Council Decision of 12 July 2011 addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit (recast) (2011/734/EU)

Article 2 U.K.

1. Greece shall adopt the following measures before the end of June 2010:

(a) a law introducing a progressive tax scale for all sources of income and a horizontally unified treatment of income generated by labour and capital assets;

(b) a law repealing all exemptions and autonomous taxation provisions in the tax system, including income from special allowances paid to civil servants;

(c) the cancellation of the budgetary appropriations in the contingency reserve, with the aim of saving EUR 700 million;

(d) the abolition of most of the budgetary appropriation for the solidarity allowance (except a part for poverty relief) with the aim of saving EUR 400 million;

(e) a reduction of the highest pensions with the aim of saving EUR 500 million for a full year (EUR 350 million for 2010);

(f) a reduction of the Easter, summer and Christmas bonuses and allowances paid to civil servants with the aim of saving EUR 1 500 million for a full year (EUR 1 100 million in 2010);

(g) the abolition of the Easter, summer and Christmas bonuses paid to pensioners, though protecting those receiving low pensions, with the aim of saving EUR 1 900 million for a full year (EUR 1 500 million in 2010);

(h) an increase in the VAT rate, with a yield of at least EUR 1 800 million for a full year (EUR 800 million in 2010);

(i) an increase in excises for fuel, tobacco and alcohol, with a yield of at least EUR 1 050 million for a full year (EUR 450 million in 2010);

(j) legislation implementing the Services Directive(1);

(k) a law reforming and simplifying public administration at local level with the aim of reducing operating costs;

(l) the establishment of a task force aiming at improving the absorption rate of structural and cohesion funds;

(m) a law to simplify the start-up of new businesses;

(n) a reduction of public investment by EUR 500 million compared to plans;

(o) the channelling of the budgetary appropriations for the co-financing of structural and cohesion funds to a special central account that cannot be used for any other purpose;

(p) the establishment of an independent financial stability fund to deal with potential capital shortfalls and preserve the soundness of the financial sector, by providing equity support to banks as needed;

(q) the reinforced supervision of banks, with increased human resources, more frequent reporting and quarterly stress tests.

2. Greece shall adopt the following measures by the end of September 2010:

(a) fiscal consolidation measures amounting to at least 3,2 % of GDP (4,3 % of GDP if carryovers from measures implemented in 2010 are considered) to be included in the draft budget for 2011: a reduction in intermediate consumption of the general government by at least EUR 300 million compared to the 2010 level (on top of savings stemming from the reform of public administration and of local government referred to in this paragraph); a freeze in the indexation of pensions (with the aim of saving EUR 100 million); a temporary crisis levy on highly profitable firms (yielding at least EUR 600 million in additional revenue per year in 2011, 2012 and 2013); a presumptive taxation of professionals (with a yield of at least EUR 400 million in 2011 and increasing returns by at least EUR 100 million per year in 2012 and 2013); a broadening of the VAT base by including certain services currently exempted and by moving 30 % of goods and services from the reduced rate to the main rate (with a yield of EUR 1 billion); a phased-in green tax on CO₂ emissions (with a yield of at least EUR 300 million in 2011); the implementation by the government of the legislation reforming the public administration and a reorganisation of local government (with the aim of reducing costs by at least EUR 500 million in 2011, and additional EUR 500 million in each year 2012 and 2013); a reduction in domestically-financed investments (by at least EUR 500 million) by giving priority to investment projects financed by EU structural funds, incentives to regularise land-use violations (yielding at least EUR 1 500 million from 2011 to 2013, of which at least EUR 500 million in 2011); a collection of revenue from the licensing of gaming (at least EUR 500 million in sales of licences and EUR 200 million in annual royalties); an expansion of the base of the real estate tax by updating asset values (to yield at least EUR 400 million additional revenue); an increased taxation of wages in kind, including by taxing car lease payments (by at least EUR 150 million); an increased taxation of luxury goods (by at least EUR 100 million); a special tax on unauthorised establishments (to yield at least EUR 800 million per year) and a replacement of only 20 % of retiring employees in the public sector (central government, local governments, social security funds, public companies, State agencies and other public institutions). Measures yielding comparable budgetary savings may be considered after consultation with the Commission;

(b) a reinforcement of the role and resources of the general accounting office and the establishment of safeguards against possible political interference in data projection and accounting;

(c) a draft reform of wage legislation in the public sector, including, in particular, the creation of a single payment authority for the payment of wages, the introduction of unified principles and a timetable to establish a streamlined and unified public sector wage grid to apply to the State sector, local authorities and other agencies;

(d) legislation to improve the efficiency of the tax administration and controls;

(e) the launch of independent reviews of central administration and of existing social programmes;

(f) the publication of monthly statistics (on a cash basis) on revenue, expenditure, financing and spending arrears for the ‘available general government’ and its sub entities;

(g) an action plan to improve the collection and processing of general government data, in particular by enhancing the control mechanisms of statistical authorities and of the general accounting office and ensuring effective personal responsibility for cases of misreporting, in order to ensure the prompt supply of high quality general government data required by Regulations (EC) No 2223/96(2), (EC) No 264/2000(3), (EC) No 1221/2002(4), (EC) No 501/2004(5), (EC) No 1222/2004(6), (EC) No 1161/2005(7), (EC) No 223/2009(8) and (EC) No 479/2009(9);

(h) the regular publication of information on the financial position of public undertakings and other public entities not classified as part of the general government (including detailed income statements, balance sheets and data on employment and the wage bill);

(i) the establishment of a comprehensive central registry for public enterprises;

(j) an action plan with a timetable for concrete actions leading to the creation of a central procurement authority;

(k) an act establishing an upper limit of EUR 50 million for the annual public service obligation contribution from the general government to railway operators for the period 2011-2013 and establishing the principle that the State provides no additional explicit or implicit support to railway operators;

(l) a business plan for the Greek railways. The business plan specifies how operational activities will be made profitable, including covering depreciation costs, as from 2011, including by closing loss-making lines, by increasing tariffs and by reducing wages and staffing; provides a detailed sensitivity analysis on the implication for wage costs of various scenarios for the outcome of collective agreement and provides information on several options concerning staff; and provides for the restructuring of the holding company, including the sale of land and other assets;

(m) a law to reform the wage bargaining system in the private sector, which should provide for a reduction in pay rates for overtime work, enhanced flexibility in the management of working time and allow local territorial pacts to set wage growth below sectoral agreements;

(n) a reform of employment protection legislation to extend the probationary period for new jobs to one year, and to facilitate greater use of temporary contracts and part-time work;

(o) an amendment of the regulation of the arbitration system to allow each of the parties to resort to arbitration if they disagree with the proposal of the mediator;

(p) a reform of the arbitration procedure to ensure that it operates according to transparent objective criteria, with an independent committee of arbitrators with decision making capacity free from government influence.

3. Greece shall adopt the following measures by the end of December 2010:

(a) the final adoption of the measures referred to in paragraph 2(a);

(b) the implementation of legislation strengthening the fiscal framework. This should, in particular, include the establishment of a medium-term fiscal framework, the creation of a compulsory contingency reserve in the budget corresponding to 5 % of total appropriations of government departments, other than wages, pensions and interest, the creation of stronger expenditure monitoring mechanisms and the establishment of a budget office attached to Parliament;

(c) a significant increase in the absorption rate of structural and cohesion funds;

(d) legislation simplifying and accelerating the process of licensing undertakings, industrial activities and professions;

(e) a modification of the institutional framework of the Hellenic competition authority (HCC) with a view to increasing its independence, establishing reasonable deadlines for the investigation and issue of decisions and entrusting it with the power to reject complaints;

(f) measures aiming at removing existing restrictions on the freedom to provide services;

(g) a decree disallowing local governments to run deficits at least until 2014; reduction in transfers to local government in line with planned savings and transfers of competences;

(h) publication of interim long-term projections of pension expenditure up to 2060 as set out in the July 2010 legislative reform covering the main pension schemes (IKA, including the pension scheme for civil servants, OGA and OAEE);

(i) implementation of a uniform e-prescribing system; publication of the complete price list for the medicines in the market; application of the list of non-reimbursed medicines and of the list of over-the-counter medicines; publication of the new list of reimbursed medicines using the new reference price system; the use of the information made available through e-prescribing and scanning for the collection of rebates from pharmaceutical companies; introduction of a monitoring mechanism allowing for pharmaceutical expenditure to be assessed on a monthly basis; enforcement of co-payments for regular outpatient services of EUR 5 and extension of co-payments to unwarranted visits to emergency departments; publication of audited accounts for hospitals and health centres; and creation of an independent taskforce of health policy experts whose task is to produce, by end May 2011, a detailed report for an overall reform of the health system aimed at improving efficiency and effectiveness in the health system;

(j) further reduction in operational expenditure by at least 5 % yielding savings of at least EUR 100 million;

(k) further reduction in transfers yielding savings for the government as a whole of at least EUR 100 million. The beneficiary public entities will ensure the concomitant reduction in expenditure so that there is no accumulation of arrears;

(l) means-testing of family allowances from January 2011 on yielding savings of at least EUR 150 million (net of the respective administrative costs);

(m) reduction in the purchase of military equipment (deliveries) by at least EUR 500 million compared to the actual 2010 level;

(n) reduction in pharmaceutical expenditure by social security funds by EUR 900 million owing to an additional reduction in drug prices and new procurement procedures and by hospitals (also including expenditure in equipment) by at least EUR 350 million;

(o) changes in the management, pricing and wages of public enterprises yielding savings of at least EUR 800 million;

(p) increase in the reduced rates of VAT from 5,5 % to 6,5 % and from 11 % to 13 %, yielding at least EUR 880 million and reduction in the VAT rate applicable to medicines and hotel accommodation from 11 % to 6,5 % with a cost not exceeding EUR 250 million, net of savings for social security funds and hospitals that result from the lower VAT rate on medicines;

(q) intensification of the fight against smuggling on fuel (at least EUR 190 million);

(r) increase in court trial fees (at least EUR 100 million);

(s) implementation of an action plan to accelerate the collection of tax arrears (at least EUR 200 million);

(t) speeding up tax penalty collection (at least EUR 400 million);

(u) collection of revenue that results from the new framework of tax disputes and trials (at least EUR 300 million);

(v) revenue from the renewal of telecommunication licences that are about to expire (at least EUR 350 million);

(w) revenue from concessions (at least EUR 250 million);

(x) a restructuring plan for the Athens transportation network (OASA). The objective of the plan shall be to reduce operational losses of the company and make it economically viable. The plan shall include cuts in operational expenditure of the company and tariff increases. The required actions shall be implemented by March 2011;

(y) an act that limits recruitment in the whole general government to a ratio of not more than one recruitment for five retirements or dismissals, without sectoral exceptions, and including staff transferred from public enterprises under restructuring to government entities;

(z) acts to strengthen labour market institution and establish that: firm-level agreements prevail over those under sector and occupational agreements without undue restrictions; firm-level collective agreements are not restricted by requirements regarding the minimum size of firms; the extension of sector and occupational agreements to parties not represented in negotiations is eliminated; the probationary period for new jobs is extended; temporal limits in the use of temporary working agencies are eliminated; impediments for greater use of fixed-term contracts are removed; the provision that establishes higher hourly remuneration to part-time workers is eliminated; and a more flexible working-time management including part-time shift work is allowed for.

4. Greece shall adopt the following measures by the end of March 2011:

(a) publication of comprehensive long-term projections of pension expenditure up to 2060 as set out in the July 2010 legislative reform. The projections shall encompass the supplementary (auxiliary) schemes, based on a comprehensive set of data collected and elaborated by the National Actuarial Authority. The projections shall be peer-reviewed and validated by the Economic Policy Committee;

(b) the government clears payment of arrears accumulated in 2010 and reduces those of previous years;

(c) an anti-evasion plan which includes quantitative performance indicators to hold revenue administration accountable; legislation to streamline the administrative tax dispute and judicial appeal processes and the required acts and procedures to better address misconduct, corruption and poor performance of tax officials, including prosecution in cases of breach of duty; and publication of monthly reports of the five anti-evasion taskforces, including a set of progress indicators;

(d) a detailed action plan with a timeline to complete and implement the simplified remuneration system; preparation of a medium-term human resource plan for the period up to 2013 in line with the rule of one recruitment for five exits, also specifying plans to reallocate qualified staff to priority areas; and publication of monthly data on staff movements (entries, exits, transfers among entities) of the several government departments;

(e) implementation of the comprehensive reform of the healthcare system started in 2010 with the objective to keep public health expenditure at or below 6 % of GDP; measures yielding savings on pharmaceuticals of at least EUR 2 billion relative to the 2010 level, of which at least EUR 1 billion in 2011; improvement in the accounting and billing systems of hospitals, through: finalising the introduction of double-entry accrual accounting systems in all hospitals; the use of the uniform coding system and a common registry for medical supplies; the calculation of stocks and flows of medical supplies in all the hospitals using the uniform coding system for medical supplies; and the timely invoicing of treatment costs (no later than two months) to Greek social security funds, other Member States and private health insurers; and ensure that at least 50 % of the volume of medicines used by public hospitals by the end of 2011 is composed of generics and off-patent medicines by making it compulsory for all public hospitals to procure pharmaceutical products by active substance;

(f) with the aim of fighting waste and mismanagement in State-owned companies and yield fiscal savings of at least EUR 800 million, an act that: cuts primary remuneration in public enterprises by at least 10 % at company level; limits secondary remuneration to 10 % of primary remuneration; establishes a ceiling of EUR 4 000 per month for gross earnings (12 payments per year); increases urban transport tariffs by at least 30 %; actions that reduce operational expenditure in public companies between 15 % to 25 %; and an act for the restructuring of the OASA;

(g) a new regulatory framework to facilitate the conclusion of concession agreements for regional airports;

(h) establishment of an independent taskforce of education policy aiming at increasing the efficiency of the public education system (primary, secondary and higher education) and reach a more efficient use of resources;

(i) adoption of a law to establish the Single Public Procurement Authority in line with the Action Plan; and development of an e-procurement IT platform and setting up of intermediate milestones in line with the Action Plan, including: testing a pilot version, availability of all functionalities for all contracts and phasing-in of the mandatory use of e-procurement system for supplies, services and works contracts.

5. Greece shall adopt the following measures by the end of July 2011:

(a) introduces to Parliament a streamlined and unified public sector wage grid to apply to the State sector, local authorities and other agencies, phased in over three years, with remunerations reflecting productivity and tasks;

(b) a medium-term staffing plan for the period up to 2015 in line with the rule of one recruitment for five exits (one for 10 in 2011). The plan shall include tighter rules for temporary staff, cancellation of vacant job post and reallocation of qualified staff to priority areas and take into account the extension of working hours in the public sector;

(c) a detailed action plan with a timeline to complete and implement the simplified remuneration system, in line with private sector wages, achieving a reduction in the total wage bill. This plan shall be based on the results of the report published by the Ministry of Finance and the single payment authority. The legislation for a simplified remuneration system shall be phased in over three years. Wages of State-owned enterprises employees shall be in line with the new wage grid for the public sector;

(d) a reinforcement of the labour inspectorate, which shall be fully resourced with qualified staff and have quantitative targets on the number of controls to be carried out;

(e) an act revising the main parameters of the pension system in order to limit the increase in public sector spending on pensions over the period 2009-2060 to less than 2,5 % of GDP, if long-term projections show that the projected increase in public pension expenditure would exceed this amount. The National Actuarial Authority (NAA) shall continue the submission of long-term projections of pension expenditure up to 2060 under the adopted reform. The projections shall encompass the main supplementary (auxiliary) schemes (ETEAM, TEADY, MTPY), based on comprehensive data collected and elaborated by the NAA;

(f) a revision of the list of heavy and arduous professions to reduce its coverage to no more than 10 % of employment; the new list of difficult and hazardous occupations shall apply with effect from 1 August 2011 to all current and future employees;

(g) legislation to establish the Single Public Procurement Authority (SPPA) with the mandate, objectives, competences, powers and schedule for entry into force, in line with the Action Plan;

(h) additional measures to promote the use of generic medicines through: compulsory e-prescription by active substance and of less expensive generics when available; associating a lower cost-sharing rate to generic medicines that have a significantly lower price than the reference price (lower than 60 % of the reference price) on the basis of the experience of other EU Member States; setting the maximum price of generics to 60 % of the branded medicine with similar active substance;

(i) publication of an inventory of State-owned assets, including stakes in listed and non-listed enterprises and commercially viable real estate and land; a General Secretariat of Real Estate Development shall be established with the aims of improving management of real estate assets, clearing them of encumbrances and preparing them for privatisation;

(j) the medium-term fiscal strategy (hereinafter ‘MTFS’) through 2015 as described in Annex I to this Decision and respective implementing bills. The MTFS shall elaborate on the permanent fiscal consolidation measures which ensure that the deficit ceiling for 2011-15 as established by the Council Decision are not exceeded, and that the debt-to-GDP ratio is put on a sustainable downward path;

(k) privatisation of assets worth at least EUR 390 million; adoption of a privatisation programme with the aim of collecting at least EUR 15 billion by end-2012, EUR 22 billion by end-2013, EUR 35 billion by end-2014 and at least EUR 50 billion by end-2015; proceeds from the privatisation of assets (real estate, concessions and financial assets) shall be used to redeem debt and will not reduce the fiscal consolidation efforts to comply with the deficit ceilings in Article 1(2);

(l) establishment of a privatisation fund with sound governance to accelerate the privatisation process and guarantee its irreversibility and professional management. The Fund obtains the legal ownership of the assets to privatise. The Fund cannot pledge its assets in a way that would frustrate its purpose, i.e. privatisation of assets;

(m) tables legislation to close, merge and downsize non-viable entities;

(n) measures to strengthen expenditure control: a decision specifying the qualification and responsibilities of accounting officers to be appointed in all line ministries with the responsibility to ensure sound financial controls;

(o) new criteria and terms for the conclusions of contracts by social security funds with all healthcare providers, with the aim of achieving the targeted reduction in spending; initiates joint purchase of medical services and goods to achieve substantial expenditure reduction of at least 25 % compared to 2010 through price-volume agreements;

(p) publication of binding prescription guidelines for physicians on the basis of international prescription guidelines to ensure a cost-effective use of medicines; publication and continuous update of the positive list of reimbursed medicines;

(q) preparation of a plan for the reorganisation and restructuring of hospitals for the short and medium term with a view to reducing existing inefficiencies, utilising economies of scale and scope, and improving quality of care for patients. The aim is to reduce hospital costs by at least 10 % in 2011 and by an additional 5 % in 2012 in addition to the previous year.

6. Greece shall adopt the following measures by the end of September 2011:

(a) a budget for 2012 in line with the MTFS and the objective of respecting the deficit ceilings established in Article 1(2);

(b) a mitigation of tax obstacles to mergers and acquisitions;

(c) a simplification of the custom clearing process for exports and imports;

(d) a further increase in the absorption rates of structural and cohesion funds;

(e) the full implementation of the Better Regulation agenda with a view to reducing administrative burdens by 20 % (compared with 2008);

(f) legislation to close, merge and downsize large non-viable entities;

(g) measures enabling a reduction in procurement and third party costs in State-owned enterprises, updating tariffs, and creating new business lines, and reduce personnel costs by completing and implementing an employment retrenchment plan. Excess staff that cannot be removed by the hiring rule of one recruitment for five exits (one for 10 in 2011) shall be dealt with through non-voluntary redundancies and furlough (labour reserve). This rule is without sectoral exceptions; it shall also apply to staff transferred from public enterprises to other government entities after screening of professional qualifications by ASEP under its regular evaluation criteria. Staff in the labour reserve shall be paid at 60 % of their wage for not more than 12 months, after which they shall be dismissed;

(h) a legal framework enabling fast assignment of land use and accelerates State land ownership registration;

(i) an act enabling the promotion of investment in the tourism sector (tourist resorts and secondary tourist housing), with a view to, together with the bill on land use, allow for accelerating the privatisation process of land plots managed by the Greek Tourist Real Estate Agency (ETA);

(j) finalisation of the functional review of existing social programmes; assessment by the government of the results of the second and final phase of the independent functional review of central administration; legislation and measures to implement the operational recommendations of the first phase of the functional review of public administration at central level and of the full review of existing social programmes;

(k) an in-depth revision of the functioning of secondary/supplementary public pension funds, including welfare funds and lump-sum schemes. The aim of the revision is to stabilise pension expenditure, guarantee the budgetary neutrality of these schemes, and ensure medium- and long-term sustainability of the system. The revision shall achieve: a further reduction in the number of existing funds; the elimination of imbalances in those funds with deficits; the stabilisation of the current spending at sustainable level, through appropriate adjustments to be made from 1 January 2012; the long-term sustainability of secondary schemes through a strict link between contributions and benefits;

(l) identification of the schemes for which lump sums paid on retirement are out of line with contributions paid with the aim of adjusting payment by the end of December 2011;

(m) further measures to extend in a cost-effective way the e-prescribing of medicines, diagnostics and doctors’ referrals to all social security funds, health centres and hospitals. In compliance with EU procurement rules, the government shall conduct the necessary tendering procedures to implement a comprehensive and uniform healthcare information system (e-health system);

(n) further measures to ensure that at least 30 % of the volume of medicines used by public hospitals is composed of generics with a price below that of similar branded products and off-patent medicines, in particular by making it compulsory that all public hospitals procure pharmaceutical products by active substance;

(o) decisions to provide for the institution and establishment of positions for the SPPA’s (Single Public Procurement Authority) personnel, as well as for the organisation of human resources and services of the Authority in accordance with the provisions of the law on the SPPA; to appoint the members of the SPPA;

(p) Publication of monthly data on staff movements (entries, exits, transfers among entities) of the several government departments.

[F1 6a. Greece shall adopt and implement the following measures without delay:

(a) a reduction in tax exemptions, in particular the tax-free personal income thresholds, with the aim of increasing revenue by at least EUR 2 831 million in 2012;

(b) a permanent levy on real estate, collected through electricity invoices, with the aim of collecting at least EUR 1 667 million in 2011, and EUR 1 750 million per annum from 2012 onwards;

(c) an immediate implementation of the revised wage grid for civil servants, thereby contributing to a reduction in expenditure of at least EUR 101 million in 2011, and with a carry-over of at least EUR 552 million for 2012, additional to savings provided in the MTFS through 2015. This reform shall cover all general government employees, except those covered by special wage regimes. These net savings take into account the impact of this measure on income tax and social contributions, as well as bonuses to be paid to specific employee categories;

(d) a cut in main and supplementary pensions, as well as in lump sums paid on retirement, with the aim of saving at least EUR 219 million in 2011 with a carry-over of EUR 446 million in 2012, additional to savings provided for in the MTFS;

(e) capping at 5 % of its deposits spending by the Green Fund, with the aim of saving EUR 360 million in 2012;

(f) ministerial decisions or circulars concerning the measures on excise on natural gas, heating oil and vehicle taxes provided for in the MTFS;

(g) ministerial decisions to uniformly regulate health benefits provided by the several social security funds;

(h) legislation for the collection of the solidarity surcharge through withholding tax;

(i) ministerial decisions that initiate the closure, merging or substantial downsizing of entities. This affects KED, ETA, ODDY, National Youth Institute, EOMEX, IGME, OSK, DEPANOM, THEMIS, ETHYAGE and ERT, and 35 other smaller entities;

(j) a ministerial Decision specifying the disability criteria on the attribution of disability pensions, consistent with achieving the MTFS saving objectives;

(k) a law to freeze the indexation of main and supplementary pensions through 2015;

(l) finalisation of the positive list for pharmaceuticals that establish prices charged to social security funds;

(m) transferring to the privatisation fund ‘ Hellenic Republic Asset Development Fund ’ (HRADF) the following assets: Alpha Bank (0,619 % of shares); National Bank of Greece (1,234 % of shares); Piraeus Bank (1,308 % of shares); Piraeus Port Authority (23,1 % of shares); Thessaloniki Port Authority (23,3 % of shares); Elefsina, Lavrio, Igoumenitsa, Alexandroupolis, Volos, Kavala, Corfu, Patras, Rafina, Heraklion port authorities (100 %); Athens Water and Sewerage Company (27,3 %); Thessaloniki Water and Sewerage Company (40 %); Regional state airports (transfer of concession rights); off-shore natural gas storage facility ‘ South Kavala ’ (transfer of rights of current and future concessions); Hellenic motorways (transfer of economic rights of current and future concessions); Egnatia odos (100 %); Hellenic Post (90 %); OPAP, SA (29 %); four state buildings;

(n) appointing the legal, technical and financial advisors for at least 14 of the privatisations that are planned until end-2012;

(o) based on a dialogue with social partners and taking into account the objective of creating and preserving jobs and improving firms’ competitiveness, adopting further measures to allow the adaptation of wages to economic conditions. In particular: the extension of occupational and sectoral collective agreements and the so-called favourability principle shall be suspended during the period of application of the MTFS in such a manner that firm-level agreements take precedence over sectoral and occupational agreements; firm-level collective contracts may be signed either by trade unions or, when there is no firm-level union, by work councils or other employees’ representations, irrespective of the firms’ size.]

7. Greece shall adopt the following measures by the end of December 2011:

[F2 (a) a budget for 2012 in line with the MTFS targets and the deficit ceilings set out in this Decision; update and publish information on the several measures provided for in the MTFS; and the tax and expenditure legislative acts that are necessary to implement the budget at the same time of the budget;]

(b) a reinforcement of the managerial capacity of all managing authorities and intermediate bodies of operational programmes under the framework of the national strategy reference framework 2007-2013 and their ISO 9001:2008 (quality management) certification;

(c) a hospital case-based costing system to be used for budgeting purposes from 2013 on;

[F2 (d) assessment of the results of the first phase of the independent functional review of central administration which will result in an action plan for the implementation of operational policy recommendations. These recommendations shall determine how to achieve a more streamlined and effective public service, to define clear responsibilities and command lines of ministerial departments, eliminating overlapping competences, and to improve inter- and intra-ministerial mobility; finalisation of the ongoing functional review of existing social programmes;]

(e) starting of operations of the Single Public Procurement Authority with the necessary resources to fulfil its mandate, objectives, competences and powers as defined in the Action Plan;

(f) review of fees for medical services outsourced to private providers with the aim of reducing related costs by at least 15 % in 2011, and by an additional 15 % in 2012;

(g) measures to simplify the tax system, broaden bases and reduce tax rates in a fiscally-neutral manner, in relation to the personal income tax, corporate income tax and VAT;

(h) further measures to ensure that at least 50 % of the volume of medicines used by public hospitals is composed of generics with a price below that of similar branded products and off-patent medicines, in particular by making compulsory that all public hospitals procure pharmaceutical products by active substance[F2 ;]

[F1 (i) appointment of advisors for the other privatisation transactions planned for 2012 and not included in point (n) of paragraph 6a; acceleration of state land ownership registration and secondary legislation on tourism housing and on land use; establishment and operation of a new General Secretariat of Public Property working together with the newly merged KED/ETA (real estate management and tourism real estate institutions, respectively), which are to prepare real estate for privatisation of commercial and tradable assets. The aim is to improve the management of real estate assets, clear them of encumbrances and prepare them for privatisation; creation of six real estate portfolios by the HRDAF; adoption of the legal act on the transfer to the State of the mobile and immobile assets of entities that are closed;

(j) the reform of revenue administration, through: the activation of a large-taxpayers unit; the removal of barriers to effective tax administration by implementing the key reforms of the new tax law, including replacing managers who do not meet performance targets, reassessing tax auditors’ qualifications; the operation of the newly created fast-track administrative dispute resolution body to deal rapidly with large dispute cases (i.e. within 90 days); the centralisation of the functions of, and the merging of, at least 31 tax offices;

(k) to strengthen expenditure control: appointment of permanent financial accounting officers in all Ministries;

(l) publication of a medium-term staffing plan for the period up to 2015 in line with the rule of 1 recruitment for 5 exits which applies to general government as a whole without sectoral exceptions; transfer of about 15 000 staff currently employed by various government entities to the labour reserve, and placement of about 15 000 in pre-retirement. Staff in the labour reserve, and in pre-retirement, are to be paid at 60 % of their basic wage (excluding overtime and other extra payments) for not more than 12 months. This period of 12 months may be extended up to 24 months for staff close to retirement. Payments to staff while in the labour reserve are part of their severance pay;

(m) revision of the list of heavy and arduous professions and reduction in its coverage to less than 10 % of employment. An in-depth revision of the functioning of secondary/supplementary public pension funds, including welfare funds and lump-sum schemes, with the aim of stabilising pension expenditure, guaranteeing the budgetary neutrality of these schemes, and ensuring medium- and long-term sustainability of the system. The revision shall achieve: a further reduction in the number of existing funds; the elimination of imbalances in those funds with deficits; the stabilisation of the current spending at sustainable level, through appropriate adjustments to be made from 1 January 2012 ; and the long-term sustainability of secondary schemes through a strict link between contributions and benefits.]

[F3 7a. Greece shall adopt the following measures without delay:

(a) a reduction in pharmaceutical expenditure by at least EUR 1 076 million in 2012;

(b) a reduction in overtime pay for doctors in hospitals by at least EUR 50 million in 2012;

(c) a reduction in the procurement of military material by EUR 300 million (cash and deliveries) in 2012;

(d) a reduction by 10 % in the remuneration of elected and related staff at local level in 2012 and a reduction in the number of deputy mayors and associated staff in 2013 with the aim of saving at least EUR 9 million in 2012 and an additional EUR 28 million in 2013;

(e) a reduction in the central government’s operational expenditure, and election-related spending, by at least EUR 370 million (compared to the 2012 budget), of which at least EUR 100 million in military-related operational expenditure, and at least EUR 70 million in electoral spending;

(f) a reduction in operational expenditure by local government with the aim of saving at least EUR 50 million in 2012;

(g) cuts in subsidies to residents in remote areas, and cuts in grants to several entities supervised by the ministries, with the aim of reducing expenditure in 2012 by at least EUR 190 million;

(h) a reduction in the public investment budget (PIB) by EUR 400 million in 2012. This reduction in the PIB budget will not have any impact on projects that are co-financed by structural funds (including TEN-T projects);

(i) changes in supplementary pension funds and pension funds with high average pensions or which receive high subsidies from the budget, and cuts in other high pensions, with the aim of saving at least EUR 450 million in 2012 (net after taking into account the impact on taxes and social contributions);

(j) cuts in family allowances for high-income households, with the aim of saving EUR 43 million in 2012;

(k) ministerial decisions to complete the full implementation of the new wage grid in all the pertinent entities, and legislation on the modalities for the recovery of wages paid in excess as from November 2011;

(l) the amendment of Articles 3 and 21 of Law 4038/2012 so that the conditions to extend the instalment plans for overdue taxes and social contributions are revised: instalment plans will only apply to existing overdue amounts below EUR 10 000 for individuals and EUR 75 000 for corporations. Tax payers applying for an extended instalment plan should disclose all their financial statements to the tax authorities;

(m) a framework law, with an in-depth revision of the functioning of secondary/supplementary public pension funds aimed at stabilising pension expenditure, guaranteeing the budgetary neutrality of these schemes, and ensuring medium- and long-term sustainability of the system.]

8. Greece shall adopt the following measures by the end of March 2012:

[F4 (a) a reform of the secondary/supplementary pension schemes designed in consultation with the European Commission, the European Central Bank and the International Monetary Fund, and validated by the Economic Policy Committee as regards its estimated impact on long-term sustainability. The parameters of the new secondary notional defined-contribution system ensure long-term actuarial balance, as assessed by the National Actuarial Authority;

(b) an adjustment of pharmacies’ profit margins and the introduction of regressive profit margins with the aim of reducing the overall profit margin to below 15 %.]

[F1 (c) undertaking of the second phase of the existing functional review of social programmes which include a more detailed review of specific programmes, aiming at reducing excessive fragmentation, generating savings and creating efficiencies;

(d) coverage of all medical acts by e-prescribing (medicines, referrals, diagnostics, surgery) in both national health system (NHS) facilities and providers contracted by EOPYY and the social security funds; production of detailed monthly auditing reports by NHS facilities and by providers; association of a lower cost-sharing rate to generic medicines that have a significantly lower price than the reference price (lower than 60 % of the reference price) on the basis of the experience of other Member States; publication by the social security funds of an annual report on medicine prescription; adoption by all hospitals of commitment registers;

(e) move towards a new centralised procurement of pharmaceuticals and medical goods for the NHS through the Supplies Coordination Committee with the support of the Specifications Committee, using the uniform coding system for medical supplies and pharmaceuticals;

(f) in order to strengthen expenditure control, adoption of legislation streamlining the procedure for submission and approval of supplementary budgets; continuation of the process of establishing commitment registries, which shall cover the whole general government [F4 ;] ]

[F3 (g) the finalisation of the on-going functional review on social programmes;

(h) appointment of the members of the Single Public Procurement Authority (SPPA);

(i) the identification of the schemes for which lump sums paid on retirement are out of line with contributions paid, and adjustment of the payments;

(j) a reduction of the pharmaceutical wholesalers’ profit margins to converge to a 5 % upper limit;

(k) the necessary tendering procedures to implement a comprehensive and uniform health care information system (e-health system);

(l) the appointment of all legal, technical and financial advisors for the privatisations planned for 2012 and 2013.]

[F1 9. Greece shall adopt the following measures by the end of June 2012:

[F4 (a) the finalisation of the review of public spending programmes. This review shall draw on external technical assistance and focus on pensions and social transfers (in a manner that will preserve basic social protection), defence spending without prejudice to the defence capability of the country and restructuring of central and local administrations; a further rationalisation of pharmaceutical spending and operational spending of hospitals, and of welfare cash benefits, will also be specified;

(b) the adoption of a tax reform simplifying the tax system, eliminating exemptions and preferential regimes, including broadening bases, thus allowing a gradual reduction in tax rates as revenue performance improves. This reform relates to the personal income tax, corporate income tax and VAT, property taxes, as well as social contributions, and will maintain the relative tax burden from indirect taxes;

(c) the revision of the legal values of real estate to better align them with market prices;

(d) the discontinuation of payments in cash and cheque in tax offices which should be replaced by bank transfers, so that staff time is freed-up to focus on more value added work (audit, collection enforcement and taxpayer advice);

(e) a reduction by 12 %, on average, in the ‘ special wages ’ of the public sector, to which the new wage grid does not apply. This will apply as from 1 July 2012 and deliver savings of at least EUR 205 million (net after taking into account the impact on taxes and social contributions);

(f) decisions to provide for the Implementing Regulation of the SPPA; the SPPA starts its operations to fulfil its mandate, objectives, competences and powers as defined in the law on the SPPA and the Action Plan agreed with the European Commission in November 2010.] ]

[F3 10. Greece shall adopt the following measures by the end of September 2012:

(a) a draft budget for 2013 in line with the primary surplus target established in Article 1(2);

(b) rules and procedures for centralised purchasing/framework contracts for frequently purchased supplies or services at central government level with the obligation for ministries and central government bodies to source via these contracts and optional use for regional entities.]

[F5 10a. Greece shall have adopted the following measures by 4 December 2012 :

(a) the budget for 2013 and the MTFS through 2016, as well as the measures as described in Annex IA to this Decision and the respective implementing legislation. The MTFS shall elaborate on the permanent fiscal consolidation measures which ensure that the deficit ceilings for 2012-2016, as established by this Decision, are not exceeded and that the debt-to-GDP ratio is put on a sustainable downward path;

(b) the presentation of an updated Privatisation Plan to the Greek Parliament and the publication of a semi-annual update of the Asset Development Plan;

(c) the transfer to the portfolio of privatisation assets of the HRADF of the full and direct ownership (shares or concession rights) of Egnatia Motorway and the regional ports of Elefsina, Lavrio, Igoumenitsa, Alexandroupolis, Volos, Kavala, Corfu, Patras, Heraklion, and Rafina;

(d) ensuring the line Ministries and other relevant entities provide the General Secretariat for Public Property with full access to the inventory of all real estate assets owned by the State;

(e) the amendment and/or the repeal of statutory provisions of State-owned enterprises (PPC, OLP and OLTH port authorities, HELPE, EYATH and EYDAP, ports, etc.) that diverge from private company law regarding any restrictions on voting rights of private shareholders;

(f) legislation to define the role and qualifications of the Secretary-General of the Tax Administration and for the Minister of Finance to delegate decision-making powers to the Secretary-General of the Tax Administration;

(g) the deployment of experienced tax auditors towards activities serving the immediate revenue imperatives, by strengthening and making fully operational key enforcement areas such as the large taxpayer unit by transferring 100 auditors from other duties, and by establishing a single functional unit for high-wealth individuals and high-income self-employed persons and staffing this unit with 50 experienced tax auditors directly accountable to the Secretary-General of the Tax Administration;

(h) a Council of Ministers act (replacing the Council of Ministers act adopted on 29 October 2012 ), aiming at strengthening budget execution and enhancing sound fiscal management, and including, beyond the provisions in the original Council of Ministers act, additional provisions: (i) establishing that Memoranda of Cooperation are signed by end-December of each year between the Ministry of Finance and the other Ministries or between the Ministries and managers of the supervised entities (thus covering the entire general government); (ii) strengthening the current balanced budget constraints for local governments in order for them to be more effective, including corrective and sanctioning mechanisms; (iii) strengthening the current monitoring system for State-owned enterprises (SOEs) and introducing an enforcement mechanism in case of deviations from the specific targets identified for each SOE; and (iv) setting the framework for defining specific targets for the coverage of operational commitment registers for local governments and SOEs to be established by December of each year. That Council of Ministers act shall also include mechanisms for correcting transfers from central government to address deviations from targets within the year and possibly in the following years, while ensuring that arrears are not increasing; it shall make explicit that the proceeds from the privatisation of government assets are paid directly into a segregated account to monitor cash flows, avoid diversion of official financing and secure a timely debt servicing; and it shall set automatic cuts in expenditure to be applied as a rule when targets are missed, while ensuring that arrears do not increase;

(i) a set of measures to improve the current financial situation of the National Organisation for Healthcare Provision (EOPYY) and ensure that budgetary execution is closer to a balanced budget in 2012 and 2013, including: (i) streamlining the benefit package; (ii) increasing cost-sharing for healthcare delivered by private providers; (iii) negotiating price-volume agreements and revising case-mix agreements with private providers; (iv) revising the fees for, and number of, diagnostic and physiotherapy services contracted by EOPYY to private providers with the aim of reducing related costs by at least EUR 80 million in 2013; (v) introducing a reference price system for the reimbursement of medical devices; and (vi) progressively increasing the contributions paid by OGA members to the average of those paid by other members of EOPYY;

(j) the following measures relating to the reimbursement of medicines: (i) legislation to control pharmaceutical spending that activates contingency measures (including e.g. an across-the-board cut in prices), if for any reason the existing automatic claw-back mechanism is not sufficient to achieve the target; such measures shall produce an equivalent amount of savings; (ii) a ministerial decree, setting the new claw-back threshold for 2013 (EUR 2,44 billion for outpatients); (iii) updating the price list and the positive list of reimbursable medicines, particularly by establishing the reimbursement of only cost effective packages for chronic diseases, by moving medicines from the positive to the negative and over-the-counter lists and by introducing the reference price system developed by the National Organisation for Medicines (EOF). These lists must be updated at least twice a year in line with Council Directive 89/105/EEC; and (iv) the substitution of prescribed medicines by the lowest–priced product of the same active substance in the reference category by pharmacies (compulsory ‘ generic substitution ’ ).]

[F6 11. Greece shall adopt the following measures by the end of December 2012:

(a) a tax reform of personal income tax and corporate income tax that aims at simplifying the tax system, broadening the tax base and eliminating exemptions and preferential regimes;

(b) the necessary primary and secondary legislation to ensure the swift implementation of the Privatisation Plan;

(c) the establishment of a regulatory framework for water companies;

(d) measures to improve the tax administration, introducing performance assessments, improving the use of risk assessment techniques, and establishing and reinforcing specialist debt management units;

(e) the preparation and publication of a plan for the clearance of arrears owed to suppliers by public entities and of tax refunds;

(f) the finalisation of the implementation of the reform of the functioning of secondary/supplementary public pension funds; and the unification of all existing funds in the public sector;

(g) legislation to extend the application of the 5 % rebate on pharmaceutical companies (which exists for hospital-priced medicines) to all products sold in EOPYY pharmacies;

(h) an increase of the share of generic medicines to 35 % of the overall volume of medicines sold by pharmacies;

(i) the assignment of internal controllers to all hospitals and the adoption by all hospitals of commitment registers.]

[F5 12. Greece shall adopt the following measures by the end of March 2013:

(a) issue a Ministerial Decree for the adjustment of end-user prices for low-voltage customers;

(b) update the MTFS, including by setting binding 3-year expenditure ceilings for government subsectors;

(c) adopt staffing plans for line Ministries;

(d) establish a significantly more autonomous tax administration and specify the degree of autonomy, governance framework, accountability, legal powers of the head of the tax administration and the initial staffing of the organisation;

(e) issue and make public a new fully-fledged anti-corruption plan for the civil service, including special provisions for the tax and customs administration;

(f) make fully operational a standard procedure for revision of legal values of real estate to better align them with market prices under the responsibility of the Directorate of Capital Taxation;

(g) transfer 40 new real estate assets (identified as ‘ real estate assets lots 2 and 3 ’ in the Privatisation Plan) to the HRADF.

13. Greece shall adopt the following measures by the end of June 2013:

(a) achieve the target of making 2 000 tax auditors fully operational;

(b) adopt a new Tax Procedures Code;

(c) ensure the e-procurement platform is ready for use by all central purchasing bodies.

14. Greece shall adopt, by the end of September 2013, the necessary legislation with a view to introducing a structural balanced budget rule with an automatic correction mechanism.]

Textual Amendments

F1 Inserted by Council Decision of 8 November 2011 amending Decision 2011/734/EU addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit (2011/791/EU).

F2 Substituted by Council Decision of 8 November 2011 amending Decision 2011/734/EU addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit (2011/791/EU).

F3 Inserted by Council Decision of 13 March 2012 amending Decision 2011/734/EU addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit (2012/211/EU).

F4 Substituted by Council Decision of 13 March 2012 amending Decision 2011/734/EU addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit (2012/211/EU).

F5 Inserted by Council Decision of 4 December 2012 amending Decision 2011/734/EU addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit (2013/6/EU).

F6 Substituted by Council Decision of 4 December 2012 amending Decision 2011/734/EU addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit (2013/6/EU).

(1)

Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market (OJ L 376, 27.12.2006, p. 36).

(2)

Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community (OJ L 310, 30.11.1996, p. 1).

(3)

Commission Regulation (EC) No 264/2000 of 3 February 2000 on the implementation of Council Regulation (EC) No 2223/96 with respect to short-term public finance statistics (OJ L 29, 4.2.2000, p. 4).

(4)

Regulation (EC) No 1221/2002 of the European Parliament and of the Council of 10 June 2002 on quarterly non-financial accounts for general government (OJ L 179, 9.7.2002, p. 1).

(5)

Regulation (EC) No 501/2004 of the European Parliament and of the Council of 10 March 2004 on quarterly financial accounts for general government (OJ L 81, 19.3.2004, p. 1).

(6)

Council Regulation (EC) No 1222/2004 of 28 June 2004 concerning the compilation and transmission of data on the quarterly government debt (OJ L 233, 2.7.2004, p. 1).

(7)

Regulation (EC) No 1161/2005 of the European Parliament and of the Council of 6 July 2005 on the compilation of quarterly non-financial accounts by institutional sector (OJ L 191, 22.7.2005, p. 22).

(8)

Regulation (EC) No 223/2009 of the European Parliament and of the Council of 11 March 2009 on European statistics and repealing Regulation (EC, Euratom) No 1101/2008 of the European Parliament and of the Council on the transmission of data subject to statistical confidentiality to the Statistical Office of the European Communities, Council Regulation (EC) No 322/97 on Community Statistics, and Council Decision 89/382/EEC, Euratom establishing a Committee on the Statistical Programmes of the European Communities (OJ L 87, 31.3.2009, p. 164).

(9)

Council Regulation (EC) No 479/2009 of 25 May 2009 on the application of the Protocol on the excessive deficit procedure annexed to the Treaty establishing the European Community (OJ L 145, 10.6.2009, p. 1).