Explanatory Memorandum to COM(2023)608 - 2023 Reform Programme and 2023 Stability Programme of Greece - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2023)608 - 2023 Reform Programme and 2023 Stability Programme of Greece. |
|---|---|
| source | COM(2023)608 |
| date | 24-05-2023 |
COUNCIL RECOMMENDATION
on the 2023 National Reform Programme of Greece and delivering a Council opinion on the 2023 Stability Programme of Greece
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121 i and 148 i thereof,
Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies1, and in particular Article 5 i thereof,
Having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances2, and in particular Article 6(1) thereof,
Having regard to the recommendation of the European Commission,
Having regard to the resolutions of the European Parliament,
Having regard to the conclusions of the European Council,
Having regard to the opinion of the Employment Committee,
Having regard to the opinion of the Economic and Financial Committee,
Having regard to the opinion of the Social Protection Committee,
Having regard to the opinion of the Economic Policy Committee,
Regulation (EU) 2021/241 of the European Parliament and of the Council3, which established the Recovery and Resilience Facility, entered into force on 19 February 2021. The Recovery and Resilience Facility provides financial support to the Member States for the implementation of reforms and investments, entailing a fiscal impulse financed by the EU. In line with the European Semester priorities, it contributes to the economic and social recovery and to the implementation of sustainable reforms and investments, in particular to promote the green and digital transition and make the Member States’ economies more resilient. It also helps strengthen public finances and boost growth and job creation in the medium and long term, improve territorial cohesion within the EU and support the continued implementation of the European Pillar of Social Rights. The maximum financial contribution per Member State under the Recovery and Resilience Facility was updated on 30 June 2022 in accordance with Article 11 i of Regulation (EU) 2021/241.
On 22 November 2022, the Commission adopted the 2023 Annual Sustainable Growth Survey4, marking the start of the 2023 European Semester for economic policy coordination. The European Council endorsed the priorities of the survey around the four dimensions of competitive sustainability on 23 March 2023. On 22 November 2022, on the basis of Regulation (EU) No 1176/2011, the Commission also adopted the 2023 Alert Mechanism Report, in which it identified Greece as one of the Member States that may be affected or may be at risk of being affected by imbalances, and for which an in-depth review would be needed. On the same date, the Commission also adopted an opinion on Greece’s 2023 draft budgetary plan. The Commission also adopted a recommendation for a Council recommendation on the economic policy of the euro area, which the Council adopted on 16 May 2023, as well as the proposal for the 2023 Joint Employment Report analysing the implementation of the Employment Guidelines and the principles of the European Pillar of Social Rights, which the Council adopted on 13 March 2023.
While the EU economies are showing remarkable resilience, the geopolitical context continues to have a negative impact. As the EU stands firmly with Ukraine, the EU economic and social policy agenda is focused on reducing the negative impact of energy shocks on both vulnerable households and companies in the short term, and on keeping up efforts to deliver on the green and digital transition, support sustainable and inclusive growth, safeguard macroeconomic stability and increase resilience in the medium term. It also focuses heavily on increasing the EU’s competitiveness and productivity.
On 1 February 2023, the Commission issued the Communication A Green Deal Industrial Plan for the Net-Zero Age5 to boost the competitiveness of the EU’s net-zero industry and support the fast transition to climate neutrality. The plan complements ongoing efforts under the European Green Deal and REPowerEU. It aims to provide a more supportive environment for scaling up the EU’s manufacturing capacity for the net-zero technologies and products required to meet the EU’s ambitious climate targets, as well as ensuring access to relevant critical raw materials, including by diversifying sourcing, properly exploiting geological resources in Member States and maximising the recycling of raw materials. The plan is based on four pillars: a predictable and simplified regulatory environment, speeding up access to finance, enhancing skills, and open trade for resilient supply chains. On 16 March 2023, the Commission also issued the Communication Long-term competitiveness of the EU: looking beyond 20306, structured along nine mutually reinforcing drivers with the objective to work towards a growth enhancing regulatory framework. It sets policy priorities aimed at actively ensuring structural improvements, well focused investments and regulatory measures for the long-term competitiveness of the EU and its Member States. The recommendations below help address those priorities.
In 2023, the European Semester for economic policy coordination continues to evolve in line with the implementation of the Recovery and Resilience Facility. Fully implementing the recovery and resilience plans remains essential for delivering the policy priorities under the European Semester, as the plans address all or a significant subset of the relevant country-specific recommendations issued in recent years. The 2019, 2020 and 2022 country-specific recommendations remain equally relevant also for recovery and resilience plans revised, updated or amended in accordance with Articles 14, 18 and 21 of Regulation (EU) 2021/241.
The REPowerEU Regulation7 adopted on 27 February 2023 aims to rapidly phase out the EU’s dependence on Russian fossil fuel imports. This will contribute towards energy security and the diversification of the EU’s energy supply, while increasing the uptake of renewables, energy storage capacities and energy efficiency. The Regulation enables Member States to add a new REPowerEU chapter to their national recovery and resilience plans in order to finance key reforms and investments that will help achieve the REPowerEU objectives. They will also help boost the competitiveness of the EU’s net-zero industry as outlined in the Green Deal Industrial Plan for the Net-Zero Age and address the energy-related country-specific recommendations issued to the Member States in 2022 and, where applicable, in 2023. The REPowerEU Regulation introduces a new category of non-repayable financial support, made available to Member States to finance new energy-related reforms and investments under their recovery and resilience plans.
On 8 March 2023, the Commission adopted a communication providing fiscal policy guidance for 2024. It aims to support the preparation of Member States’ stability and convergence programmes and thereby strengthen policy coordination8. The Commission recalled that the general escape clause of the Stability and Growth Pact will be deactivated at the end of 2023. It called for fiscal policies in 2023-2024 that ensure medium-term debt sustainability as well as raise potential growth in a sustainable manner. Member States were invited to set out in their 2023 stability and convergence programmes how their fiscal plans will ensure that the 3% of GDP deficit reference value is adhered to as well as plausible and continuous debt reduction, or for debt to be kept at prudent levels in the medium term. The Commission invited Member States to phase out national fiscal measures introduced to protect households and firms from the energy price shock, starting with the least targeted ones. It indicated that, if support measures needed to be extended because of renewed energy price pressures, Member States should target such measures much better than in the past towards vulnerable households and firms. The Commission proposed that the fiscal recommendations would be quantified and differentiated and be formulated on the basis of net primary expenditure, as proposed in its Communication on orientations for a reform of the EU economic governance framework9. It recommended that all Member States should continue to protect nationally financed investment and ensure the effective use of the Recovery and Resilience Facility and other EU funds, in particular in light of the green and digital transition and resilience objectives. The Commission indicated that it will propose to the Council to open deficit-based excessive deficit procedures in spring 2024 on the basis of the outturn data for 2023, in line with existing legal provisions.
On 26 April 2023, the Commission presented legislative proposals to implement a comprehensive reform of the EU’s economic governance rules. The central objective of the proposals is to strengthen public debt sustainability and promote sustainable and inclusive growth in all Member States through reforms and investments. The proposals aim at providing Member States with more control over the design of their medium-term plans, while putting in place a more stringent enforcement regime to ensure that Member States deliver on the commitments undertaken in their medium-term fiscal-structural plans. The objective is to conclude the legislative work in 2023.
On 30 April 2021, Greece submitted its national recovery and resilience plan to the Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant to Article 19 of Regulation (EU) 2021/241, the Commission assessed the relevance, effectiveness, efficiency and coherence of the recovery and resilience plan, in accordance with the assessment guidelines of Annex V to that Regulation. On 13 July 2021, the Council adopted its Decision on the approval of the assessment of the recovery and resilience plan for Greece10. The release of instalments is conditional on a decision by the Commission, taken in accordance with Article 24(5) of Regulation (EU) 2021/241, that Greece has satisfactorily reached the relevant milestones and targets set out in the Council Implementing Decision. Satisfactory fulfilment presupposes that the achievement of preceding milestones and targets has not been reversed.
On 2 May 2023, Greece submitted its 2023 National Reform Programme and, on 29 April 2023, its 2023 Stability Programme, in line with Article 4(1) of Regulation (EC) No 1466/97. To take account of their interlinkages, the two programmes have been assessed together. In accordance with Article 27 of Regulation (EU) 2021/241, the 2023 National Reform Programme also reflects Greece’s biannual reporting on the progress made in achieving its recovery and resilience plan.
(11) The Commission published the 2023 country report for Greece11 on 24 May 2023. It assessed Greece’s progress in addressing the relevant country-specific recommendations adopted by the Council between 2019 and 2022, and took stock of Greece’s implementation of the recovery and resilience plan. Based on this analysis, the country report identified gaps with respect to those challenges that are not addressed or only partially addressed by the recovery and resilience plan, as well as new and emerging challenges. It also assessed Greece’s progress on implementing the European Pillar of Social Rights and on achieving the EU headline targets on employment, skills and poverty reduction, as well as progress in achieving the UN’s Sustainable Development Goals.
The Commission carried out an in-depth review under Article 5 of Regulation (EU) No 1176/2011 for Greece and published its results on 24 May 202312. It concluded that Greece is experiencing excessive macroeconomic imbalances. In particular, vulnerabilities relating to high government debt and a high stock of non-performing loans in the context of high unemployment have been receding, but its external position has deteriorated. A key concern is that the current account deficit markedly widened in 2022, despite the recovery in tourism revenue. Even though it is forecast to narrow somewhat this year and next, the external deficit is set to stay well above the level that is required to ensure a lasting improvement in the net international investment position. While the government debt-to-GDP ratio remains the highest in the EU, it improved markedly in 2022, largely thanks to strong nominal GDP growth, and it is expected to recede further in 2023 and 2024. Non-performing loans recorded a sharp fall last year building on large reductions in earlier years, yet remain high and continue to weigh on banks’ profitability and lending capacity, which in turn impinges on the capital deepening and on the productivity growth of the economy. The policy response has contributed to the unwinding of imbalances and the implementation of the RRP represents a major opportunity to tackle remaining structural weaknesses. Yet more efforts are needed, in particular to ensure that external balances are put on a firmly improving path, and that non-performing loans decline further including through increasing the effectiveness of debt enforcement and improving the secondary non-performing loans market.
Based on data validated by Eurostat,13 Greece’s general government deficit decreased from 7.1% of GDP in 2021 to 2.3% in 2022, while general government debt fell from 194.6% of GDP at the end of 2021 to 171.3% at the end of 2022.
The general government balance has been impacted by the fiscal policy measures adopted to mitigate the economic and social impact of the increase in energy prices. In 2022, such expenditure-increasing measures included electricity subsidies to households and businesses, increased social benefits to vulnerable households. The cost of these measures was partly offset by new taxes on windfall profits of energy producers and suppliers, namely the price cap on electricity producers and the extraordinary levy on electricity producers for the period October 2021 to June 2022. The Commission estimates the net budgetary cost of these measures at 2.5% of GDP in 2022. At the same time, the estimated cost of COVID-19 temporary emergency measures dropped to 1.5% of GDP in 2022, from 6.5% in 2021.
On 18 June 2021, the Council recommended that in 2022 Greece14 use the Recovery and Resilience Facility to finance additional investment in support of the recovery, while pursuing a prudent fiscal policy. Moreover, Greece should preserve nationally financed investment.
According to the Commission estimates, the fiscal stance15 in 2022 was supportive, at – 1.0% of GDP. As recommended by the Council, Greece continued to support the recovery with investments to be financed by the Recovery and Resilience Facility. Expenditure financed by Recovery and Resilience Facility grants and other EU funds amounted to 2.1% of GDP in 2022 (2.6% of GDP in 2021). The decrease in expenditures financed by Recovery and Resilience Facility grants and other EU funds in 2022 was due to the phasing out of the previous programming period while investment expenditure in the new programming period has not yet picked up. Nationally financed investment provided an expansionary contribution of 0.6 percentage points to the fiscal stance.16 Greece therefore preserved nationally financed investment, as recommended by the Council. At the same time, the growth in nationally financed primary current expenditure (net of new revenue measures) provided an expansionary contribution of 0.6 percentage points to the fiscal stance. This significant expansionary contribution included the additional impact of fiscal policy measures to mitigate the economic and social impact of the increase in energy prices (additional net budgetary cost of 2% of GDP). Greece therefore sufficiently limited the growth in nationally financed current expenditure.
The macroeconomic scenario underpinning the budgetary projections in the Stability Programme is realistic in 2023 and optimistic thereafter. The government projects real GDP to grow by 2.3% in 2023 and 3% in 2024. By comparison, the Commission 2023 spring forecast projects a higher real GDP growth of 2.4% in 2023 and a lower 1.9% in 2024, mainly due to differences in the assumptions on investment activity and contributions from the external sector. The 2023 Stability Programme forecasts higher contributions from gross fixed capital formation, especially in 2024, and the Commission expects goods’ imports to remain more elevated than in the authorities’ projections .
In its 2023 Stability Programme, the government expects that the general government deficit ratio will decrease to 1.8% of GDP in 2023. The decrease in 2023 mainly reflects the phasing out of the pandemic-related fiscal measures and the reduction of the cost of the energy-related measures as well as the increasing revenues due to economic growth. According to the Programme, the general government debt-to-GDP ratio is expected to decrease from 171.3% at the end of 2022 to 162.6% at the end of 2023. The Commission 2023 spring forecast projects a government deficit of 1.3% of GDP for 2023. This is lower than the deficit projected in the Stability Programme, mainly due to more favourable evolution of tax bases driven by the macroeconomic assumptions, including the composition of growth and lower expenditures of the social budget in line with the systematic underspending observed in the past years. The Commission 2023 spring forecast projects a lower general government debt-to-GDP ratio, of 160.2% at the end of 2023. The difference is mainly due to the higher nominal GDP growth, and to a smaller extent, the lower general government deficit forecast by the Commission.
The government balance in 2023 is expected to continue to be impacted by the fiscal measures adopted to mitigate the economic and social impact of the increase in energy prices. They consist of measures extended from 2022 (in particular: the electricity subsidies to households and businesses). The cost of these measures continues to be partly offset by taxes on windfall profits of energy suppliers, namely the price cap on electricity producers and the solidarity contribution from refineries. Taking these revenues into account, the net budgetary cost of the support measures is projected in the Commission 2023 spring forecast at 0.2% of GDP in 202317. Most measures in 2023 do not appear to be targeted to the most vulnerable households or firms, and do not fully preserve the price signal to reduce energy demand and increase energy efficiency. As a result, the amount of targeted support measures, to be taken into account in the assessment of compliance with the recommendation for 2023, is estimated in the Commission 2023 spring forecast at 0.1% of GDP in 2023 (compared to 0.5% of GDP in 2022). Finally, the 2023 government balance is expected to benefit from the phasing out of COVID-19 temporary emergency measures of 1.5% of GDP.
On 12 July 2022, the Council recommended18 that Greece ensure in 2023 a prudent fiscal policy, in particular by limiting the growth of nationally financed primary current expenditure below medium-term potential output growth19, taking into account continued temporary and targeted support to households and firms most vulnerable to energy price hikes and to people fleeing Ukraine. At the same time, Greece should stand ready to adjust current spending to the evolving situation. Greece was also recommended to expand public investment for the green and digital transitions, and for energy security taking into account the REPowerEU initiative, including by making use of the Recovery and Resilience Facility and other Union funds.
(21) In 2023, the fiscal stance is projected in the Commission 2023 spring forecast to be broadly neutral (‑ 0.2% of GDP), in a context of high inflation. This follows an expansionary fiscal stance in 2022 (‑ 1.0% of GDP). The growth in nationally financed primary current expenditure (net of discretionary revenue measures) in 2023 is projected to provide a contractionary contribution of 0.3 % of GDP to the fiscal stance. Therefore, the projected growth of nationally financed primary current expenditure is in line with the recommendation of the Council. The projected contractionary contribution of nationally financed primary current expenditure is due, in substance, to the reduced costs of the (targeted and untargeted) support measures to households and firms in response to energy price hikes (by 2.3% of GDP). The increase in social spending is the main driver of growth in nationally financed primary current expenditure (net of new revenue measures). Expenditure financed by Recovery and Resilience Facility grants and other EU funds amounted to 2.5% of GDP in 2023, while nationally financed investment provided a neutral contribution to the fiscal stance of 0.0 percentage point20. Therefore, Greece plans to finance additional investment through the Recovery and Resilience Facility and other EU funds, and it is projected to preserve nationally financed investment. It plans to finance public investment for the green and digital transitions, and for energy security, such as the installation of 8 000 publicly accessible charge points for electric vehicles in key urban and suburban locations, digitalisation of public administration, and improving the electricity interconnection of islands.
According to the Stability Programme the general government deficit is expected to decline to 0.8% of GDP in 2024. The decrease in 2024 mainly reflects the phasing out of the remaining energy and other measures and the increase of revenues on the back of the solid economic growth. The programme expects the general government debt-to-GDP ratio to decrease to 150.8% at the end of 2024. Based on policy measures known at the cut-off date of the forecast, the Commission 2023 spring forecast projects a government deficit of 0.6% of GDP in 2024. This is lower than the deficit projected in the programme, mainly due to the assumptions on the execution of the social budget, most notably lower spending on social benefits and on pensions. The Commission 2023 spring forecast projects a higher general government debt-to-GDP ratio, of 154.5% at the end of 2024.
The Stability Programme envisages the phasing out of all of the energy support measures in 2024. The Commission also assumes full phasing out of energy support measures in 2024. This hinges upon the assumption of no renewed energy price increases.
Council Regulation (EC) No 1466/97 calls for an annual improvement in the structural budget balance toward the medium-term objective by 0.5% of GDP as a benchmark.21 Taking into account fiscal sustainability considerations,22 an improvement in the structural balance of at least 0.3% of GDP for 2024 would be appropriate. To ensure such an improvement, the growth in net nationally financed primary expenditure23 in 2024 should not exceed 2.6%, as reflected in this recommendation. This will also contribute to strengthening the external position. At the same time, the remaining energy support measures (currently estimated by the Commission at 0.2% of GDP in 2023) should be phased out, contingent on energy market developments and starting from the least targeted ones, and the related savings should be used to reduce the government deficit.
Assuming unchanged policies, the Commission 2023 spring forecast projects net nationally financed primary expenditure to grow at 0.7% in 2024, which is below the recommended growth rate. The adjustment projected in the Commission forecast is more than the savings from the full phasing out of energy support measures
According to the programme, government investment is expected to increase from 4.8% of GDP in 2023 to 5.4% of GDP in 2024. The higher investment reflects slightly lower nationally financed investment and higher investment financed by the EU, namely through the Recovery and Resilience Facility. The programme refers to reforms and investments, that are expected to contribute to fiscal sustainability and sustainable and inclusive growth. These include high-value added investments and structural reforms towards the green, digital and energy transitions, which are also part of the Recovery and Resilience Plan.
The Stability Programme outlines a medium-term fiscal path until 2026. According to the programme, the general government deficit is expected to decline to 0.5% of GDP in 2025 and to 0.1% by 2026. The general government deficit is therefore planned to remain below 3% of GDP over the programme horizon. According to the programme, the general government debt-to-GDP ratio is expected to decrease from 150.8% at the end of 2024 to 135.2% by the end of 2026.
Building on best practices and reforms undertaken as part of the recovery and resilience plan, modifications to Greece’s tax policy framework could help address the investment gap. More specifically, the introduction of an advance tax ruling system could strengthen legal certainty for investors and increase ongoing efforts to simplify the tax system. A review of the tax system could also help enlarge the tax base as regards the self-employed and support investment. Tax compliance could be improved by extending the application of electronic payments and making increased use of the information that originates from electronic payments, considering in particular recent evidence of a growing disparity between declared low incomes and the apparently rapidly rising turnover of the self-employed. In particular, by making better use of the information that originates from electronic payments for targeted professions. The ongoing digital transformation of the Independent Authority for Public Revenue is expected to contribute among other things to this objective. However, it is essential that the authority’s autonomy to manage and develop its HR and IT infrastructure is further increased given the ongoing challenges to tax systems worldwide.
Greece has continued to take steps to modernise its public administration, but its overall performance remains low. Following a significant adjustment after 2010, the size and cost of public administration has been broadly aligned with the EU average. Greece’s wage bill remained stable in 2022 at 10.8% of GDP, slightly above the EU average (10.2% of GDP). Ensuring continued application of the unified wage grid, while maintaining current staffing levels through the continued application of the ‘one-in-one-out’ hiring rule for permanent staff and of the ceiling for temporary staff that was introduced in 2022, will be key to safeguarding these gains. The recovery and resilience plan contains measures to improve the effectiveness of public administration, with a particular focus on improving its digital services. At the same time, attracting and maintaining high-calibre staff remains a challenge. This could be addressed in a structural manner through special/supplementary wage grids for specific functions and/or bodies as well as a well-defined system of allowances introduced as an integral part of the new HR management system, while safeguarding the integrity of the unified wage grid and the overall size of the wage bill.
(30) In accordance with Article 19(3), point (b) and Annex V, criterion 2.2 of Regulation (EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually reinforcing reforms and investments to be implemented by 2026. The implementation of Greece’s recovery and resilience plan has so far been well underway. Going forward, it will be important to maintain the implementation momentum. Greece submitted three payment requests24 for non-repayable financial support and two payment requests for loan support, corresponding to 85 milestones and targets in the plan. To date, Greece has received an overall disbursement of EUR 7 126 million25. In accordance with Article 14(6) of Regulation (EU) 2021/241, on 29 March 2023, Greece expressed its intention to request EUR 5 000 million of additional loan support under the Recovery and Resilience Facility. Greece has made a solid start to implementing its plan and has established a management and control system to monitor and coordinate the timely completion of the reforms and investments. Going forward it will be important to maintain and enhance these efforts considering the significant number of reforms and investments that are planned to be implemented, in particular as the completion of a number of these will require timely progress with various preparatory steps, including public procurement procedures. The continued implementation of the plan hinges on the administrative and implementation capacity of the assigned implementing bodies, including the regional and local administration. The swift inclusion of the new REPowerEU chapter in the recovery and resilience plan will allow additional reforms and investments to be financed in support of Greece’s strategic objectives in the field of energy and the green transition. The systematic and effective involvement of local and regional authorities, social partners and other relevant stakeholders remains important for the successful implementation of the recovery and resilience plan, as well as other economic and employment policies going beyond the plan, to ensure broad ownership of the overall policy agenda.
The Commission approved all of Greece’s cohesion policy programming documents in 2022. Proceeding with the swift implementation of the cohesion policy programmes in complementarity and synergy with the recovery and resilience plan, including the REPowerEU chapter, is key to achieving the green and digital transition, increasing economic and social resilience as well as achieving balanced territorial development in Greece.
Beyond the economic and social challenges addressed by the recovery and resilience plan, Greece faces a number of additional challenges related to healthcare and long-term care, cadastral mapping, energy policy and the green transition.
Public healthcare spending is below the EU average, while the out-of-pocket payments made by patients in Greece are the second highest in the EU as a share of GDP. The healthcare system is still hospital-centric, with curative care spending focused on hospitalisation. In addition, Greece ranks first among all Member States for public spending on medicines as a share of GDP. Public expenditure on long-term and preventive care is significantly below the EU average, and there is no comprehensive national strategy for long-term care in place. To tackle this, Greece is implementing a newly adopted primary healthcare system to reduce the reliance on hospital care and increase the efficiency of access to healthcare goods and services. The full roll-out of the primary healthcare reform is hindered by the shortage of family doctors. The number of family doctors is not sufficient to cover the entire population. Sufficient coverage will be necessary for the full introduction of an effective and comprehensive gatekeeping-based system legislated to start from 1 September 2023. To this end, stronger incentives to expand the number of family doctors to achieve full population coverage and population registration will be key to ensuring adequate and equal access to healthcare for the population.
The completion of the national cadastre – a long-standing project – will further improve Greece’s business climate. By the end of May 2023, 71% of cadastral mapping had been completed, and another 25% of property rights had been collected and are currently being processed. The processing of the collected rights is expected to be completed by the end of 2023, which would complete the cadastre by the end of the year. On the transition to the new agency ‘Hellenic Cadastre’, 12 cadastral offices and 49 branches have opened and are operational. The Hellenic Cadastre plans to fully digitalise the services to citizens and the Recovery and Resilience Facility provides support for the digitalisation of all registrations and deeds of property rights that are currently in paper form.
Despite the efforts made by Greece also in the context of the energy crisis, Greece remains highly dependent on fossil fuels, with oil and gas making up 52% and 24% respectively of its energy mix in 2021. To accelerate decarbonisation efforts, a number of measures could be further pursued that build on and go beyond the investments and reforms that are part of Greece’s recovery and resilience plan. Greece could accelerate the expansion of renewable energy by establishing and completing the legal frameworks to promote the development of renewable hydrogen infrastructure and offshore wind. Further efforts are needed to speed up the development of a legislative and regulatory framework for biomethane and turn the available sustainable biomethane potential into actual production capacity to offset natural gas imports.
As more renewables are integrated, further investments to expand the storage and network capacity will be essential to safeguard the electricity grid’s balance. Common remuneration schemes and the promotion of behind-the-meter systems could be important tools to promote the timely and viable expansion of storage capacity. To avoid the need for curtailment of renewables, additional electricity interconnections with neighbouring countries could be developed. On the further deployment of renewable energy sources, it will be important to fully enforce the new legal framework adopted in 2022, which simplifies and accelerates the licensing process for renewable and storage projects. In addition, promotion of self-consumption schemes, including expanding support for the installation of solar photovoltaic systems with batteries, and energy communities could help boost the social acceptability of renewables deployment.
Greece could also expand the scope and ambition of existing energy saving measures and reduce the high level of energy poverty. Greece’s consumption of natural gas has dropped by 22% in the period between August 2022 and March 2023, compared to the average gas consumption over the same period in the preceding 5 years, above the 15% reduction target. Greece could keep pursuing efforts to temporarily reduce gas demand until 31 March 202426.
Introducing new financial instruments such as energy efficiency auctions could target the coverage of existing renovation support programmes towards energy-poor households more efficiently. Greece’s share of smart meters is well behind the EU average (3% compared to 54%, 2021 figures) and could be increased as it enables consumers to actively participate in the market and support demand-side response. In addition, specific sectors like transport and water have considerable scope for energy savings as they are still heavily reliant on oil.
Labour and skills shortages in sectors and occupations key for the green transition, including manufacturing, deployment and maintenance of net-zero technologies, are creating bottlenecks in the transition to a net-zero economy. High-quality education and training systems that respond to changing labour market needs and targeted upskilling and reskilling measures are key to reducing skills shortages and promoting labour inclusion and reallocation. To unlock untapped labour supply, these measures need to be accessible, in particular for individuals and in sectors and regions most affected by the green transition. In Greece, green skills shortages are currently most evident in the construction sector, which is highly relevant for the green transition, and for specific occupations, including plumbers, pipe fitters and electricians. Finally, there remains scope for further action to increase the employability of young people and women. Increasing the administrative capacities of public employment services while expanding the use of the individualised approach on jobseekers, has the potential to boost employment outcomes for these groups and support a smooth and fair transition.
In light of the Commission’s assessment, the Council has examined the 2023 Stability Programme and its opinion27 is reflected in recommendation (1) below.
In view of the close interlinkages between the economies of euro area Member States and their collective contribution to the functioning of the Economic and Monetary Union, the Council recommended that euro area Member States take action, including through their recovery and resilience plans, to (i) preserve debt sustainability and refrain from broad-based support to aggregate demand in 2023, better target fiscal measures taken to mitigate the impact of high energy prices and reflect on appropriate ways to wind down support as energy price pressures diminish; (ii) sustain high public investment and promote private investment to support the green and digital transition; (iii) support wage developments that mitigate the loss in purchasing power while limiting second-round effects on inflation, further improve active labour market policies and address skills shortages; (iv) improve the business environment and ensure that energy support to companies is cost-effective, temporary, targeted to viable firms and that it maintains incentives for the green transition; and (v) preserve macro‑financial stability and monitor risks while continuing to work on completing the Banking Union. For Greece, recommendations (1), i, (3) and i contribute to the implementation of the first, second, third, fourth and fifth euro area recommendations.
In light of the Commission’s in-depth review and this assessment, the Council has examined the 2023 National Reform Programme and the 2023 Stability Programme. Its recommendations under Article 6 of Regulation (EU) No 1176/2011 are reflected in recommendation (1) below. Policies referred to in recommendation (1) help address vulnerabilities linked to government debt, external position and non-performing loans. Recommendation i contributes to addressing recommendation (1). Policies referred to in recommendation (1) contribute to both addressing imbalances and implementing the recommendations for the euro area, in line with recital 41.
1. Wind down the energy support measures in force by the end of 2023, using the related savings to reduce the government deficit. Should renewed energy price increases necessitate support measures, ensure that these are targeted at protecting vulnerable households and firms, fiscally affordable, and preserve incentives for energy savings.
Ensure prudent fiscal policy, in particular by limiting the nominal increase in nationally financed net primary expenditure in 2024 to not more than 2.6%.
Preserve nationally financed public investment and ensure the effective absorption of RRF grants and other EU funds, in particular to foster the green and digital transitions.
For the period beyond 2024, continue to pursue a medium-term fiscal strategy of gradual and sustainable consolidation, combined with investments and reforms conducive to higher sustainable growth, to achieve a prudent medium-term fiscal position.
Building on reforms undertaken as part of the recovery and resilience plan, improve the investment friendliness of the taxation system by introducing an advance tax ruling system, enlarge the tax base, including by reviewing the current taxation structure for the self-employed, and strengthen tax compliance by extending the use of electronic payments. Preserve and increase the autonomy of the tax administration authority by extending its mandate to develop and manage its information systems and human resources. Safeguard the efficiency of public administration while ensuring it can attract the right skills and preserving consistency with the unified wage grid. Pursue the ongoing reduction of non-performing loans and further improve the functioning of the secondary non-performing loans market.
2. Maintain the momentum in the steady implementation of the recovery and resilience plan and swiftly finalise the REPowerEU chapter with a view to rapidly starting its implementation. Ensure continued sufficient administrative capacity in view of the size of the plan. Proceed with the speedy implementation of cohesion policy programmes, in close complementarity and synergy with the recovery and resilience plan.
3. To ensure adequate and equal access to healthcare, complete the roll-out of the primary healthcare framework and adopt stronger incentives for the enrolment of an adequate number of family doctors in order to achieve full population coverage and population registration. Finalise cadastre reform by completing cadastral mapping and the establishment and operation of the Hellenic Cadastre Agency.
4. Reduce reliance on fossil fuels and further accelerate the diversification of energy supply routes. Further expand the deployment of renewable energy by completing and enforcing the new legal frameworks for the licensing process and for offshore wind farms, increasing electricity network and storage capacity, promoting the decentralised production of renewable energy, and putting in place legislative frameworks for the production of renewable hydrogen and biomethane. Step up the delivery of measures that improve energy efficiency, including targeted measures for energy-poor households and the installation of smart meters, and policy efforts aimed at the provision and acquisition of the skills needed for the green transition. Support the decarbonisation of the transport sector, in particular by promoting electric vehicles.
Done at Brussels,
For the Council
The President
1OJ L 209, 2.8.1997, p. 1.
2OJ L 306, 23.11.2011, p. 25.
3Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17).
4COM(2022) 780 final.
5COM(2023) 62 final.
6COM(2023) 168 final.
7Regulation (EU) 2023/435 of the European Parliament and of the Council of 27 February 2023 amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans and amending Regulations (EU) No 1303/2013, (EU) 2021/1060 and (EU) 2021/1755, and Directive 2003/87/EC (OJ L 63, 28.2.2023, p.
1).
8COM(2023) 141 final.
9COM(2022) 583 final.
10Council Implementing Decision of 13 July 2021 on the approval of the assessment of the recovery and resilience plan for Greece (ST 10152/21; ST 10152/21 ADD 1).
11SWD(2023) 608 final.
12SWD(2023) 631 final.
13Eurostat-Euro Indicators, 47/2023, 21.4.2023
14Council Recommendation of 18 June 2021 delivering a Council opinion on the 2021 Stability Programme of Greece, OJ C 304, 29.7.2021, p. 33.
15The fiscal stance is measured as the change in primary expenditure (net of discretionary revenue measures), excluding Covid-19 crisis-related temporary emergency measures but including expenditure financed by non-repayable support (grants) from the Recovery and Resilience Facility and other EU funds, relative to medium-term potential growth. For more details see Box 1 in the Fiscal Statistical Tables.
16Other nationally financed capital expenditure provided a neutral contribution of 0.0 percentage points of GDP
17The figure represents the level of annual budgetary cost of those measures, including current revenue and expenditure as well as – where relevant – capital expenditure measures.
18Council Recommendation of 12 July 2022 on the National Reform Programme of Greece and delivering a Council opinion on the 2022 Stability Programme of Greece, OJ C 334, 1.9.2022, p. 60.
19Based on the Commission 2023 spring forecast, the medium-term (10-year average) potential output growth of Greece is estimated at 4.8% in nominal terms.
20Other nationally financed capital expenditure is projected to provide an expansionary contribution of 0.1 percentage point of GDP
21Cf. Article 5 of Council Regulation (EC) No 1466/97, which also requires an adjustment of more than 0.5% of GDP for Member States with a government debt exceeding 60% of GDP, or with more pronounced debt sustainability risks.
22The Commission estimated that Greece would not need an increase in the structural primary balance as a share of GDP to achieve a plausible debt reduction in the medium term. This estimate was based on the Commission autumn 2022 forecast. The starting point for this estimate was the projected government deficit and debt for 2024 which assumed the withdrawal of energy support measures in 2024.
23Net primary expenditure is defined as nationally financed expenditure net of discretionary revenues measures and excluding interest expenditure as well as cyclical unemployment expenditure.
24Greece submitted its third payment request for grants on 16 May 2023 and the assessment by the Commission is ongoing.
25For grants the disbursed amounts for non-reimbursable financial support (excl. pre-financing) is EUR 3 436 million and the disbursed amounts for loan support (excl. pre-financing) is EUR 3 690 million.
26 Council Regulation (EU) 2022/1369 and Council Regulation (EU) 2023/706
27Under Articles 5 i and 9 i of Council Regulation (EC) No 1466/97.
EN EN