Uitvoeringsbesluit 2015/1411 - Approval of the macroeconomic adjustment programme of Greece - Hoofdinhoud

EN

Publicatieblad van de Europese Unie

L 219/12

Article 136(1) of the Treaty on the Functioning of the European Union (‘TFEU’) foresees the possibility of adopting measures specific to Member States whose currency is the euro in order to ensure the proper functioning of economic and monetary union.

Since 2010, Greece has been granted financial assistance by the Member States and the International Monetary Fund (‘IMF’). A first Economic Adjustment Programme for Greece was been agreed on 2 May 2010: the euro area Member States agreed to provide bilateral loans, pooled by the European Commission, for a total amount of EUR 80 000 million to be disbursed over the period May 2010 through June 2013 and the IMF committing additional EUR 30 000 million under a stand-by arrangement. The Second Economic Adjustment Programme for Greece was approved on 14 March 2012. The euro area Member States and the IMF committed the undisbursed amounts of the first programme plus an additional EUR 130 000 million for the years 2012-2014. Whereas the financing of the first programme was based on bilateral loans, it was agreed that — on the side of euro area Member States — the second programme would be financed by the European Financial Stability Facility (‘EFSF’), which had been fully operational since August 2010. In total, the second programme foresaw financial assistance of EUR 164 500 million until the end of 2014 (the period was later extended until the end of June 2015). Of that sum, the euro area commitment amounts to EUR 144 700 million to be provided via the EFSF, while the IMF contributed EUR 19 800 million, as part of a four-year EUR 28 000 million arrangement under the Extended Fund Facility for Greece that the IMF approved in March 2012.

On 8 July 2015, in view of the ongoing severe economic and financial disturbance, the Greek authorities requested financial assistance from the European Stability Mechanism (‘ESM’) in order to ensure a properly-functioning Greek banking system, to meet Greece's debt obligations, to support the return of Greece's economy to sustainable growth and safeguard financial stability of the euro area and of its Member States.

Pursuant to Article 13(1) of the ESM Treaty, and to form the basis for a decision of the ESM Board of Governors, in line with Article 13(2) thereof, whether to grant, in principle, stability support to Greece in the form of a loan, on 8 July 2015 the Chairperson of the ESM Board of Governors entrusted the European Commission, in liaison with the European Central Bank (‘ECB’), with assessing the existence of a risk to the financial stability of the euro area as a whole or its Member States; assessing, together with the IMF, whether public debt is sustainable; and estimating the actual or potential financing needs of Greece.

In compliance with Article 13 of the ESM Treaty, the European Commission, in liaison with the ECB, and with input from IMF staff, completed those assessments on 10 July 2015, concluding that conditions for the financial support for Greece, to be provided in the form of an ESM loan, are in place. The financing needs were estimated to be up to EUR 86 000 million.

On 17 July 2015, Greece was granted EUR 7 160 million short-term financial assistance under the European Financial Stabilisation Mechanism (‘EFSM’), by Council Implementing Decision (EU) 2015/1181 (2), for facing July 2015 repayment obligations and settling its arrears to the IMF. The assistance was disbursed in one instalment on 20 July 2015, and was linked to economic policy conditionality. The ESM assistance will be used, inter alia, to repay that short-term EFSM bridge loan.

On 16 July 2015, the ESM Board of Governors invited the Commission, in liaison with the ECB, the ESM, the Greek authorities, and, where appropriate, the IMF, to agree on a macroeconomic adjustment programme for Greece. The programme was prepared in accordance with the procedure provided for under Article 7(1) of Regulation (EU) No 472/2013. On 11 August 2015, those institutions reached an agreement at technical level on a macroeconomic adjustment programme (the ‘Programme’) with the Greek Government. The Programme submitted by Greece to the Commission and the Council aims at ensuring the adoption of a set of reforms needed to improve the sustainability of public finances, as well as to ensure financial stability and to promote growth, employment, and social fairness.

Following that agreement, Greece should adopt a comprehensive policy package, to be implemented in a three-year macroeconomic adjustment programme which would span from the third quarter of 2015 to the third quarter of 2018.

The comprehensive policy package, to be laid down in an ESM Memorandum of Understanding on Specific Economic Policy Conditionality (the ‘Memorandum of Understanding’), should aim at restoring financial market confidence, re-establishing sound macroeconomic balances and enabling the economy to return to sustainable growth. It should be structured on four pillars: restoring fiscal sustainability, safeguarding financial stability, enhancing competitiveness and growth, and modernising the state and the public administration.

The Commission services updated their forecast for nominal GDP growth in August 2015, as needed to underpin the negotiations for the ESM programme. Under this forecast, which centres around a nominal GDP growth rate of – 3,2 % in 2015, – 0,7 % in 2016, 3,4 % in 2017, 4,1 % in 2018 and 4,2 % in 2019, the debt-to-GDP ratio would amount to 196,3 % in 2015, 200,9 % in 2016, 198,6 % in 2017, 190,7 % in 2018 and 182,3 % in 2019. The debt-to-GDP ratio would therefore increase until 2016 and move to a declining path thereafter, reaching an estimated 174,5 % in 2020, with debt dynamics affected by several below-the-line operations. Under the Commission services' update of the forecast for nominal GDP growth, the primary general government balance is projected to attain a deficit of EUR 7 631 million (4,4 % of GDP) in 2015, a deficit of EUR 6 166 million (3,6 % of GDP) in 2016, a deficit of EUR 4 089 million (2,3 % of GDP) in 2017 and a deficit of EUR 753 million (0,4 % of GDP) in 2018.

The authorities will pursue a new fiscal path premised on primary surplus targets of – 0,25, 0,5, 1,75, and 3,5 % of GDP in 2015, 2016, 2017 and 2018 and beyond, respectively. The trajectory of the fiscal targets is consistent with expected growth rates of the Greek economy as it recovers from its deepest recorded recession.

Enhancing the long-term resilience of the Greek banking sector is critical to restoring financial stability in Greece and to preserving financial stability in the euro area as a whole. To preserve the liquidity of the Greek banking sector, temporary administrative measures were imposed, including capital controls.

The implementation of comprehensive and ambitious reforms in financial, fiscal and structural areas should safeguard the medium-term sustainability of the Greek public debt.

The Commission, in liaison with the ECB and, where appropriate, the IMF, should verify at regular intervals the rigorous implementation of Greece's Programme through missions and regular reporting, on a quarterly basis, by the Greek authorities.

Throughout the implementation of Greece's comprehensive policy package, the Commission should provide additional policy advice and technical assistance in specific areas.

The Greek authorities should involve, in accordance with current national rules and practices, the social partners and civil society organisations in the preparation, implementation, monitoring and evaluation of the Programme.

Any form of financial assistance received by Greece to help it implement the policies under its Programme should be in line with the legal requirements and policies of the Union, in particular the Union's economic governance framework. Any intervention in support of financial institutions should be carried out in accordance with the Union's rules on competition. The Commission should ensure that any measures laid down in a Memorandum of Understanding in the context of requested ESM financial assistance are fully consistent with this Decision,

take measures in the short term to raise revenues and to target and contain expenditure. Among the measures to raise revenue, Greece shall gradually abolish the refund of excise tax on diesel oil for farmers and increase the tonnage tax. The authorities shall take actions to launch the 2015 property tax (ENFIA) exercise in order to issue bills in October 2015 with the final instalment due in February 2016. They shall also correct identified issues with the revenue measures recently implemented. The authorities also committed to target and contain expenditure by reducing the cost of healthcare and launching the comprehensive social welfare review. The package includes further measures with budgetary impact, such as public administration reforms, reforms addressing shortfalls in tax collection enforcement, and other parametric measures;

to demonstrate its commitment to credible fiscal policies, adopt in October 2015, a supplementary 2015 budget as needed, the draft 2016 budget and a 2016-2019 Medium-Term Fiscal Strategy, supported by a sizable and credible package of parametric measures and structural fiscal reforms;

enact reforms of both direct and indirect taxation to improve efficiency, collectability and boost labour supply. To break from past practice and improve the tax and social security payment culture, the Government shall take strong action to improve collection, and neither introduce new instalment or other amnesty or settlement schemes nor extend existing schemes;

continue reforms that aim at improving the budget process and expenditure controls, clearing arrears, and strengthening budget reporting and cash management. The Government is committed to making the Fiscal Council operational;

take further action in the area of public procurement to increase efficiency and transparency of the Greek public procurement system, prevent misconduct, and ensure more accountability and control. Policies will be agreed with the European Commission, which shall assist with the implementation of an action plan;

implement fully the existing reforms and also proceed with further reforms to strengthen long-term sustainability, targeting savings of around 0,25 % of GDP in 2015 and around 1 % of GDP by 2016. The package inter alia aims to create strong disincentives for early retirement through increasing early retirement penalties and by the gradual elimination of the grandfathering of rights to retire before the statutory retirement age;

continue reforming the healthcare sector, controlling public expenditure, managing prices of pharmaceuticals, improve hospital management, increase centralised procurement of hospital supplies, manage demand for pharmaceuticals and health care through evidence-based e-prescription protocols, commission private sector healthcare providers in a cost-effective manner, modernise IT systems, developing a new electronic referral system for primary and secondary care that allows the formulation of care pathways for patients;

adopt by March 2016 a further series of guaranteed employment support schemes with individualised active labour market measures for participants, using local partnerships, involving the private and social economy sectors and ensuring the efficient and effective use of the resources available.

Achieving a fairer society will require that Greece improve the design of its welfare system, so that there is a genuine social safety net which targets scarce resources at those in most need. The authorities plan to benefit from available technical assistance from international organisations for the social welfare review and for the guaranteed minimum income implementation.