Considerations on COM(2024)608 - - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2024)608 - . |
|---|---|
| document | COM(2024)608 |
| date | June 19, 2024 |
(2) The REPowerEU Regulation4, adopted on 27 February 2023, aims to phase out the EU’s dependency on Russian fossil fuel imports. This would help achieve energy security and diversify the EU’s energy supply, while increasing the uptake of renewables, energy storage capacities and energy efficiency. Greece added a new REPowerEU chapter to its national recovery and resilience plan in order to finance key reforms and investments that will help achieve the REPowerEU objectives.
(3) On 16 March 2023, the Commission issued a Communication on the ‘Long-term competitiveness of the EU: looking beyond 2030’5, in order to inform policy decisions and create the framework conditions for increasing growth. The Communication frames competitiveness along nine mutually reinforcing drivers. Among these drivers, access to private capital, research and innovation, education and skills, and the single market emerge as paramount policy priorities for reform and investment to address current productivity challenges as well as to build up the long-term competitiveness of the EU and its Member States. On 14 February 2024, the Commission followed this Communication with the Annual Single Market and Competitiveness Report6. The report details the competitive strengths and challenges of Europe's Single Market, tracking yearly developments according to the nine competitiveness drivers identified.
(4) On 21 November 2023, the Commission adopted the 2024 Annual Sustainable Growth Survey7, marking the start of the 2024 cycle of the European Semester for economic policy coordination. The European Council endorsed the priorities of the survey around the four dimensions of competitive sustainability on 22 March 2024. On 21 November 2023, on the basis of Regulation (EU) No 1176/2011, the Commission also adopted the 2024 Alert Mechanism Report, in which it identified Greece as one of the Member States that may be affected or may be at risk of being affected by imbalances, and for which an in-depth review would be needed. On the same date the Commission also adopted an opinion on the 2024 draft budgetary plan of Greece. The Commission also adopted a recommendation for a Council recommendation on the economic policy of the euro area, which the Council adopted on 12 April 2024, as well as the proposal for the 2024 Joint Employment Report analysing the implementation of the Employment Guidelines and the principles of the European Pillar of Social Rights, which the Council adopted on 11 March 2024.
(5) On 30 April 2024, the EU’s new economic governance framework came into force. The framework includes the new Regulation of the European Parliament and of the Council (EU) 2024/1263 on the effective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97. It also includes the amended Regulation (EC) No 1467/97 on the implementation of the excessive deficit procedure and the amended Directive 2011/85/EU on the budgetary frameworks of Member States8. The objectives of the new framework are public debt sustainability and sustainable and inclusive growth through gradual fiscal consolidation as well as reforms and investments. It promotes national ownership and has a greater medium-term focus, combined with more effective and coherent enforcement. Each Member State should submit to the Council and to the Commission a national medium-term fiscal-structural plan. National medium-term fiscal-structural plans contain the fiscal, reform and investment commitments of a Member State, covering a planning horizon of 4 years or 5 years depending on the regular length of the national legislature. The net expenditure9 path in the national medium-term fiscal-structural plans should comply with the requirements of Regulation (EU) 2024/1263, including the requirements to put or keep general government debt on a plausibly downward path by the end of the adjustment period at the latest, or for it to remain at prudent levels below 60% of GDP, and to bring and/or maintain the government deficit below the 3% of GDP reference value over the medium term. Where a Member State commits to a relevant set of reforms and investments in accordance with the criteria set out in Regulation (EU) 2024/1263, the adjustment period may be extended by 3 years at most. For the purpose of supporting the preparation of those plans, on [21 June] 2024, the Commission is set to provide Member States with guidance on the content of the plans and the subsequent annual progress reports that they will need to submit and, in accordance with Article 5 of Regulation (EU) 2024/1263, will transmit to them technical guidance on the fiscal adjustments (reference trajectories and technical information where applicable). Member States should submit their medium-term fiscal-structural plans by 20 September 2024, unless the Member State and the Commission agree to extend the deadline by a reasonable period of time. Member States should ensure the involvement of their national parliaments, and the consultation of independent fiscal institutions, of social partners and other national stakeholders, as appropriate.
(6) In 2024, the European Semester for economic policy coordination continues to evolve in line with the implementation of the Recovery and Resilience Facility. The full implementation of the recovery and resilience plans remains essential for delivering the policy priorities under the European Semester, as the plans help effectively address all or a significant subset of challenges identified in the relevant country-specific recommendations issued in recent years. The 2019, 2020, 2022 and 2023 country-specific recommendations remain equally relevant also for recovery and resilience plans revised, updated or amended in accordance with Articles 14, 18 and 21 of Regulation (EU) 2021/241.
(7) On 27 April 2021, Greece submitted its national recovery and resilience plan to the Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant to Article 19 of Regulation (EU) 2021/241, the Commission assessed the relevance, effectiveness, efficiency and coherence of the recovery and resilience plan, in accordance with the assessment guidelines of Annex V to that Regulation. On 13 July 2021, the Council adopted its Decision on the approval of the assessment of the recovery and resilience plan for Greece10, which was amended on 8 December 2023 following Article 18 i of Regulation (EU) 2021/241 to update the maximum financial contribution for non-repayable financial support, as well as to include the REPowerEU chapter11. The release of instalments is conditional on a decision by the Commission, taken in accordance with Article 24(5) of Regulation (EU) 2021/241, that Greece has satisfactorily fulfilled the relevant milestones and targets set out in the Council Implementing Decision. Satisfactory fulfilment presupposes that the achievement of preceding milestones and targets has not been reversed.
(8) On 30 April 2024, Greece submitted its 2024 National Reform Programme and its 2024 Stability Programme, in line with Article 4(1) of Regulation (EC) No 1466/97. In accordance with Article 27 of Regulation (EU) 2021/241, the 2024 National Reform Programme also reflects Greece’s biannual reporting on the progress made in achieving its recovery and resilience plan.
(9) The Commission published the 2024 country report for Greece12 on 19 June 2024. It assessed Greece’s progress in addressing the relevant country-specific recommendations adopted by the Council between 2019 and 2023 and took stock of Greece’s implementation of the recovery and resilience plan. Based on this analysis, the country report identified gaps with respect to those challenges that are not addressed or only partially addressed by the recovery and resilience plan, as well as new and emerging challenges. It also assessed Greece’s progress on implementing the European Pillar of Social Rights and on achieving the EU headline targets on employment, skills and poverty reduction, as well as progress in achieving the UN’s Sustainable Development Goals.
(10) The Commission carried out an in-depth review under Article 5 of Regulation (EU) No 1176/2011 for Greece. The main findings of the Commission’s staff assessment of macroeconomic vulnerabilities for Greece for the purposes of that Regulation were published in April 202413. On 19 June 2024, the Commission concluded that Greece is experiencing macroeconomic imbalances after being identified with excessive imbalances in 2023. In particular, Greece faces vulnerabilities related to high government debt and high non-performing loans in the context of high unemployment, which remain relevant but have receded markedly and are expected to recede further, but the external position remains weak. The government debt-to-GDP ratio has continued to decline, and while it remains high at almost 162% in 2023, the short-term risks to debt sustainability appear low. Nominal GDP growth was a major driver of the rapidly falling debt ratio in recent years, but the expected further improvement in fiscal balances is set to ensure that it continues to decline. The current account deficit, which had widened markedly over the years 2020 to 2022, narrowed significantly in 2023, but remains elevated against a backdrop of buoyant domestic demand. Only marginal improvements of the current account are expected this year and next, as the robust growth in investment is forecast to keep imports elevated. The deeply negative net international investment position (NIIP)-to-GDP ratio also improved last year on the back of the high nominal GDP growth, but it remains the weakest in the EU. Non-performing loans have shown a strong reduction in recent years and continued to decline in 2023, but the workout of the non-performing loans outside of the banking sector remains slow, and as a result they continue to weigh on the economy. Employment increased and unemployment declined further but is still relatively high. Years of sustained policy action and extensive structural reforms have clearly favoured a reduction of the identified vulnerabilities. Maintaining the prudent fiscal stance and continued timely implementation of the RRP remain crucial to improve competitiveness and ensure the rebalancing of the economy, including on the external position.
(11) Based on data validated by Eurostat14, Greece’s general government deficit decreased from 2.5% of GDP in 2022 to 1.6% in 2023, while the general government debt fell from 172.7% of GDP at the end of 2022 to 161.9% at the end of 2023.
(12) On 12 July 2022, the Council recommended15 that Greece ensure in 2023 a prudent fiscal policy, in particular by limiting the growth of nationally financed primary current expenditure below medium-term potential output growth16, taking into account continued temporary and targeted support to households and firms most vulnerable to energy price hikes and to people fleeing Ukraine. At the same time, Greece was recommended to adjust current spending to the evolving situation. Greece was also recommended to expand public investment for the green and digital transitions, and for energy security taking into account the REPowerEU initiative, including by making use of the Recovery and Resilience Facility and other Union funds. In 2023, according to the Commission estimates, the fiscal stance17 was expansionary, by 0.5% of GDP, in a context of high inflation. The growth in nationally financed primary current expenditure (net of discretionary revenue measures) in 2023 provided a contractionary contribution to the fiscal stance of 0.6% of GDP and was in line with the Council recommendation. The contractionary contribution of nationally financed primary current expenditure was due to the reduced costs of the emergency support measures (targeted and untargeted) to households and firms in response to energy price hikes (by 2.7% of GDP). The main drivers of growth in nationally financed primary current expenditure (net of discretionary revenue measures) were social transfers, including pensions. Expenditure financed by Recovery and Resilience Facility grants and other EU funds amounted to 2.5% of GDP in 2023. Nationally financed investment amounted to 2.6% of GDP in 2023, representing an increase of 0.2 percentage points as compared to 2022. Greece financed additional investment through the Recovery and Resilience Facility and other EU funds. It financed public investment for the green and digital transitions, and for energy security, such as supporting the deployment of new renewables to the electricity grid that is facilitated through the upgrading of transmission infrastructure and providing financial assistance to SMEs to adopt digital solutions, which are funded by the Recovery and Resilience Facility and other EU funds.
(13) The key projections in the 2024 Stability Programme can be summarised as follows. The macroeconomic scenario underpinning the budgetary projections forecasts real GDP to grow by 2.5% in 2024 and 2.6% in 2025, while it expects HICP inflation at 2.6% in 2024 and 2.0% in 2025. The general government deficit is expected to decrease to 1.2% of GDP in 2024 and 0.9% of GDP in 2025, while the general government debt-to-GDP ratio is set to decrease to 152.7% by the end of 2024 and 146.3% by the end of 2025. The Stability Programme does not include budgetary projections beyond 2025.
(14) The Commission Spring 2024 Forecast projects real GDP to grow by 2.2% in 2024 and 2.3% in 2025, and HICP inflation to stand at 2.8% in 2024 and 2.1% in 2025.
(15) The Commission Spring 2024 Forecast projects a general government deficit of 1.2% of GDP in 2024, while the general government debt-to-GDP ratio is forecast to decrease to 153.9% by the end of 2024. The decrease of the deficit in 2024 mainly reflects the muted growth of social benefits compared to revenue growth. Based on the Commission’s estimates, the fiscal stance is projected to be expansionary, by 0.3% of GDP, in 2024.
(16) Expenditure amounting to 1.5% of GDP will be financed by non-repayable support (“grants”) from the Recovery and Resilience Facility in 2024, compared to 1.0% of GDP in 2023, according to the Commission Spring 2024 Forecast. Expenditure financed by Recovery and Resilience Facility grants will enable high-quality investment and productivity-enhancing reforms without a direct impact on the general government balance and debt of Greece. Expenditure amounting to less than 0.1% of GDP is expected to be backed by loans from the Recovery and Resilience Facility, in both 2023 and 2024, according to the Commission Spring 2024 Forecast.
(17) On 14 July 2023, the Council recommended18 that Greece ensure a prudent fiscal policy, in particular by limiting the nominal increase in net nationally financed primary expenditure19 in 2024 to not more than 2.6%. When executing their 2023 budgets and preparing their Draft Budgetary Plans for 2024, Member States were invited to take into account that the Commission would propose to the Council the opening of the deficit-based excessive deficit procedures based on the outturn data for 2023. According to the Commission Spring 2024 Forecast, Greece’s net nationally financed primary expenditure is projected to increase by 1.8% in 202420, which is below the recommended maximum growth rate. This is in line with what was recommended by the Council.
(18) Moreover, the Council recommended that Greece take action to wind down the emergency energy support measures in force, using the related savings to reduce the government deficit, as soon as possible in 2023 and 2024. The Council further specified that, should renewed energy price increases necessitate new or continued support measures, Greece should ensure that these were targeted at protecting vulnerable households and firms, fiscally affordable, and preserve incentives for energy savings. According to the Commission Spring 2024 Forecast, the net budgetary cost21 of emergency energy support measures is estimated at 0.0% of GDP in 2023 and projected at 0.1% in 2024, and 0.1% in 2025. In particular, increased heating allowance and the return of special levy on diesel to farmers are assumed to remain in force in 2024 and 2025, albeit with a minor impact22. The emergency energy support measures are projected to be wound down as soon as possible in 2023 and 2024. This is in line with what was recommended by the Council.
(19) In addition, the Council also recommended that Greece preserve nationally financed public investment and ensure the effective absorption of Recovery and Resilience Facility grants and other EU funds, in particular to foster the green and digital transitions. According to the Commission Spring 2024 Forecast, nationally financed public investment is projected to decrease to 2.4% of GDP in 2024, from 2.6% of GDP in 2023. This is due to the timing of the programming periods of the EU structural funds. In particular, the EU co-financing rate of the investments under the new programme is assumed to be higher than that of the investments under the previous programming period. This leads to a decline in the co-financed national expenditure on investments. The fiscal adjustment in 2024 is not primarily due to the decrease in investments. Taking into account these additional factors, public investment in 2024 is assessed as respecting the Council recommendation. In turn, public expenditure financed from revenues from EU funds, including Recovery and Resilience Facility grants, is expected to increase to 3.4% of GDP in 2024 from 2.5% of GDP in 2023.
(20) Based on policy measures known at the cut-off date of the forecast and on a no-policy-change assumption, the Commission Spring 2024 Forecast projects a government deficit of 0.8% of GDP in 2025. The decrease of the deficit in 2025 mainly reflects the decline of interest expenditure and muted growth of the public wage bill. The general government debt-to-GDP ratio is set to decrease to 149.3% by the end of 2025. The decrease of the debt-to-GDP ratio in 2025 mainly reflects an increasing primary surplus and nominal GDP growth, as well as stock-flow adjustments. Prudent fiscal policy should contribute to strengthening the external position too.
(21) Building on best practices and reforms carried out as part of the recovery and resilience plan, including a new reform aiming to further strengthen Greece's efforts to combat tax evasion, there remains scope to further strengthen the tax policy framework to enable Greece to attract more investments, thereby reducing the investment gap, which remains significant. In particular, the introduction of a wider advance tax-ruling system in line with EU best practices, could give taxpayers a transparent interpretation of existing tax law, thereby providing investors with greater legal certainty. Furthermore, stepping up efforts to expand the Independent Authority for Public Revenue’s capacity, in particular by strengthening its autonomy to manage and develop its human resources, could help further increase tax compliance.
(22) Greece has continued to take steps to modernise its public administration, but there remains scope to further increase its efficiency. Following a significant adjustment after 2010, the size and cost of its public administration has been broadly aligned with the EU average. Greece's public sector wage bill remained stable in 2023 at 10.8% of GDP, slightly above the EU average (10.2 % of GDP), taking into account the wage increases that took place for the first time since 2010. The adjustment of allowances, including for positions of managerial responsibility, that came into effect at the start of 2024 were consistent with the unified wage grid, as they were applied across the public administration. To safeguard those gains in future, it is key to: (i) ensure continued application of the unified wage grid, while maintaining current staffing levels through the continued application of the one-in-one-out hiring rule for permanent staff; and (ii) maintain the ceiling for temporary staff that was introduced in 2022. The recovery and resilience plan contains measures to improve the effectiveness of public administration, including the establishment of a multi-level governance framework that was adopted in 2023. For the expected improvements in coordination between the central, regional and local levels to materialise, the framework, including the envisaged governance structures and information system, is expected to become fully operational during 2024.
(23) In accordance with Article 19(3), point (b), and Annex V, criterion 2.2 of Regulation (EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually reinforcing reforms and investments to be implemented by 2026. These are expected to help effectively address all or a significant subset of challenges identified in the relevant country-specific recommendations. Within this tight timeframe, proceeding swiftly with the effective implementation of the plan including the REPowerEU chapter is essential to boost Greece’s long-term competitiveness through the green and digital transition, while ensuring social fairness. To deliver on the commitments of the plan by August 2026, it is essential for Greece to continue the implementation of reforms and to accelerate investments by addressing risks of delays while ensuring strong administrative capacity. The Greek authorities have adopted measures to improve the implementation and boost administrative capacity, while the recovery and resilience plan contains further specific measures that are expected to help achieve that objective. Specific challenges for Greece include: (i) lengthy litigation processes to address legal claims against public procurement procedures risking delays in the planned completion date of investments beyond August 2026; (ii) slow transfer of property rights; and (iii) weak coordination, particularly evident as regards investment and reforms covering policy areas stretching beyond the remit of a single Ministry. The systematic involvement of local and regional authorities, social partners, civil society and other relevant stakeholders remains essential to ensure broad ownership for the successful implementation of the recovery and resilience plan.
(24) As part of the mid-term review of the cohesion policy funds, in accordance with Article 18 of Regulation (EU) 2021/1060, Greece is required to review each programme by March 2025, taking into account, among other things, the challenges identified in the 2024 country-specific recommendations, as well as its national energy and climate plan. This review forms the basis for the definitive allocation of the EU funding included in each programme. Greece has made progress in implementing cohesion policy and the European Pillar of Social Rights, but challenges remain. In particular, Greece continues to register slow growth in more peripheral regions and significant disparities between urban and non-urban areas. Accelerating the implementation of cohesion policy programmes coupled with the strengthening of administrative capacity at national and regional level is crucial. The priorities agreed in the programme continue to be relevant. In particular, actions improving the capacity of companies to innovate and focusing on targeted business support are both essential to boost competitiveness. As part of the green transition, investment in waste management is needed to attain recycling targets and reduce landfilling. It is essential to improve water management in a comprehensive manner, encompassing water and wastewater management, energy recovery, digitalisation, water reuse, rainwater and sustainable desalination based on renewable energy sources. The energy transition requires a greater share of renewable energy, storage solutions and increased energy efficiency, as well as addressing energy poverty. Increasing the share of clean urban transport is also key to achieving carbon neutrality. Cohesion policy programmes should continue to invest in skills, based on a comprehensive strategy, to implement the Child Guarantee, to promote quality and affordable long-term care services and social housing and to enhance the labour market activation and social integration of marginalised communities, such as Roma and people with a migrant background. In the context of the mid-term review of cohesion policy programmes, the prevention and preparedness against climate change-related risks merits further attention. Greece could also leverage the Strategic Technologies for Europe Platform initiative to support its industrial transformation, notably clean energy production and storage, green shipping and biotechnology, and the development of green and digital skills.
(25) Beyond the economic and social challenges addressed by the recovery and resilience plan and other EU funds, Greece faces several additional challenges related to economic growth, the regulatory framework and upskilling of the workforce, which, if addressed, could boost the country’s competitiveness. Albeit increasing, the employment rate is among the lowest in the EU and access to the labour market remains challenging especially for women and the youth. On education, Greece has taken steps over recent years to revise curricula, including in the context of the recovery and resilience plan, and integrate some courses on soft and digital skills into them. However, performance in basic skills remains particularly low, undermining labour market outcomes, productivity and competitiveness. This is demonstrated by the performance of 15-year-old students in mathematics, reading and science, which has been deteriorating sharply since 2012 and is amongst the lowest in the EU, according to the latest OECD Programme for International Student Assessment. The high and increasing share of underperforming students, including among those who come from more advantaged backgrounds, and the low share of top performing students point to structural challenges regarding the quality and equity of the education system. Greece also ranks last among EU member states in terms of participation in early childhood education and care, which has been found to positively affect subsequent education outcomes. The challenges undermining Greece's education outcomes can be linked to: (i) the underfunding of the education system; (ii) insufficient emphasis put on competence-based teaching and learning methods with a strong focus on entrepreneurial, soft and transversal skills; (iii) low levels of school autonomy; and (iv) lack of systematic teacher evaluation.
(26) Improving services to the public and increasing economic, fiscal and climate sustainability remain important priorities. In this context, there is scope to further improve the management of state assets, including through modernising state-owned enterprises (SOEs) and developing public real estate. In certain SOEs, some reforms were successfully implemented, which helped increase operational flexibility and commercial autonomy, strengthen their internal management capacities and improve their procurement, remuneration and hiring policies and processes. Replicating such practices would be beneficial for other SOEs to deliver increased value for society and the economy alike. The Hellenic Corporation of Assets and Participations and its subsidiaries play a central role in managing such state assets. There are reflections on how to further improve the Corporation’s efficiency and effectiveness, such as by increasing its organisational and functional capacity, and by strengthening its operational autonomy and in-house investment expertise.
(27) Slow environmental licensing due to, among other things, regulatory gaps, continues to impede investment at central and regional level. Environmental licensing is an integral part of the overall licensing process for any type of investment and the process for obtaining an environmental permit is complex and lengthy. In particular, there is still no environmental classification for renewables or conditions that determine under which circumstances industrial activities with a limited environmental impact can be licensed. The criteria for cases that require a simplified permitting process due to non-substantial changes also need to be set out. The lack of regulatory acts to help solve these issues prevents legislative improvements previously introduced to base environmental licensing on more rational and risk-based criteria from having any impact. Adopting these pending regulatory acts could make a material impact on the time and quality of environmental assessments both for new or amended/renewed permits for the concerned investments. Furthermore, despite the completion of the regulatory framework to deploy environmental assessors from the private sector, the relevant registry remains unexploited and the system has not yet been set in operation. Completing the regulatory framework by adopting the missing secondary legislation and operationalising the system of certified private environmental assessors would help strengthen Greece’s business environment, as these are expected to reduce bottlenecks in the environmental licensing process and boost investor confidence. The above-mentioned policy actions are expected to facilitate investments, which are expected to increase productivity and widen the export base, thereby reduce import dependence, improve the growth outlook and support the external rebalancing as well as the unwinding of stock imbalances.
(28) Despite the efforts made, particularly through expanding the share of renewables of its overall electricity production, Greece remains highly dependent on fossil fuels, with oil and gas making up 55% and 20%, respectively, of its energy mix in 2022. While the REPowerEU chapter added to Greece’s revised recovery and resilience plan contains several reforms and investments that are expected to accelerate Greece’s decarbonisation efforts, further actions are still warranted to reduce Greece’s fossil fuel dependency. Greece has one of the EU’s oldest vehicle fleets and the use of renewables in transportation remains very low. As a result, Greece’s transport sector remains one of the largest emitters of carbon dioxide. To accelerate the electrification of the transport sector, a more ambitious policy could set the tone. This could include expanding the categories of vehicles required under the national Climate Law to switch from combustion engines to electric motors and enforcing the withdrawal of heavily polluting vehicles.
(29) The rising frequency and severity of natural disasters affecting Greece has put a heavy strain on the civil protection system. In 2023, Greece fell victim to severe wildfires and floods, which caused human fatalities, catastrophic harm to the natural environment and extensive damage to property and infrastructure. Investments in civil protection under the recovery and resilience plan and the cohesion funds are expected to boost disaster response capacities. However, there is room for further strengthening prevention efforts. Reforms and investments to improve the effectiveness and efficiency of early warning, climate-proofing infrastructure and other risk prevention measures could complement preparedness measures and help reduce the damage caused by future natural disasters. Furthermore, the scope of investments could focus on actions that build up resilience by addressing prevention and preparedness as well as through using ecosystem-based approaches.
(30) In view of the close interlinkages between the economies of euro area Member States and of their collective contribution to the functioning of the Economic and Monetary Union, in 2024 the Council recommended that the euro area Member States take action, including through their recovery and resilience plans, to implement the recommendation on the economic policy of the euro area. For Greece, recommendations (1), i and (3) help implement the first, second, third, fourth and fifth euro area recommendations.
(31) In light of the Commission’s in-depth review and its conclusion on the existence of imbalances, recommendations under Article 6 of Regulation (EU) No 1176/2011 are reflected in recommendations (1), i and (3) below. Policies referred to in recommendation (1) help to address vulnerabilities linked to government debt, the external position and non-performing loans. Policies referred to in recommendations i and (3) support potential GDP growth, and as a result also contribute to addressing recommendation (1). Recommendations (1), i and (3) contribute to both addressing imbalances and implementing the Recommendation for the euro area, in line with recital 30.
HEREBY RECOMMENDS that Greece take action in 2024 and 2025 to:
1. Submit the medium-term fiscal-structural plan in a timely manner. In line with the requirements of the reformed Stability and Growth Pact, limit the growth in net expenditure23 in 2025 to a rate consistent with putting the general government debt on a plausibly downward trajectory over the medium term and maintaining the general government deficit below the 3% of GDP Treaty reference value. Continue improving the investment friendliness of the taxation system by reinforcing its legal certainty and continue increasing the operational autonomy of the tax authority to manage and develop its human resources. Safeguard the efficiency of public administration while ensuring that it can attract the right skills and preserving consistency with the unified wage grid, and operationalising the multi-level governance framework. Ensure that external balances continue on a steadily improving path by promoting balanced growth and supporting productive domestic investment. Pursue the ongoing reduction of the stock of non-performing loans held by banks and credit servicers, including by further improving the e-auction processes to reduce the ratio of unsuccessful auctions.
2. Strengthen administrative capacity to manage EU funds, accelerate investments and maintain momentum in the implementation of reforms. Address emerging delays to allow for continued, swift and effective implementation of the recovery and resilience plan, including the REPowerEU chapter, ensuring completion of reforms and investments by August 2026. Accelerate the implementation of cohesion policy programmes. In the context of their mid-term review, continue focusing on the agreed priorities, taking action to better address the needs in the area of prevention and preparedness against climate change-related risks, while considering the opportunities provided by the Strategic Technologies for Europe Platform initiative to improve competitiveness.
3. Boost competitiveness through tackling underachievement in basic skills, reinforcing the management of state assets and completing the regulatory framework for environmental licensing.
4. Reduce reliance on fossil fuels by accelerating the decarbonisation of the transport sector. Strengthen management of natural disasters by putting in place an effective early warning and risk prevention system.
Done at Brussels,
For the Council
The President
1OJ L 2024/1263, 30.04.2024. ELI: data.europa.eu/eli/reg/2024/1263/oj.
2OJ L 306, 23.11.2011, p. 25. ELI: data.europa.eu/eli/reg/2011/1176/oj.
3Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). ELI: data.europa.eu/eli/reg/2011/1176/oj.
4Regulation (EU) 2023/435 of the European Parliament and of the Council of 27 February 2023 amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans and amending Regulations (EU) No 1303/2013, (EU) 2021/1060 and (EU) 2021/1755, and Directive 2003/87/EC (OJ L 63, 28.2.2023, p. 1). ELI: data.europa.eu/eli/reg/2023/435/oj.
5COM(2023) 168 final.
6COM(2024) 77 final.
7COM(2023) 901 final.
8Council Regulation (EU) 2024/1264 of 29 April 2024 amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure (OJ L, 2024/1264, 30.4.2024, ELI: data.europa.eu/eli/reg/2024/1264/oj) and Council Directive (EU) 2024/1265 of 29 April 2024 amending Directive 2011/85/EU on requirements for budgetary frameworks of the Member States (OJ L, 2024/1265, 30.4.2024, ELI: data.europa.eu/eli/dir/2024/1265/oj).
9Net expenditure as defined in Article 2 of Council Regulation (EU) 2024/1263 of 29 April 2024 (OJ L 2024/1263, 30.4.2024. ELI: data.europa.eu/eli/reg/2024/1263/oj). Net expenditure means government expenditure net of (i) interest expenditure, (ii) discretionary revenue measures, (iii) expenditure on programmes of the Union fully matched by Union funds revenue, (iv) national expenditure on co-financing of programmes funded by the Union, (v) cyclical elements of unemployment benefit expenditure, and (vi) one-offs and other temporary measures.
10Council Implementing Decision of 13 July 2021 on the approval of the assessment of the recovery and resilience plan for Greece (ST10152/2021).
11Council Implementing Decision of 8 December 2023 amending the Implementing Decision of 13 July 2021 on the approval of the assessment of the recovery and resilience plan for Greece (ST15831/1/2023).
12SWD(2024) 608 final.
13SWD(2024) 102 final.
14Eurostat-Euro Indicators, 22.4.2024.
15Council Recommendation of 12 July 2022 on the 2022 National Reform Programme of Greece and delivering a Council opinion on the 2022 Stability Programme of Greece, OJ C 334, 1.9.2022, p. 60.
16Based on the Commission Spring 2024 Forecast, the medium-term potential output growth of Greece in 2023 is estimated at 4.5% in nominal terms, based on the 10-year average real potential growth rate and the 2023 GDP deflator.
17The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of the general government. It aims to assess the economic impulse stemming from fiscal policies, both those that are nationally financed and those that are financed by the EU budget. The fiscal stance is measured as the difference between (i) the medium-term potential growth and (ii) the change in primary expenditure net of discretionary revenue measures (and excluding temporary emergency measures related to the COVID-19 crisis) and including expenditure financed by non-repayable support (grants) from the Recovery and Resilience Facility and other Union funds.
18Council Recommendation of 14 July 2023 on the 2023 National Reform Programme of Greece and delivering a Council opinion on the 2023 Stability Programme of Greece, OJ C 312, 1.9.2023, p. 67.
19Net primary expenditure is defined as nationally financed expenditure net of (i) discretionary revenue measures, (ii) interest expenditure, (iii) cyclical unemployment expenditure, and (iv) and one-offs and other temporary measures.
20This takes into account 0.1% of GDP one-off measures in 2024, relating to expenditures on mitigating the impact of natural disasters (as well as 0.2% of GDP in 2023, relating also to expenditures following the natural disasters). On 14 July 2023, the Council also referred to the devastating floods that hit Italy in May 2023 and agreed that the cost of direct emergency support related to those floods would be taken into account in subsequent assessments of compliance and would, in principle, be considered as one-off and temporary measures. A similar approach has been followed with regard to the floods in Greece.
21The figure represents the level of the annual budgetary cost of those measures, including revenue and expenditure and, where applicable, net of the revenue from taxes on windfall profits of energy suppliers
22Measures that, according to Greece, remain in place until the end of 2024 are, in principle, assumed in the Commission Spring 2024 Forecast as having a budgetary impact also in 2025.
23According to Article 2 i of Regulation (EU) 2024/1263, ‘net expenditure’ means government expenditure net of interest expenditure, discretionary revenue measures, expenditure on programmes of the Union fully matched by revenue from Union funds, national expenditure on co-financing of programmes funded by the Union, cyclical elements of unemployment benefit expenditure, and one-offs and other temporary measures.
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