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European Commission

MEMO

Brussels, 23 July 2014

Seventh Activity Report of the Task Force for Greece: reforms delivering results

The Commission's Task Force for Greece (TFGR) today published its seventh activity report, which confirms a stepping up of technical assistance in the period February to May 2014.

Technical assistance has helped to advance implementation of the reforms under the Economic Adjustment Programme. It is helping to build a more solid basis for growth and job creation, based on sustainable public finances, a stable financial system, and a more competitive and dynamic economy to serve the needs of the Greek people.

TFGR members have been working in a number of Greek ministries, offering their expertise and coordinating effectively the work of the providers of technical assistance from Member States, international organisations and other Commission services. They contribute directly to strengthening the capacity of the Greek administration in the ongoing reform process.

Technical assistance has particularly intensified in key areas such as tax administration, the management of EU Structural and Investment Funds, the reform of the public administration, the coordination of monitoring of compliance with EU law as well as in the coordination of state aid. For example:

Boosting the use of EU funding

The Partnership Agreement (PA) was adopted by the European Commission on 23 May 2014 and sets out how key funding from European Structural and Investment Funds 2014-2020 (ESIF) will be invested in Greece's real economy to tackle unemployment and create good quality jobs, boosting growth through innovation, promoting entrepreneurship, training and education, fighting against social exclusion as well as contributing to an environmentally-friendly and resource-efficient economy.

The Partnership Agreement includes Cohesion Policy funding (€15.52 bn), EU Rural Development Policy (€4.2 bn) and €388.7 million from the EU Maritime and Fisheries programme.

Thanks to a combined effort, Greece has now reached 5th place out of all Member States in its absorption of EU Structural and Cohesion Funds, compared to 18th place at the end of 2011, The latest figures show the country has now made use of 81.3% of the funding available in 2007-2013. This is well above the EU average of 69.17%.

Institution for Growth in Greece

Significant steps were taken to launch the Institution for Growth (IfG), an investment fund which aims to help pool financial resources from private and public organisations to provide financing to SMEs and for public investment projects. Greece adopted the legal framework for the creation of the IfG last December. This May, an IfG SME Debt-Sub-Fund was set up with €200 million coming from the Hellenic Republic and the German KfW and is now providing liquidity for SMEs.

Facilitating investments

The TFGR and the World Bank Group supported the Greek Government in developing a new framework law that aims to overhaul licenses required for business activities and investments. This framework law was adopted in April 2014.

The Greek authorities are currently working on a long-term growth strategy that builds on the Economic Adjustment Programme by strengthening policies that raise private investment, facilitate economic activity and lead to the creation of more jobs.

Modernising the health service

Healthcare reform is a crucial component of Greece's efforts to increase the effectiveness and efficiency of public spending and ensure public welfare. Technical assistance is being provided to support reforms designed to curb health expenditure while building an effective primary healthcare system accessible to all and increasing the quality of care delivery.

The TFGR has been working closely with the Greek authorities and the World Health Organisation (WHO) to implement the "Health in Action" strategy (for which Germany is the "reform partner") and to help plan and monitor implementation of structural reforms in the healthcare sector in Greece.

Technical assistance also continued to help implement other elements of the healthcare reform, notably to improve the pricing and reimbursement of pharmaceuticals, as well as the management of the national sickness fund and hospital management.

Tackling unemployment

Greece's unemployment rate remains very high at 26.8%, with youth unemployment at 57.7%. TFGR provides extensive technical assistance to help implement the series of labour market reforms set out in the Economic Adjustment Programme to improve labour market institutions and to support job creation.

The EU's Youth Guarantee will be progressively introduced for all 15-24 year olds in the form of a job, apprenticeship, traineeship or continued education for 4 months after leaving education or leaving employment. €350 million of funding from the EU Youth Employment Initiative and the European Social Fund will support young people who are not in employment, education or training (NEET) covering around 240,000 people.

Strengthening revenue administration

Support for the sound functioning of the revenue administration and public financial management is crucial both to enable the Greek authorities to increase public revenues and also to deliver a fairer distribution of the tax burden. TFGR, together with the European Commission's Directorate-General for Taxation and Customs Union (DG TAXUD) and the IMF, has continued to provide technical assistance to help the Greek authorities in this regard and to preserve the benefits of the recent achievements in public finances.

Overall, the Greek tax administration had achieved good progress, both in tax administration, with the adoption of a Secretary-General decision outlining the new organisational chart, and in terms of core business processes, especially regarding results in debt collection and VAT returns.

Three additional international resident experts, recruited under a contract with the European Commission and administratively supported by the TFGR, started work assisting in the tax administration. Technical assistance was also stepped up in the area of VAT, including reviewing VAT legislation and strengthening the fight against VAT fraud. Work is expected to progress in the area of auditing high-wealth individuals and the high-income self-employed.

Improving the business environment

Technical assistance has focussed on a number of priorities related to product market reforms. This aim is to build a supportive and stable business environment with easy access to liquidity and markets, particularly for SMEs.

For example, important steps have been taken towards reducing the cost and time for exports, notably with extensive reforms in customs procedures based on recommendations by the World Customs Organisation (WCO) and the European Commission.

As a result, customs controls for export are now fully risk-based, significantly reducing the average number of documentary and physical controls. Coupled with other reforms in customs, including extended opening hours in some selected offices, exporters have reported a decrease in time of up to 50% for clearance, and cost reductions of 20% to 50% in the past half year. Over 40 agricultural traders for fresh fruits and vegetables, accounting for almost half of Greek trade in the sector, have registered as approved traders, which facilitates receipt of the certificates needed for exports.

The TFGR has also provided extensive support to remove or simplify legislation that hinders competition, in line with the Economic Adjustment Programme and on the basis of the OECD recommendations. In March, the Greek authorities adopted a law implementing most of the recommendations, with a view to removing barriers to competition. The TFGR is currently supporting the Greek Government in preparing a follow-up project, i.e. drawing up a competition assessment and identifying obstacles in competition in sectors such as wholesale trade, e-commerce, manufacturing, and telecommunications.

The World Bank and other experts coordinated by the TFGR have supported the Greek Government in preparing a new framework law, which was adopted in April, and aims to overhaul licenses required to run a business and make investments.

Regarding liberalisation of regulated professions, experts from the Foundation for Economic and Industrial Research (IOBE), commissioned by the TFGR, have studied the effects of liberalisation in key sectors such as lawyers, notaries and chartered accountants, civil engineers, architects, stevedores, electricians, plumbers, as well as workers in the coastal maritime transport sector. The studies list the various obstacles to competition, restrictions to the functioning of markets and harmful administrative practices, in particular by professional associations.

Combating money laundering and corruption

The TFGR-supported anti-money laundering training programme has trained 700 participants so far. The training programme has now reached a more operational phase, where Greek investigators in specific cases receive "on-the-job" coaching by experts.

An indirect registry of bank accounts was launched at the beginning of this year to support Greek law enforcement effectively. This is an important step forward, as information on bank statements is now available for investigations within one day. So far, more than 2,700 requests have been submitted by the different law enforcement agencies. Work is ongoing to extend the system before summer with information on financial transactions.

Using the link between anti-money laundering and tax evasion, the Financial Intelligence Unit reported 2,628 cases of suspected tax evasion to the authorities, transmitted 472 cases to the Prosecutor's Office and froze assets worth €205 million since early 2012.

A new Anti-Money Laundering Work Programme has been developed and is waiting for approval from the Ministry of Finance. It includes improvements to asset recovery and additional operational training. The TFGR has been also advising the Greek authorities on a new Anti-Corruption Law, which has been approved by the Greek Parliament to bring it more in line with international standards. Work is ongoing on laws on the financing of political parties, the declarations of assets and restricting the immunity of elected individuals.

Background

The Task Force for Greece was launched on 20 July 2011 with the mandate to identify and coordinate the technical assistance requested by Greece in order to deliver reform commitments undertaken in its economic adjustment programme. It also works to accelerate the absorption of EU funds in order to sustain economic growth, competitiveness and employment.

This initiative was supported by the European Council on 21 July 2011, which stated that "Member States and the Commission will immediately mobilise all resources necessary in order to provide exceptional technical assistance to help Greece implement its reforms."

The Task Force began its work in September 2011. Today, it coordinates technical assistance across 13 broad policy domains, each comprising a number of specific projects: acceleration of cohesion policy projects; financial institutions/access to finance; administrative reform; revenue administration and public financial management; anti-money laundering and anti-corruption; business environment; healthcare sector reform; judicial reform; central state aid unit and infringements, labour market, social security, innovation and education; asylum and migration; privatisation and land registry; as well as network industries and services.

On 5 May 2014, the Eurogroup welcomed the contribution to programme implementation provided by technical assistance to Greece under the coordination of the Task Force. The Eurogroup also stressed the need to step up technical assistance to support growth-related reforms. It also expressed its support for a Greek home-grown growth strategy: http://www.eurozone.europa.eu/newsroom/news/2014/05/eurogroup-statement-on-greece/

The Task Force reports to President Barroso and works under the political guidance of the Commission Vice-President responsible for Economic and Monetary Affairs and the Euro. The Head of the Task Force, Horst Reichenbach, reports regularly on progress to the Greek authorities and to the Commission.

The Task Force consists of around 60 staff based jointly in Brussels (30 staff) and Athens (30 staff).

Many Member States – particularly France, Germany, Belgium and the Netherlands – have also made large numbers of senior experts and officials available.

For more information: http://ec.europa.eu/commission_2010-2014/president/taskforce-greece/index_en.htm

Links to 7th activity report:

http://ec.europa.eu/commission_2010-2014/president/pdf/qr7_en.pdf

http://ec.europa.eu/commission_2010-2014/president/pdf/qr7_el.pdf


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