Council Decision

of 7 September 2010

amending Decision 2010/320/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

(2010/486/EU)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union (TFEU), and in particular Article 126(9) and Article 136 thereof,

Having regard to the recommendation from the European Commission,

Whereas:

(1) Article 136(1)(a) TFEU foresees the possibility of adopting measures specific to the Member States whose currency is the euro with a view to strengthening the coordination and surveillance of their budgetary discipline.

(2) Article 126 TFEU establishes that Member States are to avoid excessive government deficits and sets out the excessive deficit procedure to that effect. The Stability and Growth Pact, which in its corrective arm implements the excessive deficit procedure, provides the framework supporting government policies for a prompt return to sound budgetary positions taking account of the economic situation.

(3) On 27 April 2009, the Council decided, in accordance with Article 104(6) of the Treaty establishing the European Community that an excessive deficit existed in Greece.

(4) On 10 May 2010, the Council adopted Decision 2010/320/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 [1] (hereinafter "the Decision"). The Decision established the deadline of 2014 at the latest for Greece to comply therewith. The Council established the following path for the deficit correction: government deficits not exceeding 8 % of GDP in 2010, 7,6 % of GDP in 2011, 6,5 % of GDP in 2012, 4,9 % of GDP in 2013, and 2,6 % of GDP in 2014.

(5) According to the forecast available at the time the Council adopted the Decision, real GDP was expected to contract by 4 % in 2010 and 2,6 % in 2011, and recover afterwards, with growth rates of 1,1 % in 2012, and 2,1 % in 2013 and 2014. GDP deflator was expected to be 1,2 %, – 0,5 %, 1,0 %, 0,7 % and 1,0 % from 2010 to 2014, respectively. Given economic developments in the meantime, the aforementioned real GDP growth rates remain a central scenario with balanced upside and downside risks, while the deflator is now forecast to be substantially higher for the initial years: 3? %, 1? % and ? % from 2010 to 2012.

(6) Greece has made good progress in the implementation of the measures required by the Decision. In several areas, measures have been taken in advance of the requirements. This has been the case, in particular, in the field of pension reform, reform of local administration and publication of monthly data on state revenue and expenditure. However, a number of adjustments are still necessary in each of these areas.

(7) On 6 August 2010, Greece submitted to the Council and the Commission a report outlining the policy measures taken to comply with the Decision. The Commission assessed the report and concluded that Greece is satisfactorily complying with the Decision.

(8) In the light of the above considerations, it appears appropriate to revise the Decision in a number of respects, while keeping unchanged the deadline for the correction of the excessive deficit and the respective adjustment path for the deficit and government debt,

HAS ADOPTED THIS DECISION:

Article 1

Decision 2010/320/EU is amended as follows:

1. in Article 2(2), point (a) is replaced by the following:

"(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 1500 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;";

2. in Article 2(2), point (b) is deleted;

3. in Article 2(2), point (f) is replaced by the following:

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

4. in Article 2(2), the following points are added:

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

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

(l) 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;

(m) 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;";

5. in Article 2(2), a new point (n) is added, with the wording of point (c) of Article 2(3);

6. in Article 2(2), the following points are added:

"(o) 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;

(p) 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;

(q) 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.";

7. in Article 2(3), point (a) is replaced by the following:

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

8. in Article 2(3), point (c) shall become point (n) of Article 2(2);

9. in Article 2(3), points (d), (e) and (h) are deleted;

10. in Article 2(3), the following points are added:

"(m) an act disallowing local governments to run deficits at least until 2014;

(n) 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);

(o) the seeking of technical assistance from international experts on the several aspects of the efficiency and effectiveness of the health system and management of hospitals, aiming at enhancing efficiency and reducing waste;

(p) the enforcement of the payment of EUR 3 for regular outpatient services in public hospitals.";

11. in Article 2(4), the following point is added:

"(b) 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.";

12. in Article 2(5), point (b) is replaced by the following:

"(b) measures implementing the conclusions of first phase of the independent functional reviews of central administration and social programmes;";

13. in Article 2(5), the following points are added:

"(d) 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 2010-2060 to less than 2,5 % of GDP, if the long-term projections provided by paragraph 3(n) and paragraph 4(b) show that the projected increase in public pension expenditure would exceed this amount;

(e) a revision of the functioning of supplementary/auxiliary public pension schemes with the aim of stabilising expenditure and guarantee the budgetary neutrality of those schemes;

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

(g) implementation of the reform of the public procurement system, as defined in the action plan.";

14. in Article 2(7), the following point is added:

"(c) measures implementing the conclusions of second phase of the independent functional reviews of central administration and social programmes.";

15. in Article 4(2), point (g) is replaced by the following:

"(g) government expenditure pending payment, specifying those past due date;".

Article 2

This Decision shall take effect on the day of its notification.

Article 3

This Decision is addressed to the Hellenic Republic.

Done at Brussels, 7 September 2010.

For the Council

The President

D. Reynders

[1] OJ L 145, 11.6.2010, p. 6.

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