EU on approving the macroeconomic adjustment programme of Greece - Main contents

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dossier	COM(2017)314 - Amendment of Council Implementing Decision 2015/1411/EU on approving the macroeconomic adjustment programme of Greece.
document	COM(2017)314
date	June 2, 2017

Article 1 Article 2 of Council Implementing Decision (EU) 2015/1411 is replaced by the following:

1. Greece shall pursue fiscal consolidation by means of high-quality permanent measures while minimising the impact on disadvantaged people. The Greek authorities commit to ensuring sustainable public finances and achieving sizeable and sustainable primary surpluses over the medium-term that will reduce the debt-to-GDP ratio steadily. Greece shall accordingly pursue a fiscal path premised on primary surplus targets of 1,75% of GDP in 2017 and 3,5% of GDP as of 2018 and over the medium-term. The authorities commit to take further structural measures yielding 0,3% of GDP by 2018 in order to secure the targeted primary surplus path. Measures to achieve those primary surplus targets, and agreed as part of the second review of the Programme, shall include: the streamlining of welfare benefits and abolition of tax expenditures based on the recommendations of the World Bank's Social Welfare Review; rationalization of healthcare spending through widening the scope of the closed budget framework and the reduction of claw-back ceilings; the introduction of a tax on short-term tourist accommodation rentals; and the rationalization of certain performance incentives and allowances in the public sector.

2. In support of rebalancing the budget toward more growth-friendly and distributionally fair policies, while ensuring that medium-term fiscal targets are met, the authorities shall legislate the following actions:

i. medium-term fiscal strategy for 2018-2021 in line with agreed medium-term

targets, which should be reached without growth-detrimental measures;

ii pension reform delivering net savings of 1% of GDP over the medium term

and a personal income tax reform to be implemented and delivering net savings of 1% of GDP in 2020 and over the medium term;

iii growth-enhancing tax package matching, in net terms, the yield from the

personal income tax reform encompassing: (i) a reduction in personal income tax rates and the solidarity surcharge with a medium-term fiscal impact of 0,8% of GDP; (ii) a reduction in corporate income tax rates with a medium-

term fiscal impact of 0,1% of GDP, and (iii) a reduction in property tax (ENFIA) with an impact of 0,1% of GDP;

iv targeted spending package matching, in net terms, the yield from the pension

reform composed of: (i) an increase in spending on targeted welfare benefits (housing allowance; child benefits; school meals; early childhood education and care/pre-school education; means-tested reduction in health co-payments) of 0,7% of GDP, (ii) high-quality public infrastructure investment of 0,15% of GDP, and (iii) active labour market policies of 0,15% of GDP;

v the personal income tax measures will be implemented in 2019 if, based on a

forward-looking assessment in the context of the final programme review, a frontloaded implementation is needed in order to reach the agreed 3,5% of GDP primary surplus fiscal target in 2019, which should be reached without growth-detrimental measures;

vi the expansionary package will be implemented starting in 2019, contingent on

an assessment and agreement in the final programme review, following a transparent process, with the amount to be implemented in line with the institutions’ projected over-performance relative to the agreed medium-term targets in order to ensure that these are achieved.

3. The authorities shall complete the framework needed for the full implementation of the Independent Authority of Public Revenue and for its effective operation. They shall take further measures to improve tax compliance, including legislation for the promotion and facilitation of the use of electronic payments. Measures to strengthen the fight against tax evasion shall, inter alia, aim at improving the model of cooperation between the justice and tax administrations.

4. The authorities shall take measures to further strengthen the budget process and public financial management. They shall ensure that national legislation is fully in line with the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (Fiscal Compact). The authorities shall also present a medium-term action plan to ensure that payments are made in compliance with Directive 2011/7/EU of 16 February 2011 of the European Parliament and of the Council on combating late payment in commercial transactions.⁴ They shall strengthen the public procurement framework, including by fostering central procurement.

5. The authorities shall fully implement the new legislative provisions of the comprehensive pension reform of 2016. To rationalize public health expenditure, the authorities shall take structural measures focusing on improving efficiency, including a closed budget (clawback ceiling) to cover items previously not under clawback. They shall publish an updated price bulletin to reduce pharmaceutical prices, update and publish on a regular basis the positive and the negative lists, and adopt further measures to improve generics penetration.

6. The authorities shall ensure the smooth roll-out and implementation of the new Social Solidarity Income scheme. They shall undertake a major reform of the welfare system, based on the relevant recommendations of the Social Welfare Review provided by the World Bank. That reform shall aim at streamlining the system and better targeting the needs of the most vulnerable, including the re-direction of resources to the financing of the national roll-out of the new Social Solidarity Income scheme.

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7. To safeguard financial stability, the authorities shall publish a roadmap for the relaxation of capital controls, avoiding undue delays without compromising financial stability. They shall assess and address impediments to the secondary market for non-performing loans identified in the report on the review of implementation of Law 4354/2015, in order to streamline the licencing process for servicers of non-performing loans. The authorities shall establish an out-of-court workout scheme for non-performing loans and ensure its smooth implementation, allowing for both large and smaller debtors with a debt above a minimum threshold into the mechanism, and subjecting all elements of debt, including private and public debt, excluding social security contributions and withheld taxes, to the debt-restructuring mechanism. The authorities shall also modernise the corporate insolvency framework and ensure its effective implementation, with a key focus on the role of insolvency administrators. They shall review the Code of Civil Procedure, with a view to bringing it in line with Union best practices.

8. To promote growth, competitiveness and investment, the authorities shall continue to design and implement a wide range of reforms in product markets that aim at achieving Union best practices. Reforms shall include: further implementation of OECD Toolkit recommendations to remove impediments to competition across a wide range of sectors; reforms to liberalise investment licensing and reduce the administrative burden of starting a business; further steps in the liberalisation of regulated professions; reforms to modernise the framework for land use, including spatial planning and cadastre; and measures to enhance the functioning of the water and transport sectors.

9. Regarding labour markets, Greece shall adopt legislation to clarify that the 2011 collective bargaining reforms will be extended until the end of the Programme. The authorities shall replace the current administrative framework for collective dismissals with a notification procedure of no more than three months which shall not involve ex-ante approval, and shall amend legislation on industrial action. They shall also take further steps to combat undeclared work, strengthen vocational education and training, and implement the three-year action plan on education.

10. The authorities shall continue the implementation of wide-ranging reforms in the energy markets, to bring them in line with Union legislation and policies, make them more modern and competitive, reduce monopolistic rents and inefficiencies, promote innovation, favour the wider adoption of renewables and gas, and ensure the transfer of benefits of all those changes to consumers. In the electricity market, in order to bring the market share of the incumbent to the agreed targets, the authorities shall continue the implementation of electricity auctions, and propose unconditional structural measures to divest a share of the generation capacity of the incumbent, in line with the relevant Decisions of the European Commission⁵. The authorities shall also continue the process leading to the full ownership unbundling of the transmission system operator from the incumbent, continue the implementation of the reform of incentives for renewable energies, and ensure the timely implementation of other market reforms. In the gas market, continued implementation of the existing reforms shall, inter alia, lead to full eligibility to switch supplier for all customers by 2018, as scheduled. The authorities shall take further action to remove remaining obstacles to effective competition in the

⁵ Decisions C(2008) 824 final and C(2009) 6244 final, which were upheld by Judgments of the General

Court of the European Union of 15 December 2016 in Case T-169/08 RENV and Case T-421/09 RENV

wholesale and retail gas markets, and to promote interconnections, as well as the diversification of the sources of supply.

11. The authorities shall continue to implement an ambitious privatisation programme and policies that support investment. The authorities commit to facilitate the privatisation process and complete all needed government actions to allow tenders to be executed successfully. In that respect the authorities shall complete all actions needed as agreed on a quarterly basis between the Hellenic Republic Asset Development Fund (‘HRADF’), the institutions and the government. The List of Government Pending Actions has been approved by the Board of Directors of the HRADF. Following the establishment of the Hellenic Corporation for Assets and Participations (HCAP), which shall have in its possession valuable Greek assets, the authorities shall ensure that the management and internal rules of HCAP complies with international standards and best practices, including the OECD Guidelines on Governance of State-Owned Enterprises. The overarching objective of HCAP is to manage valuable Greek assets; and to protect, create and ultimately maximise their value which it shall monetise through privatisations and other means.

12. A modern State and public administration shall continue to be a key priority of the Programme. The authorities shall pay particular attention to the implementation of the measures already taken under the Programme to increase the efficiency of the public sector in the delivery of essential public goods and services, with special reference to the recruitment and de-politicisation of managers, performance evaluations, and mobility. Measures shall be taken to enhance the effectiveness of the judicial system, including by allowing for the implementation of electronic auctions, and to upgrade the fight against corruption. The institutional and operational independence of key institutions, such as the revenue administration and the statistics institute (Elstat), shall be strengthened through further implementation of adopted reforms.'

Article 2 This Decision is addressed to the Hellenic Republic.