2.4.1 Monitoring and reporting
- Commitment registries established in all general government sub-sectors covering 97 per cent of entities and reporting on the e-portal.
- Line ministries have established General Directorates of Financial Service (GDFS), embedded in each line ministry, responsible for sound fiscal management and Accounting Officers have been appointed.
- GAO's support to GDFS could be further strengthened.

*Source: _cr14151 - 21. To implement the new ENFIA property tax, the government will finalize filing of the E9*

### 1. Identify  other  areas  of  operational  expenditure  where  real  time  monitoring  mechanisms

### 1. Identify  other  areas  of  operational  expenditure  where  real  time  monitoring  mechanisms

### Operational expenditure monitoring and GAO / GDFS capacity
- 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 and above 10 million to be effective from May 2014.
- Establish a new legal framework for appointment procedures of Accounting Officers within the general regime for the public administration (June 2014).
- Fully staff the GDFS line Ministries (June 2014).
- Strengthen the support of GAO budget directorate to line ministries' GDFS by:
  - establishing a specialized unit in GAO to support Accounting Officers and their staff in the units (April 2014); and
  - set-up a GAO capacity building program to provide guidance and support to GDFS staff in carrying out their responsibilities (June 2014).
- Build-up sectorial expertise in GAO to support the achievement of fiscal targets in all sub-sectors through:
  - i. Defining the terms of reference of a qualified working group in GAO with appropriate competences to coordinate with the senior management the implementation of ongoing PFM reforms (April 2014) and make this group fully operational through a Ministerial Decision (June 2014).
  - ii. Setting-up of a capacity building program for policy analysis (June 2014).
  - iii. implementing of this program for a spending review of policy areas that cover a significant percentage of overall public spending subject to an assessment of the qualified working group and following consultation with EC-ECB-IMF (December 2014).

### Payment flows and clearance of arrears — problems and required reforms
- Significant progress required to prevent build-up of arrears on tax and expenditure sides.
- Transposition issues with the Late Payment Directive:
  - Article G10 of the transposition law is not in line with Article 10 of the Directive as it does not guarantee that an enforceable title for unchallenged claims is obtained within 90 calendar days adding any procedural delays.
  - Article 20 of Law 3301/2004 (still in force) established that an enforceable title cannot be used against Greek State bodies and bodies governed by public law in Courts; this provision is not in line with Article 10 of the Directive and is subject of an open infringement against Greece since 2009.
  - Directive requires payment of invoices within 30 days in principle, or 60 days in exceptional cases; Greece faces challenges due to extremely slow payment processes, excessive layers of control and lack of automation.
- Joint Ministerial Decision instructing fiscal audit offices to process all payment requests within 20 days and set deadlines for each stage of the payment process.
- ERP project (comprehensive re-engineering of financial management work processes) necessary to streamline payment processes in the short-medium term to meet the 30 day target.
- Adoption of L. 4151/2013 shifted entire responsibility for payment execution from tax offices (DOYs) to the fiscal audit offices.

### Government actions to monitor and streamline payments (with dates)
- 1. Put in place a monitoring system in other than State Budget able to detect areas of non-compliance with the deadlines set in the Late Payment Directive by using the data from the existing commitment registers (E-Portal), starting from April data (May 2014).
- 2. Submit legislation to expand pre-contractual audits by the Hellenic Court of Audit (HCA) and a Presidential Decree will be issued subject to the approval of the Plenary of the HCA increasing the threshold from the current EUR 15,000 up to EUR 45,000 for ex-ante audits carried out by the Court of Auditors in order to reduce the volume of ex ante audit in excess of the current 70% (April 2014).
- 3. Re-prioritize the medium-term action plan to meet the requirements of the Late Payment Directive (April 2014).
- 4. Implement an updated disaster recovery plan following recent changes to IT and administrative processes (April 2014).
- 5. Conduct a review with external technical assistance of the PIB payment processes to identify whether they conform to the deadlines established by the Late Payment Directive and, if not, propose changes necessary to ensure that they do, and to examine whether sound financial processes continue to be observed following recently approved process changes. The review will also propose changes necessary to implement further streamlining and automation of financial management processes. In parallel, it will streamline the procedures related to the PIB execution, as appropriate to a modern financial management of a multi-year investment programme, taking into account international best practices. PIB procedures will be subject to effective checks and balances with good design and a transition process to the improved procedures. The final outcome will be fully compatible with the ERP project (on-going under the responsibility of Ministry of Finance), ensuring, thus, an integrated monitoring of the whole state budget execution (June 2014).
- 6. Conduct system audits and testing in high volume conditions (September 2014).
- 7. After a proper testing extend the use of the Fiscal Management Information System (FMIS) to the General Directorates for Financial Services (GDFS) of the line ministries and the HCA, so that the payment process and transfer of documents could be started in an electronic manner by GDFS and the HCA as of 1 January 2015. This includes the implementation of necessary IT applications by October 2014.
- 8. To address problems with the extra-budgetary funds and in the social security sector, especially in relation to the transfer of competencies from SSFs to EOPPY, and taking into account the progress in the setting-up of the commitment/co-payment registries, the Government will:
  - i. Ensure that IKA transfers (including both cash transfers and expenditures made by IKA on behalf of EOPYY) to EOPYY at least 97 percent of the revenue collected by IKA on behalf of EOPYY during the relevant period (June 2014).
  - ii. Monitor the effectiveness of the commitment registers by conducting regular targeted inspections in the public entities covered by the system (continuous).
  - iii. Set up a form in consultation with GDFS to provide regularly data to GAO concerning cost of uninsured population coverage by the NHS making the health budget more transparent separating the component of expenses for insured covered through contributions and the expenses for non-insured subsidized through the State budget while enhancing the fiscal oversight of Minister of Finance (June 2014).
  - iv. Pass legislation by June 2014 to ensure that all hospital invoices will be submitted electronically to EOPYY (January 2015).
  - v. Develop a comprehensive plan to clarify the transfers from SSFs to EOPYY (June 2014).
  - vi. Establish a timetable for conducting full audits on all invoices submitted from January 2014, with a view that all grants from Ministry of Finance cover public hospital deficits and EOPYY payments to public hospitals are settled afterwards, based on the total claims fully audited by EOPYY (June 2014).

### Arrears clearance, targets and conditions
- The Government has reduced the arrears from € 9.4 billion at the end of 2012 to € 4.7 billion at the end of 2013.
- The Government will extend into Q3 2015 the special plan to clear pre-2012 stock of arrears.
- Conditions for a government unit to allow funds for arrears clearance to be disbursed:
  - For expenditure arrears:
    - (i) establishment by the unit of a fully functioning commitment register; and
    - (ii) 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:
    - (iii) verification of claims.
- Entities that meet these conditions can clear their arrears even if their parent agency does not meet the conditions.
- Once the clearance of all verified arrears is achieved, the Government ensures that no new arrears are accumulated (continuous).

### Safeguards for delivery of fiscal commitments and EU Fiscal Compact
- Early implementation of the EU's Fiscal Compact is an instrument to enhance credibility.
- The Government will submit the necessary legislation to transpose the Fiscal Compact provisions with a view to introducing a structural budget balance rule with an automatic correction mechanism (April 2014).

### Budget preparation and implementation measures
- 1. Submit to the Parliament the 2015-18 medium-term fiscal strategy (MTFS) including a lowering of binding expenditure ceilings by €320 million to lock in the 2013 under-spending by May 2014.
- 2. In the first stage, submit the organic budget law by April 2014 to:
  - i. Introduce fixed expenditure ceilings set in the MTFS 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.
  - ii. Establish binding annual balanced-budget targets for local governments.
  - iii. Identify performance targets for SOEs.
  - iv. Introduce 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.
  - v. Establish an independent Fiscal Council that will assess macro forecasts and assumptions for budget and MTFS preparation, monitor compliance against targets and rules, and provide independent ex ante policy analyses and assessments of fiscal developments and challenges.
- 3. Following the first stage of the reform of the organic budget law, the Government will:
  - i. Appoint the Board of a stand-alone independent Fiscal Council (July 2014).
  - ii. Complete a full review of the internal MTFS and budget preparation processes to ensure its conformity with the revised legislation including ensuring budgetary independence of regulatory and other independent bodies (September 2014).
  - iii. Amend the OBL to ensure that it is fully in line with the ongoing PFM reform program and good international practice (October 2014).
  - iv. After consultation with the EC-ECB-IMF propose a specific rule on revenue over-performance effective after the program period for inclusion in the OBL and whether the size and nature of any windfall revenue and fiscal over-performance in the previous year allows for a greater spending envelope in the current year, subject to there being no projected gaps.

### Corrective and sanctioning mechanisms for privatisation and fiscal targets
- 1. Strengthen HRADF's governance and independence and implement an automatic correction mechanism, should there be any difficulties in the privatisation process or slippages in the targets (quarterly):
  - i. Reviewing the functioning of the privatisation framework law, through specific QPCs to be enforced the moment the privatisation plan derails.
  - ii. Taking, 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.
  - iii. Increasing 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. Any shortfall in privatisation proceeds ceteris paribus increases the financing need and the debt ratio. To mitigate this undesirable outcome, 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.

### Debt servicing account and cash management measures
- 1. 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. By law, 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, as well as 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).
- 2. Address fragmented cash management and idle cash in other general government entities:
  - Complete a review of the accounts of State in commercial banks by May 2014 and based on this review will recommend the closure of all unnecessary accounts by June 2014.
  - Develop a plan for cash management reform by July 2014 to be fully implemented as of 1st January 2015.
- 3. PDMA responsibilities and timeline:
  - The PDMA will manage, on behalf of the Hellenic Republic, the State's bank accounts related to the settlement – including payments – of all cash and risk management transactions and execute the whole borrowing operation of the Hellenic Republic, taking over the functions carried out so far by the Public Debt Directorate (D23) of the Greek Ministry of Finance active (May 2014).

### Making the public administration more efficient and effective — reform actions and timing
- Implement an ambitious reform of the public administration focusing on reorganisation of ministries and entities, reallocation and streamlining of personnel, objective and transparent recruitment, competence evaluation for managers and staff, broader use of public procurement, better financial management, introduction of e-Government and ICT policies, simplification of rules, and reduction of scope for corruption.
- Other Actions to advance the reform agenda during 2014:
  - 1. Having adopted a human resources strategy, reflect this strategy in legislation to be adopted by Parliament (December 2014). The legal acts will aim at ensuring institutional continuity and higher levels of efficiency in the public administration, and provide a basis for evaluating and developing the competences of the senior management and the staff at large. They will, inter alia:
    - i. Introduce a new, competence-based legal framework for the recruitment of top management (May 2014).
    - ii. All senior appointments will be filled based on this new framework (December 2014).
    - iii. Complete the appointment process of Heads of Unit (June 2015).
  - 2. Establish within the public administration an internal job market, to give the opportunity to all employees to find new positions. The job market will be transparent, and include assessments through predetermined procedures, as well as and experiences. The internal job market will replace the practice of long secondments, while time-limited secondments will only be allowed in very specific cases as of 1st January 2015 (March 2015).

*Source: _cr14151 - 1. Identify  other  areas  of  operational  expenditure  where  real  time  monitoring  mechanisms*

### 3. Develop  the  necessary  tools  for  the  functioning  of  the  internal  job  market.  This  will  include

### _cr14151 - 3. Develop  the  necessary  tools  for  the  functioning  of  the  internal  job  market.  This  will  include

### Internal job market tools (implementation and deadlines)
- Set up a database for the management of personnel.
- Create committees for the selection of personnel.
- Create a database for the management of open positions within the administration.
- Establish detailed procedures and a departure package.
- These tools are communicated across the administration as soon as possible (December 2014).

### Review of Government employment levels and remuneration structure
- Perform, in consultation with the EC-ECB-IMF, a broad review of Government employment levels and the remuneration structure to ensure consistency with high-quality public services and fiscal sustainability.
- Include a fiscally-neutral review of the wage grid aimed at de-compressing the wage range in both directions in connection with skill, performance and responsibility of staff in a fiscally neutral way.
  - A first draft will be submitted for consultation with the EC/ECB/IMF in July 2014.
  - The new wage grid will be legislated in October 2014; and effective January 1, 2015.

### Non-wage benefits review and legal steps prior to disbursement
- Perform a comprehensive review of all non-wage benefits, such as working hours, leave arrangements, per diems, travel allowances and perquisites (July 2014).
- Prior to disbursement, Authorities will:
  - Submit to the Council of State the Presidential Decrees needed to finalize the restructuring process of line ministries (excluding Ministries of Foreign Affairs, Public Order and Citizens’ Protection and National Defense).
  - Complete the transfer of a cumulative 25,000 employees to the mandatory mobility scheme. Mandatory transfers of employees of tax authorities will be counted against the target.
  - Meet the end-March 2014 target for cumulative 5,000 exits.
  - Adopt, through the Government Council of Reform, the two-year Administrative Reform Action Plan, including the Human Resources Strategy.

### Legal alignment and performance evaluation system
- Following the review, adopt the necessary legal instruments to align them with best practises in the EU (September 2014).
- Introduce, as of January 2015, a permanent and continuous system of individual evaluations, including performance-based incentives, to assess 2014 performance by March 2015. A draft law will be presented to the EC-ECB-IMF (September 2014).
- As a transitional measure revise the current system of individual evaluations by introducing:
  - a ceiling to the percentage of employees who are assigned top grade and
  - a floor to those with low grade (April 2014).
  - The 2013 performance assessments will be conducted under this appraisal system.
- Enforce the probation period for new staff of two years, including through a comprehensive performance assessment after the end of the first year, and at the end of the probation period (continuous).

### Mobility, availability, exits, and renewal of personnel
- Distinguish the “availability” (mobility and exit) scheme from a new “mobility” scheme (permanent mechanism for voluntary and mandatory transfers). The new mobility scheme:
  - Will not be connected to exits nor require placing employees under the availability scheme and reducing their remuneration.
  - A minimum of 6,000 employees will be involved in the new mobility scheme in 2014 (continuous).
- Commit to renew personnel by accelerating efforts on disciplinary cases, incapacity, and illegal hirings (including illegal conversion of temporary contracts into permanent ones).
  - Indicative dismissal target: 2,000 by Q1 2015 (continuous).
- In consultation with EC/ECB/IMF and taking into account public administration reforms, assess the possible need to formally define exit targets (September 2014).
- Ensure employees placed in the availability scheme are assessed within a centrally-defined evaluation framework before reallocation or exit (continuous).
- To support end-2013 cumulative exit target of 4,000 and early delivery of the 2014 target, accelerate disciplinary actions and further evaluate entities. Effective 2014, outsourcings will not count under the 1:1 rule (continuous).

### Staffing plans, implementation timelines, and cohesion policy coordination
- Complete staffing plans for remaining general Government entities, to be adopted by the GCR progressively and at the latest by May 2014.
  - Staffing plans are to be implemented with their respective legal acts for each entity within three months after their adoption by the GCR and no later than August 2014.
  - Local Governments, regions and decentralized administrations’ staffing plans will be implemented by December 2014.
  - Involve Commission services regarding assessment of structures and staffing linked with Cohesion Policy (NSRF Operation Programmes) and seek its agreement when taking related decisions (continuous).

### Aggregate employment targets, census, and reporting
- Authorities remain on track to reduce general government employment by 150.000 by the end of 2015.
- Provide a full and updated picture of public employment:
  - Finalise the recording of all public sector (excluding Chapter B companies) employees into the census database (April 2014) and payment of their wages through the Single Payment Authority within months of their entry into the census database (September 2014).
  - 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).

### Hiring rules, ratios, and contingency measures
- Facilitate staff renewal and skill acquisition:
  - The Government will hire one new employee for each exit as a result of:
    - (i) disciplinary cases, cases of incapability, and illegal hirings;
    - (ii) temporary injunctions;
    - (iii) downsizing of private law legal entities;
    - (iv).redundant positions, as a result of further organizational restructuring (continuous).
  - If monthly assessments provided to EC/IMF/ECB show employment developments and plans are no longer on track to achieve aggregate targets, Authorities commit to reduce the 1:1 hiring ratio for exits mentioned under (i.) (continuous, monthly).
  - For all other exits than those mentioned under (i), the hiring ratio will remain 1:5, as envisaged in the program (continuous).
- Provide hiring plans for the following year to ASEP on a regular basis by end July, or as soon as they are finalised, with at least a six-month notice with respect to the desired recruitment date.
  - Ensure sufficient budget so that modern methods are used by ASEP for selections, including a competency-based approach (continuous).

### Fighting corruption (other actions and timelines)
- Pursue implementation of the National anti-corruption plan (continuous).
- Present a revised anti-corruption action plan, and include follow up actions as needed (April 2014).
- Adopt a draft code of conduct for members of government (April 2014).
- Adopt a draft code of conduct for members of Parliament (April 2014).
- Present draft legislation on the funding of political parties (April 2014).
- Adopt legislation on the funding of political parties (June 2014).
- Present draft legislation to provide for an enhanced system of published declaration of assets, interests and incompatibilities by public and elected officials, and for members of government, with sufficiently deterrent penalties for misreporting. Declarations to be monitored by an independent body with investigative power through risk-based audits (April 2014).
- Adopt the above-mentioned legislation on enhanced system of declarations and monitoring (June 2014).
- Prior to disbursement, adopt the agreed 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.

### 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; strategy to be adopted by the GCR (April 2013).
- Establish a system of ex-ante review of all primary and secondary legislation to be undertaken by the Secretariat General for Coordination (SGC) to ensure draft legislation aligns with Government objectives, international and European obligations, and commitments under this MoU.
  - System operational as of 1st May 2014 and should produce bi-weekly reports with all submitted draft legislation, its objective and consistency with current targets and obligations, and fiscal impact assessment (to be prepared by GAO).
  - This to be undertaken in collaboration with the Secretariat General of the Government for constitutional and EU law compatibility aspects (April 2014).

### ICT in Public Administration Reform (institutions, inventories, procurement, and timelines)
- Establish an ICT Unit/Directorate in MAREG responsible for policy, strategic planning and monitoring for all ICT aspects; fully functional by June 2014.
- The Act establishing the new entity will provide for close coordination mechanisms with Central Purchasing Bodies for ICT procurement (continuous).
- The new entity will monitor ICT actions and projects of all General Government entities, including supervised ones; status and deadlines of deliverables will be published quarterly (continuous, starting in September 2014).
- Proceed to an inventory of available ICT hardware and software to facilitate consolidation (June 2014, update bi-annually).
- Proceed to an inventory of available ICT applications, registries and services used internally or provided to citizens and organisations (e.g., TaxisNet, E-justice) indicating operational status (June 2014, update bi-annually).
  - Inventory should specify which data, applications and services can be shared.
  - Identify information that can be published as open data and make it applicable to the public.
- Undertake a thorough review of the project cycle of ICT interventions and create a costing model for ICT projects; adopt necessary legal framework for ICT project production (June 2014).
- Undertake a thorough review of the purchasing cycle of hardware and software to optimize quality and minimize cost (September 2014).
- As of January 2015 all purchases of standardized ICT equipment should be centralized and enacted using the E-procurement platform.
- Provide an action plan of major ICT projects in key public sector policy areas ensuring compatibility with e-Gov and ICT strategies (April 2014).
- Set up a central inventory of national and international evaluators of ICT professionals qualified to evaluate ICT project bids (April 2014).

### Public procurement reform: SPPA, CPBs, and e-procurement
- Aim to realize important fiscal savings and higher quality purchases via:
  - Making the Single Public Procurement Authority (SPPA) fully operational.
  - Establishing an e-procurement platform and mandating its gradual use.
  - Increasing the share of supplies and services tendered through Central Purchasing Bodies (CPB), including use of framework contracts.
  - Codifying and simplifying all public procurement legislation.
- SPPA to ensure coordination and coherence of Central Purchasing Bodies, reform of procurement regulations and e-procurement framework (continuous).
- Move towards more centralised procurement, including health procurement, and start building procurement statistics, use framework contracts and review public procurement legislation.
- Reform of public procurement legislation:
  - Undertake to adopt by May 2014, in close consultation with the Commission Services, a reform of public procurement legislation including works, supplies and services under SPPA coordination to:
    - Simplify, streamline and consolidate public procurement legislation.
    - Rationalise administrative structures and processes to achieve procurement efficiency and efficacy.
    - Improve national review procedures, including reduction of delays from redress system and assess SPPA's role in redress (remedies and judicial protection).
- Central Purchasing Bodies (CPB) actions:
  - Adopt a reorganisation and staffing plan for the General Secretariat of Commerce as a Central Purchasing Body (May 2014).
  - Revise the Unified Public Procurement Programme:
    - Submit a proposal to the European Commission for a revised programme identifying supplies/services, bodies, and procedural arrangements (April 2014).
    - Enact appropriate legislation implementing the revised Programme and render its use mandatory for other Ministries (August 2014).
    - Apply the revised Programme to cover public procurement needs of 2015 (October 2014).
  - Monitor compliance of Ministries and other bodies with mandatory use of centrally managed framework agreements (continuous).
  - Promote awareness and facilitate use of centrally managed framework agreements (continuous).
  - CPB specific tasks:
    - Identify three categories for procurement via framework contracts, publish contract notices, and award relevant contracts by June 2014.
    - Ensure framework agreements include clauses for providers to implement and set up call-down procedures within two months from entry into force; Ministries to be provided supplies and services within four months from entry into force (continuous).
    - Revise list of categories of supplies and services to be procured under central purchasing scheme; present to and consult with European Commission; include military purchases of standardised civil supplies (including fuel) and services (not falling under Directive 2009/81). Identify areas for further framework agreements (June 2014).

*International Monetary Fund — content unit _cr14151*

### 1. Publishes  monthly  a  report  on  the  number  of  contract  notices  on  supplies,  services  and

### _cr14151 - 1. Publishes  monthly  a  report  on  the  number  of  contract  notices  on  supplies,  services  and

### E-procurement systems, governance, and rollout
- Publishes monthly a report on the number of contract notices on supplies, services and works and on the number of contracting authorities uploading information on the portal (continuous).
- Complete pilot tenders on the ESHDHS system and draw conclusions for further development of system management/governance and system functionality (April 2014).
- Establish a suitably equipped and resourced steering committee for ESHDHS and KHMDHS, under the responsibility of the Minister, to develop and oversee implementation of a business continuity and development plan (April 2014).
- Set appropriate legal framework under the new law of SPPA to remove duplication in data-entry requirements for contracting authorities, establishing interoperability among databases and creating KHMDHS as the single public system dedicated to publication of contract notices and contract award notices in the Greek public administration (May 2014).
- Establish, by May 2014, a business continuity and development plan for KHMDHS and ESHDHS which:
  - Ensures that the Hellenic Republic becomes owner and manager of systems needed to run ESHDHS and KHMDHS and ensures continuity beyond expiry of current contractual arrangements.
  - Complies with recommendations set out in the systems evaluation carried out by independent experts and lessons from pilot tenders.
  - Ensures KHMDHS is appropriately visible and advertised (for instance in search engines) to increase visibility.
  - Launches extensive communication and training plans for suppliers and contracting authorities.
  - Ensures ESHDHS development ensures interoperability between KHMDHS, ESHDHS, and DIAVGEIA to ensure automatic transfer of information between systems (e.g. user registration).
  - Ensure compliance of information entered in ESHDHS is compliant to TED requirements so as to automate submission to TED.
- Implement all arrangements (financial, managerial, staffing and otherwise) to ensure uninterrupted development and implementation of ESHDHS and KHMDHS (September 2014).
- Ensure mandatory use of e-submission as follows:
  - For all Ministries regarding the purchase of supplies and services (continuous, beginning 1st July 2014).
  - The 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 for goods and services (July 2014).
  - For all local and regional bodies for the purchase of supplies and services (1st October 2014).
  - The whole public sector in Greece uses the e-procurement platform for supplies and services (October 2015).
  - For public procurement tenders regarding works by central government bodies by 1st January 2015 and by contracting authorities other than the central government bodies by December 2015.
- Submit to the Commission services the data of the monitoring activities covering year 2013 and the first months of year 2014 (April 2014), including:
  - 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 out of the total number of tenders published in the relevant period.
  - The types of purchases carried out with the e-procurement platform.
  - Value of procurement carried electronically out of the total value of public procurement carried out in the relevant period.
  - The percentage of procedures carried out electronically out of the total number of procedures carried out in the relevant period.
  - The percentage of contracting authorities using e-submission out of the total number of contracting authorities.
  - Data reporting on the evolution of prices, savings (also in terms of lower administrative cost), duration of the procurement procedure and number of bidders per tender, in comparison with corresponding data before introduction of e-procurement.

### Social security reforms — review of contributions and pensions
- Authorities will review impact on wages, employment and public finances, and assess in consultation with EC/ECB/IMF the case for a further cut in employer contributions of 1 p.p. in a budget neutral way (June 2015).
- Prepare by September 2014, in consultation with EC/ECB/IMF, a comprehensive plan to (i) unify and streamline SSC policies to eliminate loopholes, and (ii) better target lower-end contributions to improve employment incentives, including enhancing schemes for young people and long-term unemployed financed by EU funds.
- Implement the plan (December 2014).
- On supplementary pensions:
  - Government will integrate all funds that fall under the ESA95 definition of General Government in ETEA and will adjust benefits to contributions in an actuarially neutral way with pro-rata calculations starting January 1, 2014.
  - Fiscal sustainability factor will be applied to all supplementary funds integrated into ETEA from 1st July 2014 to eliminate any deficit.
- Starting January 1, 2015, all supplementary pension funds will only be financed by own contributions. For a limited number of funds that technically cannot be merged into ETEA at this stage, same rules applied from 1st January 2015.
- Lump-sum pensions reform effective since January 1, 2014; remaining funds that fall under ESA95 definition of General Government incorporated under law 4052/2012, effective from 1st January 2015.
- Starting 1st January 2015, all lump-sum funds will only be financed by own contributions.
- Government will undertake a review of the social security system by May 2014 to:
  - Make proposals to further consolidate social security funds (SSFs) and integrate back-office functions and IT systems.
  - Provide a comprehensive analysis of contribution and benefit structures and timing of payment, and widen contribution base for SSFs.
  - Clarify and identify rules of operation fund by fund as first step before harmonizing them.
  - Make proposals to enable pension portability between SSFs to facilitate mobility across jobs, occupations, and sectors.
  - Through detailed accounting covering each individual SSF, assess extent spending on social assistance matches government funding to SSFs; examine SSFs financing through nuisance taxes; benchmark management and other overhead costs of individual SSFs.
  - Evaluate means to strengthen link between contributions and benefits.
- Follow-up actions after review, in consultation with EC/ECB/IMF, to make proposals toward consolidation and harmonization by June 2014:
  - Further consolidate SSFs, integrate back-office functions and IT system, harmonise rules of operation, and improve pension portability (June 2014).
  - Make progress towards constructing a central register of contributors and developing a unified registration procedure in line with roadmap to integrate social security contribution collection with tax administration revenue collection services.
- Government will present a wide-ranging package for pensions (September 2014) taking account of actuarial review results, including:
  - Policies to widen base of SSFs, including elimination of unjustified exemptions by 1 January 2015.
  - Policies to ensure full separation of social insurance functions from social assistance functions of SSFs, with social assistance funded by general tax revenues.
  - Policies for future pension-funding system to safeguard sustainability and actuarial fairness, to be implemented from 1 January 2015; proposed system should increase incentives for labour market participation and improve incentives for making contributions through establishing a strong link between current contributions and future pension entitlements (e.g., through an electronic registry).
  - Policies to contain pension spending to ensure short- to medium-term compatibility with MTFS targets by recalibrating pension system parameters.
- Government will adopt the package for pensions by October 2014.
- Prior to disbursement: Lower Social Security Contribution rate by 3.9 percentage points, to be implemented by 1st July 2014; rate cut achieved mostly by reducing employer-paid non-pension contributions.

### Social security collection reforms and KEAO
- Rationale: revenue functions of Social Security are scattered across funds leading to inefficiencies; low current-year payment compliance and continuous increase of arrears threaten short-term viability.
- Short- to medium-term multi-pronged approach:
  - Strengthen operations and progressively enlarge role of joint collection centre KEAO to position it as collection enforcement arm for collectible overdue contributions to the 4 SSFs party to KEAO (IKA-ETAM, OAEE, OGA, ETAA).
  - Implement short-term revenue measures based on better reconciliation of notifications/declarations and payments and better access to tax administration information.
  - Reinforce inspection and audit function, especially within IKA-ETAM.
  - Pave way towards integration of revenue collection within tax administration.
- Actions and timelines to work towards integration of social security collection:
  - Establish working group to prepare formal framework for exchange of asset information from tax administration to KEAO (April 2014).
  - Adopt formal framework for exchange of asset information from tax administration to KEAO (April 2014).
  - Announce strategy for integration of SSC payment and collection into tax administration by July 2017 (April 2014).
  - Assign piloting of project to a group of full-time staff (April 2014).
  - Put in place a MOLSSW task force to commence preparations for integration by preparing business case, unifying payer register and legal harmonization of contribution base across funds (April 2014).
  - Establish joint working group (MoL-SS Funds-Revenue administration) to follow up integration (April 2014).
  - Include review of weaknesses in SSC collection, including enforcement, in comprehensive social security review (April 2014).
  - Adopt joint Ministry of Finance/Ministry of Labour plan of action for integration with milestones (May 2014):
    - Complete business case for integration of filing, payment and collection (September 2014).
    - Implement a central registry of Social security contributors and PIT taxpayers (December 2015).
    - Harmonize contribution base across major funds and with personal income tax (December 2016).
  - Merge administration of registration filing, payment and collection with tax administration (June 2017).
- Measures to increase compliance:
  - Develop within IKA/ETAM new audit and inspection strategies with assistance of comparable European SSC administrations to address compliance problems, notably cash-in-hand payments (June 2014).
  - Publish schedule for filing and payments of all contributions to main funds (continuous, every December).
  - Abstain from extending deadlines for filing and payment of SSC except in rare cases and after assessing fiscal implications (continuous).
  - Adopt automated follow up of payment shortfalls within ten days (for unpaid invoiced amounts) in OAEE, OGA and ETAA based on agreed timetable (April 2014).
- Measures to reinforce KEAO:
  - Issue ministerial decision to define “collectible” Social security contributions debt cases for transfer to KEAO from OAEE, ETAA, and OGA (consistent with KPI definition) (April 2014).
  - Assign 400 more staff for KEAO:
    - 150 additional (April 2014).
    - 250 additional (June 2014).
  - Four main social security funds transfer to KEAO all amounts over EUR 5,000 identified unimpeded debtors (excluding disputes, bankruptcies, state owned entities and municipalities) and only where there is a debt less than 6 months old. When both fresh and old debt exist, old debt is bundled with fresh debt and also transferred to KEAO (continuous).
  - Establish an Advisory board for KEAO with heads of major funds, KEAO, and Ministry of Labour leadership (April 2014).
  - Publish monthly indicators of KEAO's performance (continuous).
  - Issue secondary legislation to quarantine uncollectable debt (June 2014).
  - Publish monthly indicators to monitor performance of fresh start and basic instalment schemes, including number of SS debtors and associated debt who dropped out, reminders, and enforcement measures undertaken (continuous).

### Social security IT systems and reporting
- Finalise electronic recording of all social security contributions to ETEA. Finalise ETEA computerised system of individual pension accounts (April 2014).
- Produce regular quarterly report of activities of the Health Committee, aimed at monitoring and revising disability status and ensure disability pensions correspond to not more than 10 percent of the overall number of pensions (continuous, next report, April 2014).

### Health care modernisation and pharmaceutical spending targets
- Programme objective: stabilise public health expenditure at, or below, 6 percent of GDP, while guaranteeing universal access and improving quality of care delivery.
- Policy measures include reducing fragmented governance, reinforcing and integrating primary healthcare network, streamlining hospital network, strengthening central procurement, and developing monitoring/assessment capability and e-health capacity.
- Pharmaceutical spending targets and figures:
  - Achieve 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.
- Strengthen health system governance by:
  - Ensuring effective concentration of all health insurance funds, without exception, into EOPYY, monitoring transfer of staff and assets.
  - Ensuring effective transfer of all health-related decision making procedures and responsibilities (including payroll expenditures) under the Ministry of Health.
- Controlling pharmaceutical spending:
  - Step up efforts and further develop incentives and obligations for all participants along medicines supply chain (producers, wholesalers, pharmacies, doctors and patients) to promote use of generic medicines and cost-effective use of medicines.
  - Contingency measures to deliver overall targets (section begins but specific contingency items follow in subsequent text).

*Source: _cr14151 - 1. Publishes  monthly  a  report  on  the  number  of  contract  notices  on  supplies,  services  and  (IMF PDF).*

### 1. The   Government   applies   an   automatic   claw-back   mechanism   (every   six   months)   to

### _cr14151 - 1. The   Government   applies   an   automatic   claw-back   mechanism   (every   six   months)   to

### Claw-back mechanism for outpatient pharmaceutical expenditure
- Government applies an automatic claw-back mechanism every six months to pharmaceutical producers to guarantee that the outpatient pharmaceutical expenditure (EOPYY budget) does not exceed the specified targets (Continuous and through to 2015 inclusive).
- Clawback ceiling: 2 billion euro including vaccines and other medicinal products for the uninsured (April 2014).
  - A note on the collection of the clawback for the second half of 2013 is submitted by April 2014.
  - A note on the collection of the first half of 2014 is submitted in August 2014.
- If the claw-back cannot achieve the target, contingency measures (including e.g. across-the-board cut in prices or entry fee for the positive list) are activated to produce an equivalent amount of savings (April 2014).
- EOPYY may introduce additional incentives and mechanisms, including a prescription quota system for physicians with a minimum prescription target of generics for doctors of 60% percent on average and adjusted to specialty, to ensure generic substitution (April 2014).

### 2.9.1.2. Pricing of medicines
- Revise downward the price of medicines based on the three EU countries with the lowest prices (full revisions every six months and a monthly pricing of new generics in line with Council Directive 89/105/EEC; next list to be published by end June 2014).
- On the basis of the report on the impact of the new profit margins of pharmacies, introduce regressive mark-ups and reduce the profit margins down to 15%, starting from 1st June 2014.
- Ensure that EOPYY negotiates a 5% discount through price-volume or risk sharing agreements focusing on the top spending medicines sold in EOPYY pharmacies (continuous).

### 2.9.1.3. Prescribing and monitoring
- Update the positive list of reimbursed medicines and the list of OTC medicines after every price bulletin (or the corrective); next one by July 2014.
- Ensure full coverage of e-prescription to doctors, outpatient facilities and providers contracted by EOPYY and to all NHS facilities. 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).
- Continue publishing prescription guidelines/protocols for physicians, with priority for the most expensive and/or mostly used medicines, and make them compulsory (continuous).
- Enforce application of prescription guidelines through the e-prescription system; following the initial 2 therapeutic groups, additional prescription guidelines are included in the system (June 2014).
- For guidelines not included in the e-prescription system, activate a pop-up with guideline when the first-line choice of treatment is not chosen:
  - A pilot for most expensive 10 medicines (April 2014).
  - Full process (September 2014).
- Further develop the e-prescription system by monitoring the compulsory ICD-10 and enforcing SPC filters in the e-prescription system (continuous).
- Enhance monitoring and assessment through:
  - 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 information on volume and value of medicines, use of generics and off-patent medicines, and rebates received from pharmacies and pharmaceutical companies; reports are shared with the European Commission, ECB and IMF staff teams (continuous, quarterly; new report April 2014).
  - Detailed reporting on individual prescription behaviour to each physician relative to the average of comparable physicians and signals when they breach prescription guidelines; feedback is provided at least every month and a yearly report is published covering: 1) volume and value of the doctor's prescription relative to peers and guidelines; 2) doctor's prescription of generic medicines vis-à-vis branded and patent medicines; and 3) prescription of antibiotics (continuous).
- Enforce sanctions and penalties as follow-up to assessment and reporting of misconduct and conflict of interest in prescription behaviour and non-compliance with the EOF prescription guidelines (continuous).

### 2.9.1.4. Increasing use of generic medicines
- Increase share of generic medicines in total outpatient and reimbursed medicines to reach 60 percent (in volume) by December 2014.
- Decide about reimbursement of newly patented medicines on the basis of objective and strict medical and cost-effective criteria, and until internal capacity is in place, rely on best practice health technology assessment carried out in other member states while complying with Council Directive 89/105/EEC (continuous).
- Exclude from the list of reimbursed medicines those 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 to include cost effectiveness criteria in the reimbursement and licensing process and to manage the positive and internal reference price mechanism (April 2014).
- Take 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).
- Ensure that all public hospitals procure at least 2/3 of pharmaceutical products by active substance using centralised tender procedures developed by EPY and enforce compliance with therapeutic protocols and prescription guidelines (continuous).

### 2.9.2. Reviewing provision of medical services contracted by EOPYY
- Immediately implement procedure to check all claims/invoices sent to EOPYY with priority for private providers under the clawback system:
  - By June 2014 all claims referring to 2013 should have been checked for private clinics; if concentrating checks proves ineffective, in-site checking of invoices should be considered.
  - By September 2014 all claims referring to 2013 should have been checked for diagnostics.
- Implement the clawback mechanism on spending with private providers for 2013 and 2014 and set the clawback targets for 2014 by April 2014. A report is produced by June 2014.
- Activate contingency measures (including e.g. across-the-board cut in prices and access to private providers or entry fee on contractual arrangement) if the claw-back is not able to achieve the target; such measures produce an equivalent amount of savings (April 2014).
- Implement all 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; next report April 2014).
- Monitor implementation of policies introduced in late 2012 to improve EOPYY’s financial situation and ensure budgetary execution is closer to a balanced budget in 2013; monitoring measures include changes in OGA contributions, benefit package, cost-sharing for private care, fees for diagnostic and physiotherapy services, use of price-volume agreements and case-mix agreements with private providers, and use of a reference price system for reimbursement of medical devices (continuous).
- Introduce blocked/closed contracts with private providers and ex-ante approval of private hospital treatment plans; set budgets to doctors for diagnostic tests; introduce clinical guidelines for prescription of diagnostic tests and referrals; consider price reductions and develop indicators for monitoring compliance with prescription guidelines (April 2014).
- Publish a monthly report on prescription and expenditure of diagnostic tests and private clinics (continuous).
- Initiate tendering procedure for introduction of in-house financial and analytical cost accounting systems of EOPYY (April 2014).

### 2.9.3. National Health System (NHS) service provision — Reorganisation and management
- Implement plan for reorganisation and restructuring as set in Law 4052 / March 2012 to reduce inefficiencies, utilise economies of scale and scope, and improve quality of care; reduce hospital operating costs in 2014 in line with MTFS targets and continue reorganisation of hospital network through:
  - Increasing mobility of healthcare staff within and across health facilities and health regions.
  - Adjusting public hospital provision within and between hospitals in the same district and health region.
  - Revising activity of small hospitals towards specialisation (e.g. rehabilitation, cancer treatment, terminal care).
  - Revising emergency and on-call systems.
  - Optimising and balancing resource allocation of heavy medical equipment on the basis of need.
  - Hire financial officers for all hospitals with more than 400 beds through 3 year contracts setting specific financial and operational goals and targets on their performance.
  - Reducing cost with outsourcing services such as IT services, laboratory services and hospital servicing costs (e.g. cleaning services).
  - Introducing a national registry of referrals to outpatient specialist and elective care to improve monitoring and management of waiting lists (September 2014); this may be based on the e-prescription system.
- Define a set of activity related (input, process, output, outcome) indicators and produce a quarterly report together with submission of financial data (next report April 2014). Produce an annual report comparing hospital performance on benchmarking indicators (continuous; next report 1st April 2014).
- Update a report on human resources for the whole health care sector annually and use it as a human resource planning instrument (continuous; next report 1st April 2014).
- Finalise analysis regarding number and healthcare needs of the uninsured; establish a registry of all beneficiaries of NHS and EOPYY services and health insurance status of all residents; propose measures to ensure access to necessary care by the uninsured specifying potential budgetary impact and sources of financing (April 2014).
- Implement policies to ensure universal access to necessary care including cost-effective primary health care, pharmaceuticals, diagnostics and elective hospital care in conjunction with existing policies such as the poverty booklet and social voucher programmes of MoH (health voucher and training voucher) (June 2014).

### 2.9.3.2. Accounting, costing, control, IT and monitoring systems
- EOPYY to publish 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; report to include expenditure commitments/purchases (accrual basis) and actual payments (cash basis), 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:
  - Regular annual publication of balance sheets in all hospitals (continuous, yearly).
  - Introduction of uniform coding system for medical supplies developed by EPY and EKEVYL and use of the observe.net system to monitor procurement and use of tenders for medical supplies (continuous).
  - Pilot introduction of inbound hospital logistics and warehouse management systems using barcode scanning systems for pharmaceuticals and medical consumables (to be finalised by December 2014).
  - Implement actions to ensure timely invoicing of full treatment costs no later than 2 months to other EU countries and private health insurers for treatment of non-nationals/non-residents (continuous).
  - Enforce collection of co-payments and implement mechanisms to fight corruption and eliminate informal payments in hospitals (continuous).
- ELSTAT to continue providing expenditure data in line with Eurostat, OECD and WHO databases i.e. System of Health Accounts (2012 figures to be released by April 2014).
- Hospital computerisation programme to allow measurement of financial and activity data in hospitals and health centres; Minister of Health to define a core set of non-expenditure data in line with Eurostat, OECD and WHO health databases, accounting for future roll-out of DRG schemes (continuous).
- Start development of a system of patient electronic medical records (continuous).
- Continue development of a full DRG costing and reimbursement system while improving existing KEN system, aiming for modern hospital costing and reimbursement for contracting (prospective block contracts between EOPYY and NHS); existing KEN used in all hospitals:
  - A DRG Management Institute is established (June 2014).
  - Legal framework, coding manuals and cost adaptation methodology adopted by end 2014; DRGs cost weight methodology will include a detailed item on costs of personnel.
  - In 2015 the DRG system is implemented in a group of pilot hospitals.
  - In 2016 the DRG system is extended to all hospitals (test period).
  - In 2017 the DRG system is applied to all hospitals in a budget neutral way (including personnel costs) and EOPYY contracts hospital care on the basis of prospective budgets based on DRGs (including personnel costs).
- Submit follow-up analysis of how hospital accounting schemes integrate DRGs at hospital level for future activity-based cost reporting and prospective budgets twice yearly (next report June 2014).

### 2.9.4. Centralised procurement
- Increase substantially the number of expenditure items and share of expenditure covered by centralised tender procedures through EPY up to 45% of all the expenditure in medicines and medical devices by 2014; share rises to 60% in 2015. Ensure the use of such tender procedures (continuous).
- EPY to 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 (annual report; next report April 2014).
- In compliance with EU procurement rules, Government to conduct necessary tendering procedures to implement a comprehensive and uniform health care information system (e-health system) including full and integrated hospitals' IT systems (continuous).

### 2.10. Upgrading the education system
- Authorities to regularly provide a written report on progress in implementation of the Education Action Plan and a detailed rolling calendar for implementation before end-2014 of all pending measures (continuous; February and September of each year).
- Primary and secondary education measures:
  - External evaluation of School Directors, School Advisors and Regional Directors is completed (June 2014).
  - First cycle of external evaluation of educational staff is launched (September 2014) and authorities provide a report on its results (continuous; February and September of each year).
  - Produce a position paper with future measures, including legal changes, to increase financial and organisational autonomy of primary and secondary schools (June 2014).

*Italic: IMF Staff Report content unit _cr14151 excerpt (as provided).*

### 3. On Higher Education:

### 3. On Higher Education:

### Higher education quality assurance and implementation milestones
- iv. The external evaluation of the higher education institutions by the Quality Assurance Authority is completed and its results are published (June 2014).
- v. The organisation charts and internal regulations of the Higher Education Institutions are completed and published (June 2014).
- vi. The authorities report on the implementation of laws 4009/2011 and 4076/2012 on higher education and provide a calendar for implementation of pending provisions (June 2014).
- vii. The authorities present an intermediate impact assessment of the ATHINA project after the first academic year of implementation, including budgetary impact, participation and future attainment rates, adequacy of staff allocation, R&D activities and quality of education (September 2014).

### Framework for strengthening and restructuring the banking system
- 1. The Government ensures that no state aid will be granted to banks before it is approved by the European Commission under state aid rules.
- Other Actions: Following the announcement of the results of 2013 stress test exercise, the authorities commit to taking the following steps:
  - 1. By June 2014 banks have to meet their capital needs under the baseline scenario, based on capital-raising plans that they must submit to the BoG for approval by April 2014. The upfront capital raising under the baseline scenario is based on mitigating actions, but only those included in banks’ current restructuring plans along with any further mitigating actions agreed with the European Commission as commitments in the revised restructuring plans, which the BoG will take into account for recalculating capital needs. Further, banks have until May 2014 to submit capital-raising plans addressing the adverse scenario, for approval by the BoG by June 2014.
  - 2. To set aside the resources of the HFSF as a buffer against possible capital shortfalls that could materialize in the stress test horizon, or as a result of the SSM comprehensive assessment exercise (continuous). These form part of a credible backstop, together with the support of Euro Area Member States.
  - 3. Stand ready to take all necessary policy actions to safeguard overall financial stability and remain committed to a four-pillar banking sector, and the results of the stress test have confirmed that this commitment is appropriate (continuous). The SSM assessment in 2014 provides an opportunity in late-2014 to assess progress and confirm that capitalization remains sound.
  - 4. Initiate the swift process of share capital increase of Eurobank. The calling of an extraordinary shareholders’ assembly of Eurobank, to be take place by end-April 2014, will be approved by the HFSF in order to initiate the share capital increase under the new recapitalization framework. The HFSF will reduce its stake in Eurobank significantly. The overriding objectives are to strengthen the bank's capital base as soon as possible, attract, in a competitive process, anchor investors that would play an active role in the bank’s management and balance sheet repair, and achieve a strong private sector participation in the transaction, marking the return of the banking sector to capital markets as a sign of its nascent recovery.
- Prior to disbursement, the Authorities:
  - a. Adopt legislation governing the injection of public sector resources into the banks through the HFSF, under which the HFSF will provide capital to viable banks that – after having exhausted the possibility to generate capital through internal measures and through private capital raising - fail to meet the capital needs determined by the stress tests.

### 3.2. Funding (Bank of Greece commitments)
- 1. Stand ready, following the procedures and rules of the Eurosystem, to continue disbursing adequate and appropriate emergency liquidity support in a timely manner, if needed, while expecting banks to achieve a sustainable funding model over the medium term (continuous). In this context, banks have submitted their funding plans to the BoG, and will be required to update their plans on a quarterly basis to allow for continuous monitoring and assessment of their efforts.

### 3.3. Enhancing supervision and the management of troubled assets (BoG commitments)
- 1. Introduce KPIs to monitor banks' progress in reducing their large NPL portfolios. Banks will begin gradual reporting under these KPIs by June 2014, with full reporting to commence from end-2014.
- 2. Report on the appropriateness of banks’ loan forbearance practices and recognition of income from NPLs by July 2014.
- 3. Assess, based on the results of the ECB’s comprehensive assessment, the need to introduce impairment provisioning guidelines similar to some other EU supervisory authorities and if guidelines are deemed necessary, introduce them in time for consideration in the 2014 end-year accounts.
- 4. Evaluate options for improving recovery from assets under liquidation and will implement in full the recommendations of technical assistance to this end by June 2014.
- 5. Undertake a review of the BoG's supervisory model, legal powers, governance structures and the enforcement toolkit, in consultation with EC/ECB/IMF by June 2014.
- 6. Introduce appropriate legislative or regulatory changes by September 2014.
- 7. Prepare, as part of this review, by June 2014 a self–assessment of the Basel Core Principles (BCP) that are pertinent to the issues that will remain under the national supervisory mandate, in advance of the IMF’s stand-alone BCP assessment, which is to be completed by end-September 2014.
- Steps to enhance effectiveness of supervision:
  - 8. Revise the BoG's organizational structure and internal governance processes, in preparation for transfer of supervisory responsibility to SSM by September 2014.
  - 9. Engage specialists to assist the BoG with the supervision of NPL portfolios by May 2014.
  - 10. Assess the impact of the introduction of the EBA guidelines on definitions of NPLs and forbearance and require banks to adopt the guidelines by June 2014.
- Government commitment:
  - 1. Address restrictions on hiring experienced staff in the BoG in a manner that preserves staff autonomy and the financial independence of the BoG by April 2014.

### 3.4. Improving debt resolution processes
- 1. The Authorities have established the Government Council for the Management of Private Debt ("The Council) which will coordinate legal and institutional reforms to enhance corporate and personal debt resolution frameworks, in consultation with the EC/ECB/IMF staff.
- 2. The Council has agreed its expenditure budget for 2014. Under the Secretary General for Consumer Protection, engaged project management, public relations, and technical specialists to ensure effective delivery of all aspects of the agenda, and adopted definitions of a cooperative borrower and reasonable living expenses for use in and out-of-court debt workouts.
- The Authorities commit to:
  - 3. Introduce by May 2014, a binding Code of Conduct for banks that specifies the terms of engagement between creditors and debtors. Banks will be required to pilot and implement long-term debt restructuring tools by October 2014 and be compliant with the Code by end-2014.
  - 4. Design out-of-court debt restructuring tools for enterprises by May 2014.
  - 5. Specify a similar coordination mechanism for SMEs, that will include the use of standardized templates as well as a review and appeals procedure by May 2014.
  - 6. Adopt and implement both mechanisms in points 4 and 5, inter alia, by making the necessary legislative changes by July 2014.
  - 7. Review the personal and corporate insolvency laws (June 2014), and implement necessary changes to improve the functioning of in-court insolvency procedures by October 2014.
  - 8. Establish a regulated profession of insolvency administrators, not restricted to any specific profession and in line with the EU best practices by October 2014.
  - 9. Launch educational services and public awareness campaigns to inform debtors of their options and rights and educate small businesses on financial and credit management by July 2014.
  - 10. Develop a coherent plan for a means-tested social safety net for vulnerable homeowners by July 2014.
  - 11. Implement other supportive measures such as better data collection by May 2014, reducing the costs of the property auction process by June 2014, and introducing residential and commercial real estate transaction price registers by October 2014.
  - 12. Set-up a monthly data collection process to monitor the effectiveness of the transition debtor-protection scheme enacted in December 2013. Based on incoming data, the Council will prepare a report assessing the effectiveness of the new law and its impact on strategic default behavior by June 2014, and will propose measures to ensure effective implementation in case of shortcomings.

### 3.5. Overhaul of governance arrangements (HFSF and related)
- 1. Enhance, the governance of the HFSF by (i) reviewing the internal safeguards on strict conflict-of-interest rules and related-party transactions and making appropriate changes by May 2014, (ii) employing personnel with international experience in commercial banking and NPL resolution and (iii) increasing the number of General Council members to nine and the members with international experience to seven.
- 2. Undertake a broad review of the governance arrangements concerning HFSF's participation in the banks, to be done in consultation with the EC/ECB/IMF by May 2014.
- 3. Based on the review to be undertaken in 3.5.2, adopt appropriate legislative and operational steps to ensure that financial institutions are run on a sound, commercial basis, by June 2014.

### 3.6. Strategy for the cooperative banking sector (BoG commitments)
- 1. Prepare a comprehensive strategy on the cooperative sector, taking into account the role of Panellinia bank and examine in consultation with the EC/ECB/IMF, by all modalities, including further consolidation or review of their modus operandi, to ensure the sector as a whole has achieved stability and standards that are considered best practices internationally (July 2014).
- 2. Implement the comprehensive strategy for the cooperative banking sector by September 2014.

### 3.7. Fiscal policy that potentially undermines the solvency of banks
- The authorities commit to:
  - 1. Not take any fiscal policy actions that would undermine the solvency of banks (continuous).
  - 2. 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 that such a payment would be compatible with the preservation of adequate capital buffers and liquidity going forward (continuous).
  - 3. Not impose unilateral debt relief solutions for any particular group of debtors (continuous).

### 3.8. The loan and consignment fund (Government commitments)
- 1. Ensure that the Loan and Consignment Fund is not crowding out competition in the financial sector (continuous).
- 2. Ensure that the commercial sector part of the Loan and Consignment Fund will be in a gradual run-off. In that respect, the Government commits to revise the legal framework of the Loan and Consignment Fund to provide that its commercial sector part will not grant any new loans and will not take any new deposits, except the roll-over of existing deposits (April 2014).
- 3. In consultation with the EC, to revise the legal framework of the Loan and Consignment Fund regarding the scope of activities of the reserved sector part to ensure that it acts only in case of market failure by May 2014.

### 3.9. Insurance Sector
- 1. The BoG evaluated the capacity of the insurance sector to assume social security/pension schemes, taking into consideration the under development Solvency II regime for institutions for occupational pensions (IORP Directive). In this regard, by June 2015, the BoG will establish a list of additional changes in legislation/structure of Greek insurance industry and the relevant legislation will be adopted.

### 4. Strengthening labour market institutions and promoting employment and social inclusion
- The Government will foster the effective implementation of the recent labour reforms and build upon them to boost employment and support restoring cost-competitiveness, notably to sustain a reduction in nominal unit labour costs in the economy by 15 per cent.
- The Government is promoting an efficient wage-setting system, reducing non-wage labour costs, fighting undeclared work and informality, also by streamlining administrative burdens and increasing the transparency and enforceability of the labour law.

### 4.1. The wage-setting system
- (No specific numbered actions included in the supplied text.)

### 4.2. Fighting undeclared work and informality and lowering compliance costs
- To help formality in labour arrangements by reforming the Labour Inspectorate and streamlining the administrative burden to foster compliance, the Government:
  - 1. Strengthens the fight against undeclared work and raises the effectiveness of the Labour Inspectorate through focussing on its core roles of enforcing labour law and labour contracts and health and safety standards. Prioritising the activities of the Inspectorate and fostering the detection of the most severe cases of violations are expected to be at the core of those changes (continuous).
  - 2. Streamlines and reduces the labour reporting requirements in a timely and comprehensive manner, including through implementing the conclusions of the OECD administrative burden review (April 2014).

### 4.3. Further improving regulatory framework
- The Government will review existing labour regulations to identify measures to attract investment and support job creation while ensuring full compliance with EU acquis and Core Labour Standards. Specific commitments:
  - Prior to disbursement, the Authorities:
    - a. To increase incentives for hiring long-term unemployed workers, and as part of a broader package to support long-term unemployed, the government will adopt legislation that adjusts the statutory minimum wage for long-term unemployed (defined as being unemployed for more than one year) aligning the maturity allowances of white collar workers with the blue-collar ones, in percentage terms, for workers over 25.
  - In this light, the Government:
    - 1. Introduces administrative changes, in consultation with social partners, on the framework for collective dismissals (April 2014).
    - 2. Undertakes an assessment, in consultation with the EC/ECB/IMF and the ILO, on whether the collective dismissal system replicates best practices in an effective, credible, and durable way (September 2014).
    - 3. Based on that assessment, in case of doubt, it takes appropriate legislative action to align the framework with best practices (October 2014).
    - 4. Revises the framework for employment through temporary work agencies, notably by substantially broadening the types of work, positions and contracts for which hiring through temporary work agencies is possible; reducing restrictions on hiring via temporary work agencies following redundancies for economic reasons (from 6 to 3 months for individual redundancies, and from 12 to 6 months for collective dismissals) (April 2014).
    - 5. To safeguard the right to work, promote constructive relations among parties to industrial relations, and avoid any undue disruption of the operations of firms, and at the same time ensure that the framework for unions’ operations is mature and aligned with international conventions:
      - i. Reviews the existing framework against best practices (June 2014).
      - ii. After consultations with social partners prepares the necessary legislative changes to bring the Greek framework in line with best practices, and in full respect of the applicable international conventions, by September 2014.
      - iii. Adopts those changes by October 2014.
    - 6. Sets a roadmap for the codification of all existing legislation relevant for labour and industrial relations into a single Labour Code (June 2014).
    - 7. Completes the codification of all existing legislation relevant for labour and industrial relations into a single Labour Code (December 2014).

### 4.4. Expanding and upgrading vocational education and apprenticeships
- To sustainably increase the level of skills and the employability of entrants to the labour market, to facilitate mobility of workers and to attract new investment, the Government will ensure the modernisation of vocational education and training (VET) and the increase in the provision of apprenticeships to implement Law 4186/2013 of September 2013.

*IMF staff report content as provided in the source document.*

### 1. The  Ministry  of  Labour  and  the  Ministry  of  Education  with  OAED,  building  on  the  VET

### 1. The Ministry of Labour and the Ministry of Education with OAED, building on the VET Roadmap, adopt a detailed implementation plan for the modernisation and expansion of vocational education and training and the provision of apprenticeships (April 2014)

### Vocational education and apprenticeships — implementation plan and milestones
- Develop a quality framework for vocational education and apprenticeships by June 2014, including:
  - alignment with the European Quality Assurance Reference Framework for VET (EQAVET) and European best practices;
  - use of occupational profiles defined by EOPPEP;
  - development of a certification scheme for businesses offering apprenticeships with associated supervision and monitoring system;
  - a set of VET standards and regulations to ensure quality and relevance in VET institutions.
- Set up a monitoring mechanism for local partnerships at regional level, including formation of at least two pilot local partnership agreements with master plans (June 2014).
- Elaborate a strategy with detailed proposals to ensure progressively closer employer engagement and private-sector funding in VET (May 2014).
- Develop clear estimates of the budgetary costs of the expansion of VET and apprenticeships, including detailed assumptions on the share of costs to be covered by public resources and by employers, and estimates of additional infrastructure and human resources costs (May 2014).
- Produce a detailed plan for required technical assistance to achieve the Implementation Plan (May 2014).
- Develop a strategy to provide a diagnostic system to identify future skills needs and to match VET with labour market needs (September 2014).

### Coordination, reporting, and financing
- Ensure full implementation of the implementation plan via administrative and legislative actions; set up a permanent coordination committee with representatives from relevant Ministries; regular joint progress reporting (continuous; February, May, September and November of each year).
- Secure availability of adequate budget allocations, including proposed contribution by EU Structural Funds for the period 2014-2020, to deliver the planned expansion of VET and apprenticeships throughout the implementation period and compatible with overall fiscal targets (continuous, starting June 2014).

### Support to unemployed — Action Plan on Employment and Youth Guarantee alignment
- Step up implementation of the Action Plan on Employment (adopted July 2013) to:
  - prevent unemployment becoming permanent;
  - mitigate hardship of unemployment;
  - promote integration of long-term unemployed, young people, and disadvantaged groups;
  - ease labour market mismatches and facilitate school-to-work transition and worker mobility via improved training policies;
  - strengthen social economy.
- Start implementing the Council Recommendation on Establishing a Youth Guarantee gradually, prioritising relief for the hardest-hit young people; involve social partners and private sector; ensure effective use of resources and prevent abuses/fraud.

Key measures and milestones:
- Implement a new round of short-term public work programmes in 2014 targeted at jobless households, the long-term unemployed, and young people not in education, employment or training; the new round scheme may target at least 50,000 persons. Proposals for the new-round scheme to be made by May 2014.
- Make proposals for future youth schemes after evaluating existing youth schemes, including the youth voucher; ensure proper monitoring and sanctions against fraud (May 2014). Extension to other jobseeker categories can be envisaged.
- Closely align the Youth Guarantee Implementation Plan with the VET modernisation roadmap and provision of immediate relief for hardest-hit young people (December 2014).
- Ensure adequate administrative capacity to formulate employment policies and implement the Youth Guarantee at all levels, including effective coordination mechanisms between Ministry of Labour, Ministry of Education, other Ministries, OAED, regions and other partners (June 2014).
- Fully implement the Re-engineering Plan for OAED and establish, where appropriate, partnerships with the private sector and external organisations (September 2014).

### Developing social welfare and promoting inclusion — reviews, guaranteed minimum income pilot and roll-out
- Develop the welfare system and improve social safety nets within current budgetary envelopes to create an integrated and cost-effective welfare system that reduces poverty via minimum income protection while preserving incentives to work and avoid welfare dependency.

Social welfare review and timeline:
- Launch a comprehensive review of social welfare and social protection spending in April 2014 (including social assistance paid through social security); first part to report officially in June 2014. The review to cover structure/type of benefits, eligibility, target population and number of beneficiaries, recent spending and financing sources; cover central government, social security funds and local governments.
- Second part of the review to focus on effectiveness in reaching target populations, identify uncovered groups, assess alternative design parameters (including non-tax-form based eligibility, incentives for labour activation, anti-fraud controls); second part should officially report in September 2014.
- Based on the review, set out a Government Strategy on Social Welfare and Inclusion by October 2014, including detailed proposals for creation of a guaranteed minimum income scheme; streamlined social spending must remain within programme fiscal targets and be consistent with fiscal sustainability.

Guaranteed minimum income pilot and milestones:
- Launch pilot phase of guaranteed minimum income scheme by (September 2014), aiming at phased-in national roll-out in 2015 if financing is available. Pilot to test non-tax-form based targeting, registration procedures, benefits platform, delivery channels, payment systems, monitoring and auditing; include activation of beneficiaries and phased integration of other benefits and services.
- Pilot milestones:
  - Project team with project manager set up (April 2014).
  - Provision of data for selection of pilot areas, eligibility criteria, targeting and benefit amounts (April 2014).
  - Assessment of overhead, infrastructure and equipment costs of pilot (April 2014).
  - Terms of reference for development of IT system for database and management information system (April 2014).
  - Choice of municipalities (May 2014).
  - Eligibility criteria and benefit determination (May 2014).
  - Legal process completed for regulations through common ministerial decision by Ministry of Finance and Ministry of Labour in conjunction with EC/ECB/IMF staff (May 2014).
  - Stakeholder dialogues held (May 2014).
  - Comprehensive proposals for monitoring and evaluation of pilot success (July 2014).
  - Testing of IT system for database and management information system (July 2014).
  - Pilot preparations and operationality finalised (July 2014).
  - Launch of the pilots (September 2014).
  - End of pilots and evaluation (March 2015).
- Produce a roadmap by June 2014 for country-wide phased-in roll out of a guaranteed minimum income scheme targeting the poor, including long-term unemployed, to mitigate poverty and foster social inclusion by 2015 if financing is available.
- Prepare an action plan to provide health insurance access to uninsured citizens in cooperation with foreign experts by April 2014.

### Creating favourable conditions for economic activity — structural reforms to improve business environment
- Emphasise structural reforms to improve business and economic environment, enhance competition and competitiveness, reduce time and costs to create a company, obtain licenses and permits, and improve judicial functioning.

Promoting an efficient and competitive business environment — rationalising/eliminating quasi-fiscal charges:
- Eliminate nuisance charges at an annualized cost of €245 million and remove earmarking of nuisance charges amounting to €1.4 billion (April 2014).
- Specific steps and dates:
  - Update list of nuisance charges (May 2014).
  - Eliminate additional nuisance charges as many as possible (June 2014).
  - Abolish all nuisance charges that finance auxiliary pensions falling under the Ministry of Labour (June 2014).
  - Conduct a review (September 2014) and adopt legislation (November 2014) on nuisance charges that (a) finance main pensions, and (b) were identified in the OECD competition assessment.
  - Abolish all nuisance charges financing auxiliary pensions that fall under the ESA95 definition of General Government but are outside the Ministry of Labour (November 2014).
  - Review transaction-related charges, including stamp-duties (August 2014) and adopt legislative changes to replace the most distortionary ones with more efficient taxes (November 2014).

Reducing procedural and administrative burden:
- Additional measures to ease doing business measured by World Bank's Doing Business indicator:
  - Eliminate the capital concentration tax for start-ups (April 2014).
  - Adopt measures to streamline starting a business, especially fees paid before launching operations, and facilitate registering property by eliminating requirements not directly related to property transfer transactions (April 2014).
- Implement law 3982/2011 on fast track licensing for technical professions: submit Presidential Decree to Council of State to replace professional experience requirements by seminars organized by approved bodies and define fees for such seminars (April 2014).
- Implement Law 4014/2011 on environmental licensing:
  - Adopt Ministerial Decision (Art.18.5) Digital Environmental Registry (April 2014).
  - Adopt Presidential Decree (Art. 14.5) establishing the environmental licensing directorate (May 2014).
  - Adopt Ministerial Decision (Art. 17.8) fixing compensatory fees and procedures (June 2014).
  - Adopt Presidential Decrees (Art. 16.6) establishing certified Environmental Impact Assessment assessors registry (September 2014).
  - Establish registry of private environmental assessors (October 2014).
  - Review implementation of law 4014/2011 to confirm simplification and shortening of licensing procedures (April 2014).
- License at least two disposal sites for hazardous waste (June 2014).
- Fully implement roadmap for investment licensing reform:
  - Adopt framework law of the single licensing framework (April 2014).
  - Adopt single regulatory framework for business parks (April 2014).
  - Adopt roadmap for implementing investment licensing law and set up coordination structure for monitoring its implementation (April 2014).
  - Implement all remaining actions by December 2014 as set out in the roadmap.

Simplifying export and import procedures — pre-customs, risk systems, e-Customs, roll-out and fees:
- Pre-customs procedures:
  - Fully implement risk-based control system for fresh fruits and vegetables by April 2014 and automate by September 2014.
  - Review pre-customs and customs procedures for 5 more products (olive oil, cosmetics, aluminium profiles, canned peaches, dual use product) and propose simplification by April 2014.
  - Gather national legislation for obtaining necessary export documents for 10 main Greek products per country of destination and propose simplification by April 2014.
  - Streamline procedures and adopt legal amendments by June 2014.
- Risk assessment systems:
  - Implement automatic clearance for low risk export declarations in customs pilot offices by April 2014, and across all customs offices by June 2014.
  - Align export risk assessment with EU Member State best practices so level of controls converges across customs offices to the average EU level by April 2014.
  - Adopt action plan for import risk assessment by April 2014 with target that level of controls converges across customs offices to the average EU level by December 2014.
  - Implement automatic clearance for low risk import declarations in all customs offices by December 2014.
- e-Customs and payments:
  - Ensure e-customs supports electronic payments for exports and imports in all customs offices by September 2014.
  - Require electronic payments for all customs charges and accept cash only for small payments by individuals (September 2014).
- Pilot evaluation and national roll-out:
  - Present detailed plan and timetable for rolling out optimised procedures across customs offices by April 2014.
  - Apply optimised procedures permanently in pilot customs offices of the Athens airport and Piraeus Port by April 2014.
  - Adopt national customs strategy and roll-out plan by June 2014.
  - Roll out optimised procedures and apply them permanently in all other customs offices by December 2014.
- Fees and fines:
  - Review fee structure for customs clearance procedures and modify in line with EU practices by June 2014.
  - Review rules for imposing fines for mistakes in customs declarations (June 2014) and modify rules in line with EU practices by September 2014.
- Trade facilitation:
  - Present a report on progress of the trade facilitation roadmap implementation, including legal and operational changes during the first year of reform (April 2014).
  - Adopt action plan for full implementation of the single window (May 2014).

*IMF staff summary of Greek authorities’ implementation plan and reform milestones as contained in the referenced document.*

### 7. To identify and eliminate unnecessary reporting requirements for businesses:

### 7. To identify and eliminate unnecessary reporting requirements for businesses:

### Administrative burdens and sector-specific amendments
- Following the identification of administrative burdens, the Authorities adopt the amendments to sector specific legislation (June 2014).

### 5.1.3. Improving spatial management and planning
- Accelerate work on a modern cadastre to ensure timely completion of cadastral property register covering all land and buildings in Greece; necessary to secure fiscal revenues from real estate tax and provide legal certainty to open up the real estate market to new investment, including foreign direct investment. Following the adoption of Law 4164/2013, the Government:
- Transaction fees:
  - Ensures 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.
    - Adopts legislation (June 2014).
    - Makes the system fully operational (September 2014).
- Organisation of EKXA AE:
  - Adopts 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 (April 2014).
  - Adopts regulations to provide framework for the transformation of temporary cadastre offices into final ones in the capital of the regions where the cadastre is operational, in line with business plan (April 2014). Make these two offices fully operational (September 2014).
  - Adopts reforms of the institutional framework of EKXA AE to ensure adequate resources and capacity for effective land management (April 2014).
- Inter-ministerial coordination and integration of databases:
  - Ensures that all new real estate related transactions, including data on objective values and transaction prices, are registered electronically using the web platform provided by EKXA AE and that a standard format for registration is used for the notaries in Attica and Larisa (April 2014). Extend this service to 90 percent of the notaries of the country (July 2014).
  - Presents a roadmap with timetable for completing all actions, including legislative actions, required to the complete parallel processes and integrate the maps, including those related to archaeological sites, industrial development, spatial planning, forestry, coastal zones, protected areas and public property, with those of EXKA SA (April 2014).
  - Submits to the Council of State the Presidential Decree stipulating that new construction permits are built on maps provided by or in conformity with EKXA AE (April 2014).
  - Ensures that new urban planning permits are built on maps provided by or in conformity with EKXA AE (April 2014).
- Completion of forestry and coastal maps and of the cadastre:
  - Suspends forest maps under implementation (about 13% of the country) by August 2014 for Thessaloniki, Chalkidiki, Pieria, Lakonia and Messinia and by October 2014 for Evia.
  - Tenders projects of suspension and certification of previously developed forest maps, and new forestry maps in other areas to deliver certified forestry maps for 46.5% of the country (April 2014).
  - Adopts legislation on Coastal Zones (April 2014).
  - With regard to the seven million active property rights tendered since December 2011, awards tenders of four million active property rights by April 2014 and of the remaining three million active property rights by December 2014.
  - Completes the award of tenders for unfinished cadastral projects (December 2014).
- To facilitate spatial planning:
  - Adopts a revised framework legislation to significantly shorten the time required for strategic and town planning and make land use more flexible while preserving necessary safeguards (April 2014).
  - Completes the revision of the regional spatial plans for 10 out of 12 regions to make it compatible with the sectoral plans on industry, tourism, aquaculture and renewable energy:
    - The third phase for the formulation of proposals is completed by April 2014.
    - The fourth phase for the legislation of the final proposal is completed by May 2014.
  - Completes the revision of the spatial plan for North Aegean:
    - The third phase for the formulation of proposals is completed by April 2014.
    - The fourth phase for the legislation of the final proposal is completed by June 2014.
  - Completes the revision of the spatial plan for South Aegean:
    - The first phase of this revision is completed by April 2014.
    - The second phase of modification is completed by April 2014.
    - The third phase for the formulation of proposals is completed by July 2014.
    - The fourth phase for the legislation of the final proposal is completed by September 2014.
  - Reforms the forestry legislation to support the timely completion of forestry maps and ensure sustainable forest management:
    - Updates the legislation on forests and forest lands by June 2014.
    - Codifies the legislation on parks, forests and forest lands by December 2014.

### 5.1.4. Enhancing competition and promoting better regulation
- Implement additional recommendations of the competition assessment:
  - Adopts sectoral legislation for provisions of the Ministries of Environment, Maritime, Health, Tourism, and Transport (June 2014).
  - Reviews the evolution of over-the-counter prices and commits to liberalizing the retail channels for all OTC products in case there is no reduction of such prices (June 2014).
  - Prior to the disbursement: Following the competition assessment in the sectors of food processing, retail trade, building materials and tourism, the Government adopts legislative amendments to remove disproportionate regulatory restrictions identified by the Competition Assessment Toolkit.
  - Adopts the Code of best practices on sales and offers and the Code of best practices on foodstuff traditional definitions (September 2014).
  - Adopts all technical specifications (December 2014).
  - Based on an assessment, adopts legislation to bring in line EU best practices provisions related to the definition of bakeries, sales periods, truck licenses and establishment restrictions of pharmacists (December 2014).
  - Reviews the impact of the legislative changes regarding the shelf life of pasteurized milk and makes additional legislative changes if milk prices remain high compared to other EU countries and the consumer choice among shelf life durations remains limited (December 2014).
  - Reviews the experience of liberalized Sunday trading in selected areas and decides on that basis whether to roll out the recent changes across the country (March 2015).
- Competition assessments and follow-up:
  - Launches competition assessment for other sectors (manufacturing, wholesale trade, telecommunication, and e-commerce) based on the OECD toolkit (May 2014).
  - Completes the assessment of other sectors (October 2014).
  - Adopts specific measures that promote competition and lower consumer prices based on the follow-on competition assessment (November 2014).
- Governance and regulation:
  - Reviews the advocacy role of the Hellenic Competition Commission in order to safeguard progress on removing barriers for competition (April 2014).
  - 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 2014).

### 5.2. Research and development and innovation
- Authorities will fully implement the revised legal framework for R&D and innovation to strengthen links between R&D investment and economic growth, develop closer links between researchers and industry, foster technology transfer and address bureaucratic obstacles.
- Key actions:
  - The authorities will adopt the revised R&D and innovation legislation by July 2014, and will ensure that the necessary subsequent steps are taken to fully implement the revised legal framework by December 2014.
  - The Ministry of Development and the Ministry of Education through the General Secretariat for Research and Technology will cooperate effectively to adopt by July 2014 a national research and innovation strategy for smart specialisation based on the synthesis of the competitive advantages of the regions and a related action plan. The strategy and the action plan will be fully aligned with the Partnership Agreement 2014-2020 and will:
    - Provide a national framework for R&D and innovation policies, including governance mechanisms to integrate and coordinate the regional RIS3 strategies.
    - Define the articulation of the smart specialisation strategies between the national and regional levels.
    - Organise and coordinate the effective and efficient collaboration of academia-research centres and the business community, encouraging the entrepreneurial discovery process at regional and national level to foster the competitive advantage of Greek businesses in global value chains.
    - Develop a strong thematic focus and concentrate investment priorities on the areas considered as strategic, following the RIS3 exercise, for the Greek economy and society in the Partnership Agreement.
    - Leverage private investment and foster more collaborative and systemic innovation based on a Triple Helix approach (cooperation between academia, business and government).
  - Adopt legislation setting out guidelines on scientific and technological R&D eligible for tax credits as required under Art. 22A of the Income Tax Code (May 2014).

### 5.3. Reforming the judicial system to support economic activity
- Objectives: ensure effective and timely enforcement of contracts, competition rules and judicial decisions; increase efficiency by adopting organisational changes to courts; speed up administration of justice by eliminating backlog and facilitating out-of-court settlement mechanisms. Consultation with EC/IMF/ECB in design and implementation.
- 5.3.1. Review of the code of civil procedure:
  - Include in the draft code provisions aiming at reinforcing the effectiveness of the enforcement of civil court decisions (April 2014).
  - Submit the final draft Code of civil procedure to the Hellenic Parliament (April 2014).
  - The new code is adopted (May 2014).
- 5.3.2. Judicial statistics:
  - Compile and publish on its website the information indicated in Section 10 of this Memorandum (quarterly).
  - Provide the courts with web application system to transfer data from the courts to the Ministry by (September 2014).
- 5.3.3. Tax case backlog reduction:
  - Building on the assessment of past measures, the Government proposes (April 2014) short-term measures to reduce the backlog of tax cases, such as a temporary and fast track procedure to deal with tax cases below EUR 50,000 that have been pending in an administrative justice court for more than 2 years.
- 5.3.4. Non-tax case backlog reduction:
  - Authorities report on the implementation of the obligation of the judges to determine the hearing interim measures requests within 30 days from the issuance of the requested temporary order, according to Law 4055/2012 (April 2014).
- 5.3.5. Development of e-justice applications in courts:
  - Update, further refine and operationalize 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.
  - Action plan to include additional actions:
    - An evaluation of the use of IT systems in courts (April 2014).
    - A timetable, including proposed deadlines, for the extension of case e-registration and e-tracking to all courts (April 2014).
  - Implementation of integrated e-justice systems within the Framework of the E-justice Action Plan:
    - 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:
      - The Magistrate Courts, Civil and Criminal Courts of First Instance & the Courts of Appeal of Athens, Piraeus, Thessaloniki & Chalkida, including the respective Prosecutors' Offices.
      - All the Administrative Courts.
    - The Government completes the extension of the above applications to the other courts (December 2017).
  - Ensure consistency of the e-Justice action plan with the national e-government strategy (continuous).
- 5.3.6. Promotion of pre-trial conciliation and mediation:
  - The Ministry of Justice updates on a monthly basis the list of the Accredited Mediators and the Mediators’ Training Centres on its website (continuous).
- 5.3.7. Other measures on judicial reform:
  - Assessment of the Law on fair trial and conciliation (4055/2012): conduct an assessment and present it (April 2014).
  - Administrative review of cases:
    - Submit to Parliament a draft law on Administrative review of cases (May 2014).
    - Implement the pilot project on administrative review of cases (January 2015).
  - Based on the study of court fees delivered in November 2013, the authorities propose for a selective increase of court fees, in full accordance with the constitutional principle of access to justice (September 2014).
  - Prior to the disbursement: The Authorities adopt legislation for the opening of the mediator profession to non-lawyers.

### 6. Efficient Network Industries — 6.1. Energy policy
- Ongoing reforms: privatisation and restructuring of PPC, transition to the EU target model for the electricity market, and improved sustainability of incentives for renewable energies to make the sector competitive and contribute to growth.
- 6.1.1. Ensuring that electricity prices reflect costs:
  - Effective 1st July 2014, PPC reviews and adjusts its tariff structure. New tariffs will provide adequate cost recovery, while significantly reducing cross-subsidization between different categories of consumers, and with a view to an overall simplification of the pricing structure. The review will fully take into account all measures aimed at addressing the concerns related to cost-competitiveness of energy-intensive users.
  - PPC tariffs are reviewed on a quarterly basis, and the cost justification of the possible modifications is made public, taking into account the need not to disclose confidential data (continuous).
  - RAE monitors the pricing review proposals of PPC to ensure that there is no abuse of dominant position (continuous).
- 6.1.2. Public Service Obligation for non-interconnected islands:
  - Interconnect islands where the avoided PSO costs outweigh the costs of constructing the interconnector; RAE will ensure timelines set in ADMIE's 10-year development plan for constructing the interconnection with the Cyclades by 2018 are fully respected and the final plan for interconnecting Crete is included in ADMIE's 10–Year Development Plan for 2014. ADMIE, DEDDIE and planning authorities will be properly incentivized to facilitate their construction.
  - RAE revises the annual amount of Public Service Obligations due to suppliers based on the new methodology by May 2014.
  - The government ratifies the revised amount through law by June 2014.
  - The adjustments to the PSO will be reflected in the adjustments of the PPC tariffs as needed as of 1st July 2014.
  - Prior to the disbursement:
    - The Government will introduce a permanent adjustment to existing power purchasing contracts for renewable energy sources, with a view to align rates of return to sustainable EU average levels, considering Greek-specific conditions and to eliminate the debt of the RES account by December 2014. The adjustment will have to provide the financial sustainability of the RES account without putting an excessive burden on consumers.
    - The Government will publish, as detailed in paragraph 6.1.5.2, and in consultation with the European Commission services, a timeline and list of actions, to be taken in order to facilitate the transition to a more mature gas market model, increasing the degree of competition at all levels, and transferring the advantages to the broadest possible set of consumers.
- 6.1.3. Providing for a financially sustainable development of renewable energy sources:
  - Authorities commit to design and implement a comprehensive reform of renewable energy policies, with support and close cooperation with EU technical assistance, taking into account Ministry’s “Plan to Reform the Sector of Renewable Energy Sources (RES)” and industry views, to provide long-term sustainability at zero average deficits.
  - Authorities monitor the evolution of the Renewable energy sector to stimulate appropriate development as provided by EU policies and legislation, while ensuring financial sustainability of incentives and security of the network.

*Source: _cr14151 - 7. To identify and eliminate unnecessary reporting requirements for businesses*

### 1. Once  the  RES  account  debt  is  eliminated,  adjust  the  RES  levy  every  six  months  as

### _cr14151 - 1. Once  the  RES  account  debt  is  eliminated,  adjust  the  RES  levy  every  six  months  as

### Renewable Energy Sources (RES) account management
- Once the RES account debt is eliminated, adjust the RES levy every six months as necessary, so as to keep the account’s 24-months ahead flow projections in balance and without debt (continuous).
- 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.
- To ensure the financial sustainability of the RES account, and ensure that no excessive burdens are put on consumers, introduce constraints that will cap all the newly-installed RES capacity receiving incentives, effective immediately (replacing the current freeze). Draft legislation to introduce such cap shall be submitted for consultation to EC/IMF/ECB by April 2014.
- Following the entry in operation of the electronic registry of RES installations (including PV rooftops), 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 (continuous).

### Liquidity and arrears in the energy sector
- The Government makes payments to clear all general government arrears with PPC, to contribute to solve the liquidity issues in the energy sector, and in view of the upcoming privatisation of PPC (June 2014).
- The Government ensures that there is no further accumulation of public sector arrears to PPC, and that the respect of the obligations of the public sector following the transposition of the Late Payments directive is guaranteed (continuous).
- With a view to a complete clearing of existing arrears in the energy markets by the end of 2014, the Ministry of Energy, in close cooperation with ADMIE and LAGIE, will communicate to the EC/ECB/IMF the detailed gross debt and credit positions of all participants in such market on a monthly basis (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, based on 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. Regulatory provisions should ensure equal treatment for all participants, avoiding any distortion or unjustified advantage coming from belonging to vertically integrated companies (continuous).

### Energy markets — overview
- Greece is undertaking several important reforms in the energy markets.
- In the electricity market, the privatisation of PPC is being carried out following a strong commitment of the government, while an action plan is being implemented by the regulator to transition to the EU target model.
- In the gas market, following the adoption of Law 4001/2011 to transpose the Third Package, the sale of DESFA, provided regulatory approvals are met in a manner fully compliant with EU law, as an entity fully unbundled from DEPA is a positive step. The privatisation of DEPA will also be an important element. Several issues need to be addressed in the gas market to fully reap benefits of privatisation and transition to a more mature gas market model.

### Electricity market — specific actions and timelines
- 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:
  - Review the recently introduced capacity payment mechanisms to ensure cost-effectiveness and compliance with the guidelines on "Generation adequacy in the internal electricity market" (SWD(2013) 438) and EU State-aid rules:
    - RAE will present its first findings by April 2014.
    - Following consultation with ADMIE, and taking into account the system needs identified in the document “Introducing the interruptibility service for the electric system in Greece”, the review will be finalised by May 2014, and will include an assessment of the capacity needs of the system and a timeline to progressively reduce its cost.
    - The complete revised mechanism, including the first cost reduction, will enter into force effective 1st July 2014.
  - Introduce auctions of NOME-type products, limiting the participation in auctions to generators and suppliers:
    - Public consultation, including the structure and the parameters of the auctions of NOME-type products, will be launched by April 2014.
    - The final legal provisions will be adopted by June 2014.
    - The reference price for auctions will be set in consultation with the European Commission, and auctions will start on 1st September 2014.
  - Following the removal of the 30 percent rule, phase out the full recovery of variable costs (May 2014).
- The Ministry of Energy, RAE, ADMIE and LAGIE will draw up a road map, in consultation with European Commission Services, comprising a list of actions, timelines and tasks to be attributed to each institution for implementation of the electricity market reform (May 2014). At a minimum this list will foresee:
  - Transition from a pool based system to separate day-ahead and intra-day electricity market.
  - Transition to the "target model", fostering market integration.
  - Market based provision of ancillary and balancing services.
  - Deep market integration of demand side response.
  - Ensuring implementation of NOME-type products is compatible and coherent with the privatization process of PPC and the creation of small PPC. NOME-auctions and products will remain until the Greek electricity retail markets are fully competitive. The creation of a fully operational small PPC will constitute a necessary milestone.

### Gas market — reform actions and timelines
- Timeline and actions to facilitate transition to a more mature gas market model:
  - Transition from a bilateral contracts-based market to a competitive and liquid gas market.
  - Review and improvement of LNG regulation to further favour third-party access, with cost-based tariffs, including, if appropriate, complementary measures to facilitate its usage (gas swaps).
  - Review of the current gas release programme to increase its effectiveness.
  - Review of whether complementary measures pursuant to Article 83 of Law 4001/2011 are required.
  - Further development of storage legislation and regulation, and foster availability of storage sites, to improve flexibility in the market.
  - A plan for promoting the adoption of gas as heating fuel for households, for reasons of efficiency and emissions reduction, inter alia through the use of EU structural funds and possibly accompanied by a fiscally neutral revision of the excise on gas.
  - Transition of supply and distribution (including for existing and projected EPAs) to a regulated model, with separation of supply from network activities, and phase-in of incentive-based regulation for distribution (and transmission) to favour network development.
  - Transition to full eligibility for all gas customers.
  - Phase out of the derogation under the Third package.
- Distribution segment minimum results and deadlines:
  - Adoption of legal provisions to provide legal and functional unbundling (Chapter V of Directive 2009/73/EC) and relevant duties and powers to RAE (Chapter VIII of Directive 2009/73/EC) of EPAs supply and network businesses, to be effective 1st October 2015 (September 2014).
  - Adoption of legal provisions to make all gas industrial consumers in Greece eligible effective 1st October 2014, and all other gas customers eligible according to the schedule in point 1.viii above (June 2014).
  - EPAs will make their supply and network business legally and functionally unbundled by 30th September 2015.
  - Effective 1st October 2015, network development by all EPA networks, existing and projected, shall be regulated by RAE, which will set appropriate network tariffs and adequate investment incentives for distribution networks.
  - The Hellenic Competition Commission will review by June 2014 the remedies it imposed on DEPA through its decision of 12 November 2012, inter alia to optimise the functioning of the gas release programme taking into account RAE’s opinion and stakeholders' views.

### Fuel market — actions and timelines
- Implement the agreed roadmap for the creation of a regulated, non-profit independent organisation for the storage of fuel reserves (Central Stockholding Entity, CSE). Draft legislation will be consulted with public and the EC/ECB/IMF by June 2014, with a view to its approval by September 2014 and implementation through Ministerial Decrees by December 2014. The CSE will be operational by 1st January 2015.
- Legislative provisions will allow the national network to use storage capacity of other EU countries in compliance with EU regulation 119/2009.
- Within one month from the entry in operation of the CSE the minimum duration of one year for contracts on storage facilities' use by third parties shall be no more effective (January 2015).
- Monitor and make publicly available average monthly data on storage and other cost components charged to domestic and international customers (April 2014).
- To remove regulatory restrictions that hinder competition in the wholesale fuel sector, as per Opinion no. 29/VII/2012 of the Hellenic Competition Commission:
  - Following the implementation of a mandatory guarantee scheme for wholesale fuel trading as an alternative for minimum capital requirements for operating in such market, review the effectiveness of the new system by December 2014.
  - Adopt all necessary implementing legislation to Law 4172/2013 to allow for the installation of inflow-outflow systems throughout the refining and wholesale trading supply chain (April 2014).
- To enhance competition in the retail fuel sector, complete the installation of inflow-outflow systems in the areas not yet covered by August 2014.

### Electronic communications — digital dividend release roadmap
- Resolve cross-border coordination issues with neighbouring countries, if any; if difficulties on international coordination make this unfeasible, frequency and broadcasting plans might indicate alternative channels for re-location of broadcasters, while continuing negotiations with third countries for final assignment of frequencies to broadcasters and mobile operators (continuous).
- 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 (April 2014).
- Launch the tender procedure for the assignment of frequencies of the digital dividend (800 MHz band) in line with EC Decision 2010/267/EU and RSPP procedures (June 2014).
- Grant the licenses to the electronic communications providers by 30th October 2014 at the latest and ensure that the use of the entire 800 MHz band for electronic communications services other than broadcasting can start by 1st November 2014 at the latest.

### Transport and logistics — maritime activities and ports (pre-disbursement requirements)
- Adopt law to make the port regulator operational as of 1st May 2014 by revising law 4150/2013 to ensure independence, operational details, tasks, responsibilities, and supervision of concession agreements.
- Appoint the Board of Directors to prepare the full functioning of the ports regulator by the time of completion of the tender of OLP/OLTH. A transitional structure within the Ministry of Mercantile Marine undertakes revisiting existing concession agreement while the regulator is established.
- Issue a joint MD specifying funding and staffing requirements for the port regulator’s operation.
- Prepare a draft Presidential Decree setting out the precise structure of the regulator, to function fully with all staff as of 1st January 2015.

### Other maritime sector actions and timelines
- Introduce additional measures to improve competitiveness of the sector, including:
  - Allowing optionally firm labour agreements in the domestic ferry sector, irrespective of whether there is a sectoral collective labour agreement and suspending the favourability clause and extension of collective agreements while respecting international and European legislation.
  - Allowing companies to distribute freely across its fleet the days they stop operations during the winter season.
  - Eliminating the requirement for companies to declare maximum prices.
  - Aligning mandatory discounts for ferry tickets for new PSO lines with those for commercial lines (April 2014).
- Align manning requirements for domestic services with those for international lines while respecting best-practice safe manning principles, review applicability of above changes to favourability clause and extension of collective agreements for international lines, and adopt legislative changes as appropriate (September 2014).
- Prepare an action plan for the full functioning of the regulator by the time tender is completed and OLP/OLTH shares are transferred to the new investor (expected timeline, 9 months after EOI is launched), including plans for embedded TA to prepare regulatory decisions/manuals (April 2014).
- Issue a Presidential Decree setting out the precise structure of the regulator, to function fully with all staff as of 1st January 2015 (June 2014).
- Ensure any state aid issues related to the privatisation of ports are clarified before the launch of the second phase of tenders (May 2014).

*Source: INTERNATIONAL MONETARY FUND.*

### 1. The Government ensures that the Hellenic Civil Aviation Authority can effectively perform

### 1. The Government ensures that the Hellenic Civil Aviation Authority can effectively perform

### Aviation: institutional capacity, oversight, and market functioning
- The Government produces a detailed plan laying down the main steps to ensure the Hellenic Civil Aviation Authority can perform functions deriving from the reform of the aviation sector, including economic regulation, safety and security oversight; plan to include requests for technical assistance and provision for adequate levels of competent personnel (April 2014).
- The Government takes decisive measures to ensure that the Hellenic Slot Coordinator Authority (HSCA) is functionally and financially independent, sufficiently staffed, endowed with adequate software equipment and able to carry out its functions by July 2014; authorities will issue the secondary legislation (July 2014).
- The Government ensures full implementation of EU Regulation (EU 691/2010) referring to the performance of air traffic management (continuous).
  - Takes full advantage of 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.
- By November 2014 the Government produces a comprehensive assessment of all the PSO contracts awarded including an evaluation of the economic necessity considering available alternatives, and measures to ensure the participation in the tendering process of non-domestic airlines (October 2014).

### Railways: public service contracting and asset synchronization
- The award authority for public service contracts for rail passenger transport according to Regulation 1370/2007/EU is integrated into the new authority for contracting land passenger (both intercity bus and rail) services; secondary legislation adopted and fully implemented (May 2013).
- Renewal of the current public service contract for rail passenger transport to be completed by direct award by end April 2014 with maximum duration of five years; subsequent public service contracts to be awarded by competitive tender (continuous).
- Rent contracts concerning all rolling stock employed in every public service contract are synchronized both in duration and to allow reallocation of rolling stock 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.

### Logistics
- To reduce fragmentation of the economy and lower the cost of trade, the Government adopts a framework law on logistics by May 2014.

### Competitive Services — Retail sector measures
- Objective: allow a wider class of goods to be sold by more efficient retailers and reduce operating costs, covering retail-specific regulations and licensing rules.
- The Government:
  - Following review by the Ministry of Interior, adopts legislation to significantly simplify the number of authorisations requested by the public administration for the opening and operation of shops (April 2014).
  - Adopts legislation to liberalize outdoor trade in line with OECD recommendations (April 2014).
  - Adopts legislation to liberalize the tourism rental regime (April 2014).
  - Based on an assessment, adopts legislative amendments to bring tourism rental regime in line with EU best practices (September 2014).

### Regulated professions, professional qualifications and services
- For professions and economic activities included in Section 10.2, the Government adopts legislation amending sector specific legislation as per the opinions of the Hellenic Competition Commission and other requirements.
- To ensure activities reserved to engineers, architects, geologists and land surveyors are justified and proportional, the Government:
  - Following the opinion of the Hellenic Competition Commission, adopts legislation to amend unjustified or disproportionate requirements reserving certain activities to specific professions (April 2014).
  - Submits to the Council of State the Presidential Decrees defining standards for complex activities (June 2014).
  - Adopts implementing provisions consistent with the timeline foreseen in the legislation (November 2014).

### Additional measures for professions and legal services
- To remove unnecessary restrictions for access to and pursuit of the lawyer profession in the Code of Lawyers:
  - The Government repeals the provision related to severance pay in case of voluntary termination of the contract of a salaried lawyer, and adopts provision so that any unilateral adverse alteration of the terms of the salaried contract that is harmful to the lawyer is deemed as termination of contract on behalf of the employer (April 2014).
- To lower the cost of doing business:
  - The Government amends legislation on the basis of an assessment to align notaries' fees with best practices in the EU by September 2014.
- With support of outside experts:
  - The Government will review comprehensively all professions under each ministry to determine what regulated professions have not yet been assessed (August 2014), and remove any remaining excessive restrictions across all regulated professions that are identified (October 2014).

### Easing recognition of professional qualifications
- Ensure effective implementation of EU rules on recognition of professional qualifications, including compliance with ECJ rulings; continue efforts to make recognition procedures and access fully online for all professions.
- The Government:
  - Continues to update information on the number of pending applications for recognition of professional qualifications, specifying those received online through the Point of Single Contact, and submits it to the European Commission (quarterly).
  - Ensures implementation of PD 38/2010 (as amended by law 4093/2012) and recognition of qualifications derived from franchised degrees from other Member States to access or exercise an economic activity so holders have the right to work in Greece under the same conditions as holders of Greek diplomas (continuous).

### Increasing the impact of European funding — European Structural and Investment Funds (ESI)
- The Government meets targets for payment claims in absorption of EU Structural, Cohesion and EAFRD Funds set down in the table below; compliance measured by certified data (continuous).

- EUR million (cumulative) — Targets for payment claims in the absorption of Structural and Cohesion Funds and EAFRD (programming period 2007-2013) to be submitted in 2014
  - June 2014 / December 2014
  - European Regional Development Fund (ERDF) and Cohesion Fund (CF): 720,00 / 2.170,00
  - European Social Fund (ESF): 280,00 / 830,00
  - European Agricultural Fund for Rural Development (EAFRD): 220,00 / 669,00

- The Government ensures only the strictly necessary national contribution remains available in the "Public Investment Budget" allocation to ensure full completion of all on-going projects including non-eligible expenditure under Structural Funds and Cohesion Fund rules for 2007-2013 programming period, in particular for expropriations (continuous).
- The Government submits complete applications for all remaining major projects for which no Commission decision under Article 41 of Regulation (EC) No 1083/2006 has been adopted yet; ensures balanced submission of major project modification requests and provides EC a time schedule (April 2014).
- To achieve 100% absorption of the ERDF and Cohesion funds and manage overbooking of NSRF 2007-13:
  - Eliminates the sleeping approved projects and reduces sleeping contracts on a case by case basis, except priority projects, and reports to the Commission (May 2014).
  - Calculates programme-by-programme the overbooking by adjusting budgets of approved projects, adjusting allocations of granted state aid schemes, and estimating expected reduction of budgets for financial engineering instruments; submits results to EC (May 2014).
  - Commits not to approve new projects nor sign contracts until process completed, except exceptional cases agreed with EC.
- Submits to the Commission a list of potential projects to be phased in the 2014-20 period consistent with Partnership Agreement priorities (June 2014).
- Takes measures to ensure completion of 23 priority projects by end 2014 and the remaining 105 priority projects by end 2015 (continuous).
- To ensure smooth financial flow and payments of EU co-funded projects:
  - Adopts secondary legislation for implementation of the alternative to the function of "ypologos" procedure for EU co-funded projects (May 2014).
  - Renders operational the electronic payment (April 2014), with a view to have 50% of the payments effectuated electronically by September 2014 and 100% by December 2014.
  - Examines and presents to the Commission a proposal for a new simplified financial circuit for payments of co-funded projects including creation of a single budget line per operational program in the PIB, aiming implementation in the 2014-20 period (July 2014).
- In view of programming period 2014-2020, ensures Operational Programmes promote competitiveness, growth and jobs and complement structural reforms:
  - Complete simplification initiative by reviewing the "implementation trail" and mapping competences, permits and deadlines before adoption by the Commission of the operational programmes (Deadline: Before the adoption by the Commission of the operational programmes).
  - Proceed assisted by TFGR with an assessment of principal beneficiaries' administrative, financial and operational capacity:
    - Terms of reference prepared in consultation with Commission services (April 2014).
    - Findings and operational recommendations delivered (July 2014).
    - Measures and reforms endorsed (October 2014).
  - Extend inter-services consultation system to cover whole cycle from maturation to final completion of EU co-funded projects supported by necessary electronic system (September 2014).
  - Set up a state aid mechanism for EU co-financing of SMEs in 2014-2020 to ensure transparency, targeting, efficiency and fraud prevention; mechanism supported by appropriate electronic tools (September 2014).
- Report monthly to the Commission on progress of Financial Engineering Instruments; propose rationalisation of current allocations seeking optimal use for Greek SMEs (April 2014). Launch an ex ante assessment as defined in article 37 paragraph 2 of Regulation 1303/2013 for 2014-20 (June 2014).
- Produce and implement a comprehensive anti-fraud strategy for EU co-funded projects, coordinated by the National Coordinator on Anticorruption:
  - Identification in cooperation with EC of a comprehensive anti-fraud strategy with a multi-annual action plan (April 2014).
  - Implementation of identified measures under Ministry of Development covering all EU co-financed programmes (July 2014).
  - Full implementation of anti-fraud strategy across all Government relevant departments by December 2014 according to a precise calendar to be defined (April 2014).

### European Agricultural Fund and Rural Development (EAFRD)
- Meet the target for payment claims in absorption of the EAFRD set out in chapter 8 of the MoU (December 2014).
- Ensure the national contribution for the 2007-2013 Rural Development Programme co-financed by the EAFRD (continuous).
- Ensure necessary administrative capacity at all levels for sound management of the Rural Development Programme 2014-2020; submit a plan of action aiming to fulfil this condition at time of approval of the new programme (May 2014).
- Develop an action plan detailing steps, deadlines and responsible actors for creation of a network for advisory and technical services and an electronic system of administrative and statistical data within the Ministry of Rural Development and Food, to be in place by 2015; system to cover payments, controls, statistical surveys and FADN and integrate CAP Monitoring and Evaluation Framework specifications (June 2014).
- Update existing error rate action plan for rural development to guarantee sound financial management and maintain the error rate at the acceptable level of materiality (April 2014).
- Prepare an action plan to address structural weaknesses within the Land Parcel Identification System (LPIS) to reduce financial corrections relating to direct aid (April 2014), including:
  - Update LPIS on basis of new imagery at least 30% of the old ortho-images in LPIS by December 2014, and the remainder by December 2015.
  - Remove from LPIS the permanent pasture land that does not comply with eligibility conditions of EU legislation for receiving CAP aid (May 2014).

### Institutional compliance — Statistics
- Government will fully honour the Commitment on Confidence in Statistics signed in March 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).

*Source: _cr14151 - 1. The Government ensures that the Hellenic Civil Aviation Authority can effectively perform*

### 2. Government  respects  the  independence  of  ELSTAT  in  carrying  its  tasks  and  providing  high

### 2. Government respects the independence of ELSTAT in carrying its tasks and providing high quality statistics

### Respect for ELSTAT independence and financial autonomy
- Government "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."
- 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)."

### Staffing authority and transfer procedures for ELSTAT
- Amend the law on statistics so that:
  - (a) "the transfer of personnel from other government entities to ELSTAT according to article 20 para. 3 of law no. 3832/2010 shall be made by decisions of the competent Minister for the entity where the transfer originates and the President of ELSTAT;"
  - (b) "it is clarified that the powers of the President of ELSTAT, as laid down in law no. 3832/2010, include the power to specify, pending the revision of the organogram of ELSTAT, the subjects of the permanent posts of the Department of Research and Studies of ELSTAT, the number of such posts allocated to each subject, the relevant formal and substantive criteria and qualifications for employment in such posts and all other relevant matters, and issue the relevant call for application accordingly, notwithstanding the remaining competences of the Supreme Council for the Selection of Personnel (ASEP) with regard to the application of law no. 2190/1994 (April 2014)."

### Actions required prior to disbursement (other institutional requirements)
- All actions attributable to public Authorities should comply with "rules on free movement of capital (TFEU, Article 63) (continuous)."
- Prior to the disbursement:
  - a. "the Government completes the transfer of 28 employees to Elstat from other General Government entities"
  - b. "Take all necessary actions to allow the provision of administrative data by Government departments to ELSTAT."
    - "The arrangements for full access by ELSTAT to all tax information necessary for the development, production and dissemination of statistics shall be formalised by mutual agreement between the Minister of Finance and the President of ELSTAT, respecting the principles of professional independence of ELSTAT and of statistical confidentiality."
    - "ELSTAT will take all necessary internal measures to preserve the confidentiality of tax information to which it has access."
    - "Amendment to the Greek legal framework, i.e., the relevant provisions in tax legislation and the law on statistics, shall be taken as appropriate in that respect including repeal of the amendment of Art. 93 para. 1 and 2 of law no. 4182/2013."
    - "The aforementioned arrangements shall be based on the law as appropriately amended and on the Regulations issued by ELSTAT (Regulation on Statistical Obligations of the Agencies of the EL.S.S. and Regulation on the Operation and Administration of ELSTAT). Memoranda of understanding between the Ministry of Finance and ELSTAT will be agreed."

### Related institutional inventories and timelines (selected items from Annexes relevant to institutional reforms)
- Privatisation Program — selected Government pending actions with target date "Apr-14":
  - EYATH: "Legislation to align pricing policy of EYATH with that of other water companies." — Responsibility: Ministry of Environment — Action: "Pass amendment to article 21 of Law 2937/2001, in order to align the process of the pricing policy of EYATH SA with that of the other water and sewerage services providers as provided for by Law 4117/2013 and the complementary Ministerial Decisions"
  - EYATH: "Water Regulator" — Responsibility: Ministry of Finance, Ministry of Administrative Reform and e-Governance; and Ministry of Environment — Action: "Put in place full staffing and initiate operations of the Special Secretariat for Water (Regulating authority)"
  - ODIE: "Legislation needed to finalize ODIE tender" — Responsibility: Ministry of Finance — Action: "Pass legislation on the issues raised by investors as prerequisites to continue in the process: GGR harmonisation; lease agreement exemption from art. 618 of civil code)"
  - OLP, OLTH & Ports: "Ports Regulator" — Responsibility: Ministry of Shipping — Action: "Pass law related to establishment and staffing of port regulatory authority"
  - Egnatia Odos: "Setting up additional toll stations in advance of privatization" — Responsibility: Ministry of Transport, Infrastructure and Networks — Action: "Issue Ministerial Decision for the toll stations that have been specified by the technical advisers at main and vertical axes"
  - TRAINOSE/ROSCO (multiple entries): clarifications on assets, transfer of rolling stock ownership, valuation of rolling stock, and related legislative and administrative actions — Responsibility: Ministry of Transport, Infrastructure and Networks (and OSE for one item) — Target date "Apr-14"

### Regulated professions and legislative deadlines (selected)
- Actuaries: "amend legislation to set the certification exams to be conducted by any public or private sector body accredited by ESYD (April 2014)."
- TV technicians: "adopt liberalizing measures (April 2014)."
- Health profession:
  - (i) "adopt legislation to establish day care clinics (April 2014);"
  - (ii) "adopt all necessary secondary legislation to define the technical standards for establishing day care clinics (May 2014);"
  - (iii) "adopt legislation to review minimum square requirements, and allow the co-establishment of primary health care providers with the exception of chain professions necessary for a treatment of a patient (May 2014)."
- Sales of fertilizers, propagation and plant protection material: "submit to the Council of State the Presidential Decrees setting the standards for training course and issue secondary legislation to establish training courses (April 2014)."
- Geo-technicians: "abolish mandatory membership to the Chamber (with the exception of veterinarians) (April 2014)."
- Gyms (fitness centers): "conduct proportionality assessment of recreational and sports centers (April 2014) and remove unnecessary requirements according to the opinion of HCC (May 2014)."
- Hairdressers/manicurists: "adopt legislation to align licensing requirements with EU best practices (May 2014)."

### Statistics to be published by the Ministry of Justice (requirements and breakdowns)
- Quarterly publication for civil and administrative first instance court, court of appeal, Supreme Court and Council of State to include:
  - 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 tax and customs cases, include "the inflow of the new cases with a breakdown above and under 150 000 euros."
  - For civil and commercial courts, 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 end period, and "the total number of cases with a hearing date."
- For selected most relevant courts (defined in consultation with EC, IMF and ECB), publish by quarter, or by semester or year if so agreed:
  - i. "The stock of cases (both at beginning and at end period), with a breakdown by year of registration."
  - ii. For civil and commercial Justice, more detailed information on corporate insolvency cases including:
    - "A more detailed breakdown by value, defined in consultation with EC, IMF and ECB."
    - "A more detailed breakdown by sector (e.g., agriculture, construction, manufacturing, and services), defined in consultation with EC, IMF and ECB."
  - iii. For civil and commercial Justice courts:
    - "Number of interim measures issued under Law 4055/2012, and number of those issued within 48 hours."
    - "Number of decision issued under Law 4055/2012 and number of those issued within 30 days."

*Source: _cr14151 - 2. Government respects the independence of ELSTAT in carrying its tasks and providing high quality statistics*

### 3. When the IT system will be fully in place, the Ministry of Justice will publish:

### _cr14151 - 3. When the IT system will be fully in place, the Ministry of Justice will publish:

### Ministry of Justice publication requirements
- The Ministry of Justice will publish the following tables:
  - The number of judges and administrative staff6,
  - The stock of cases at the beginning of the period.3
  - The inflow of cases registered during the period.
  - The outflow of cases closed during the period7.
  - The stock of cases at the end of the period.3
- Breakdown requirements:
  - 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.
- Performance metric:
  - The average duration of the outflow cases during the period.

### Definitions and notes (as provided in source)
- 3 At the end of the period.
- 4 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).
- 5 "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.
- 6 At the end of the period.
- 7 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).

### Provision of data — programme reporting (selected items and frequencies)
- Contact for transmissions:
  - ecfin-greece-data@ec.europa.eu
- To be provided by the Ministry of Finance:
  - Preliminary monthly data on the state budget execution (including breakdown by main categories of revenue and expenditure and by line ministry). (Data compiled by the Ministry of Finance) — 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. (Data compiled by the Ministry of Finance) — 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). (Data compiled by Ministries of Administrative Reform and E-Governance and of Finance) — Monthly, 30 days after the end of each month.
  - Monthly above the line cash data on general Government entities other than the state. (Data compiled by the Ministry of Finance) — 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. (Data compiled by the Ministry of Finance) — Weekly on Friday, reporting on the previous Thursday.
  - Data on below-the-line financing for the general Government. (Data compiled by the Ministry of Finance) — 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. (Data compiled by the Ministry of Finance on the basis of basic data from the several line ministries) — Monthly, within 30 days after the end of each month.
  - Data on use of international assistance loans split among following categories: Financial stability fund, segregated account, debt redemption, interest payments, other fiscal needs, building of cash buffer; per quarter and cumulative — 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. (Data compiled by the Ministry of Finance) — Monthly, within one month.
  - Data on assets privatised and proceeds collected. (Data compiled by the Ministry of Finance) — Monthly.
  - Data on state-owned enterprises: revenue, costs, payroll, number of employees and liabilities (including maturities of public enterprises' debts). (Data compiled by the Ministry of Finance) — 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. (Data compiled by the Ministries of Finance and Education, Religious Affairs, Culture and Sport) — Monthly, at the end of each month.
  - Monthly statement of the operations on the special accounts. (Data compiled by the Ministry of Finance) — Monthly, at the end of each month.
  - Report on progress with fulfilment of policy conditionality. (Report prepared by the Ministry of Finance) — 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. (Data compiled by the Ministries of Labour and Health) — 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 (Data compiled by the Ministry of Finance) — Monthly, 30 days after the end of each month.

- To be provided by the Bank of Greece:
  - Assets and liabilities of the Bank of Greece. — Weekly, next working day.
  - Assets and liabilities of the Greek banking system - aggregate monetary balance sheet of credit institutions. — Monthly, 30 days after the end of each month.
  - Evolution of the external funding provided by Greek banks to their subsidiaries abroad. — Monthly, 15 days after the end of each month.
  - Report on banking sector liquidity situation. — Weekly, next working day.
  - Report on the evolution of financial stability indicators. — 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. — Quarterly.
  - Weighted average of Loan-to-value (LTV) ratio for new loans with real estate collateral — 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. — Monthly.

*International Monetary Fund — content extracted from the specified content unit.*

### 3.01 billion (about €3.41 billion, or US$4.64 billion), which would bring total disbursements

### _cr14151 - 3.01 billion (about €3.41 billion, or US$4.64 billion), which would bring total disbursements

### Disbursements, Board decisions, and conditionality
- Approved disbursement of 3.01 billion (about €3.41 billion, or US$4.64 billion).
- Total disbursements under the arrangement would reach SDR 10.22 billion (about €11.58 billion, or US$15.75 billion).
- Executive Board approved a waiver of nonobservance of the performance criterion on domestic arrears, given corrective actions taken.
- Board approved the authorities’ request for rephasing three disbursements evenly over the remaining reviews in 2014.
- EFF arrangement approved on March 15, 2012, is part of a joint financing package with euro area member states amounting to about €173 billion over four years.
- Arrangement entails exceptional access equivalent to about 2,159 percent of Greece’s quota.
- European partners’ assurance: 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 the program.

### Recent macroeconomic developments and outlook
- 2013 annual real GDP contraction: 3.9% (program projection: -4.2%).
- General Government overall balance (2013): -3.2 percent of GDP (target: -4.1 percent).
- General Government primary balance (2013): surplus of 0.8 percent of GDP (program target: 0 percent).
- Current account balance (2013): surplus of 0.7 percent of GDP (expected: -0.8 percent).
- Q1 2014 real output decline: -1.1% (from -2.3% in Q4 2013).
- Unemployment rate: 26.5% in February (latest available month).
- Private sector deposits are almost €13 billion higher than in June 2012.
- Growth projections: return to positive annual growth of 0.6% in 2014; recovery of 2.9% in 2015.
- April 9 bond issue: €3 billion, 5-year bond at 4.75 per cent coupon, oversubscribed sevenfold.

### Emphasis on structural reforms — progress and measures
- Reforms progressed in: revenue administration, tax policy, public financial management, privatization, civil service, health care, pensions, social welfare, education, and anti-corruption.
- Product market and business environment reforms undertaken to enhance competition and reduce administrative burden.
- Qualitative indices showing improvement:
  - OECD “Product Market Regulation”: Greece identified as the country with the biggest improvement between 2008-2013.
  - World Bank “Doing Business Report”: Greece improved by 9 positions in “paying taxes”; 24 positions in “ease of doing business”; 70 positions in “protecting investors”; and 97 positions in “starting a business”.
  - Lisbon council and Berenberg Bank: ranked Greece first in the “Adjustment Progress indicator” in 2012, 2013 and 2014; in 2014 Greece topped three of four subcategories and ranked second in the fourth.
- Public sector employment reduction target: reduce by 150,000 compared with 2010.
- Q1 2014 mandatory staff exits: over 3,000 confirmed dismissals (Q1 2014 target: 1,000).
- Public administration reforms to include: reorganization of ministries, reallocation of personnel, competence-based evaluation for managers and staff, better financial management, simplification of rules, rapid expansion of e-government.
- Product market measures: implementation of majority of OECD 2013 recommendations for tourism, retail trade, food processing and construction materials; liberalization steps in transport and residential rental markets; development of logistics market; opening professions with restricted entry.
- Labor market reforms:
  - Unit labor costs fell 14 percent between 2011-13.
  - Major prior reforms: reduction in average public sector salaries by 23 percent; reduction in the minimum wage by 22 percent and by 32 percent for young workers; significant cuts in severance payments.
  - Tax wedge reduction by cutting social security contributions in one step (compared to phased process originally envisaged).
  - Collective dismissals and industrial action: two-stage process with administrative steps now and potential legislative alignment with EU best practices in autumn 2014; industrial action framework evaluation with reforms by October 2014.

### Fiscal policy and public financial management
- 2013 fiscal performance exceeded program targets due to stronger revenue performance and streamlined expenditure management.
- New fiscal framework introduced including: (a) multiannual planning, (b) binding expenditure ceilings, (c) numerical fiscal rules, and (d) strong expenditure monitoring mechanisms.
- Revenue administration reforms:
  - Income Tax and Tax Procedures Codes broadened tax base and modernized tax administration.
  - New unified Property Tax introduced.
  - Semiautonomous revenue administration created with competences on tax and customs.
  - Strategic planning and financial directorate established; advisory council of external experts created.
  - Tax collection consolidated in largest offices; cash payments replaced by transfers and checks.
  - New IT system supports compulsory electronic submission of tax returns.
- Public Financial Management reforms: provide timely and accurate budgetary information, ensure compliance with public entities’ budget ceilings, and support optimal resource utilization.

### Financial sector recovery and banking system
- Bank of Greece stress tests estimated capital needs at €6.4 billion based on a baseline scenario.
- Hellenic Financial Stability Fund (HFSF) will retain buffers until at least the pan-European stress tests are completed later this year.
- HFSF law amended to enhance effectiveness.
- Systemic banks completed larger-than-required capital increases with significant over-subscription; total amount raised close to €8.5 billion.
- Banks regaining access to international capital markets; bond issuances first time since 2009.
- Reduced reliance on Eurosystem funding due to lowering interest rate margins and access to international repo, debt, and equity markets.
- Authorities committed to strengthening the private sector debt resolution framework to facilitate orderly and swift workout of impaired bank assets.

### Privatization
- Privatization proceeds continue but at a slow pace due to weak demand and immaturity of assets, particularly real estate.
- Recent tenders have produced satisfactory results; some expected to catalyze private investments in coming years.
- Steps to reinforce governance and effectiveness of privatization, with emphasis on real estate assets.
- Institutional strengthening planned for HRADF and ETAD, including organizational changes.

### Protecting the vulnerable and social measures
- Cumulative decline in real GDP since start of the crisis: 26.2 percent.
- Unemployment: 26.5 percent; youth unemployment nearing 60 percent.
- Average disposable income decline between 2009 and 2013: 35 percent.
- Share of population at risk of poverty or social exclusion rose from 28 percent to 35 percent.
- Program focus: social welfare and reducing unemployment.
- Measures:
  - One-off "social dividend" underway for 2014 financed by extra-ordinary fiscal performance in 2013.
  - Widening scope of unemployment benefits to the long-term unemployed.
  - Broadening access of the uninsured to health services through health passports.
  - 50 percent reduction of the “maturity” component of the minimum wage for long-term unemployed to assist reintegration.
  - Minimum income guarantee scheme launched on a pilot basis in two municipalities, intended roll-out starting in 2015.
  - Schemes financed with EU structural funds to recruit young and long-term unemployed.
  - Major reform and expansion of vocational education and apprenticeships.

### Growth strategy and financing for investment
- Growth to come from restructuring the production base via reforms: flexible labor market, dismantling entry barriers, liberalizing product markets.
- Indicative priority sectors: tourism, primary sector and processing of agricultural products, fish farming, energy, logistics, technology and applied R&D, pharmaceuticals, metal and building materials industries, activities related to shipping.
- Two-pronged approach to tap resources:
  - Develop efficient and effective procedures to ensure timely disbursements of EU structural funds.
  - Align technical assistance and explore bilateral ways for financing the economy, including pooling public and private financial resources.
- Institution for Growth (IfG):
  - Establishing three facilities: SME lending, SME equity, and infrastructure lending.
  - Legal framework adopted in December 2013; Greece will invest up to EUR 350 million in IfG.
  - Germany and private foundations have pledged further contributions.

### Risks and the way forward
- External downside risk: sharp correction of international asset prices and increase in risk premia, affecting exports and tightening financial conditions.
- Geopolitical risks: situation in Russia and Ukraine and instability in Turkey could weigh on Greek exports.
- Internal downside risks: slower-than-envisaged implementation due to capacity constraints and delays establishing required legal and regulatory frameworks.
- Authorities’ stance: politically committed to program success; determined to improve integrity and accountability of civil service.
- Upside risks: better export performance, potential very strong tourist season, and possible shipping sector improvement as excess supply declines and world trade picks up.
- Authorities and staff view attainment of durable improvement in investor sentiment in 2014 and beyond as challenging but risks are now more balanced than at the fourth review in July 2013.
- Concluding policy emphasis: combine short-term stabilization with wide-ranging structural reforms to achieve a long-term developmental vision based on exports and investment; strengthen competition, enhance public administration effectiveness, and confront vested interests and corruption.

*International Monetary Fund — Statement and review material excerpt*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2014/_cr14151.pdf_