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Memorandum of Understanding on Specific Economic Policy ConditionalityHowever a joint Ministerial Decision was issued instructing fiscal audit offices to process all paymentrequests within 20 days, and set deadlines for each stage of the payment process. Within the scope ofthe on-going comprehensive re-engineering of financial management work processes, called the ERPproject, it is necessary to streamline payment processes in the short-medium term to meet the 30 daytarget. An interim solution should have the objective of removing the main bottlenecks in the currentprocess and improving efficiency. This must include changes in work practice and legislation based onthe action plan prepared by the Authorities following the provision of technical assistance. Theauthorities initiated the streamlining of the current process with the adoption of L. 4151/2013 thatshifted the entire responsibility for payment execution from tax offices (DOYs) to the fiscal auditoffices.To further monitor delays in payments and streamline payment processes, the Government will:1. Put in place a monitoring system in other than State Budget able to detect areas of noncompliancewith the deadlines set in the Late Payment Directive by using the data from theexisting commitment registers (E-Portal), starting from April data (May 2014).1662. Submit legislation to expand pre-contractual audits by the Hellenic Court of Audit (HCA)and a Presidential Decree will be issued subject to the approval of the Plenary of the HCAincreasing the threshold from the current EUR 15,000 up to EUR 45,000 for ex-ante auditscarried out by the Court of Auditors in order to reduce the volume of ex ante audit in excessof the current 70% (April 2014).3. Re-prioritize the medium-term action plan to meet the requirements of the Late PaymentDirective (April 2014).4. Implement an updated disaster recovery plan following recent changes to IT andadministrative processes (April 2014).5. Conduct a review with external technical assistance of the PIB payment processes to identifywhether they conform to the deadlines established by the Late Payment Directive and, if not,propose changes necessary to ensure that they do, and to examine whether sound financialprocesses continue to be observed following recently approved process changes The reviewwill also propose changes necessary to implement further streamlining and automation offinancial management processes. In parallel, it will streamline the procedures related to thePIB execution, as appropriate to a modern financial management of a multi-year investmentprogramme, taking into account international best practices. PIB procedures will be subjectto effective checks and balances with good design and a transition process to the improvedprocedures. The final outcome will be fully compatible with the ERP project (on-goingunder the responsibility of Ministry of Finance), ensuring, thus, an integrated monitoring ofthe whole state budget execution (June 2014).6. Conduct system audits and testing in high volume conditions (September 2014).7. After a proper testing extend the use of the Fiscal Management Information System (FMIS)to the General Directorates for Financial Services (GDFS) of the line ministries and theHCA, so that the payment process and transfer of documents could be started in an electronicmanner by GDFS and the HCA as of 1 January 2015. This includes the implementation ofnecessary IT applications by October 2014.8. To address problems with the extra-budgetary funds and in the social security sector,especially in relation to the transfer of competencies from SSFs to EOPPY, and taking intoaccount the progress in the setting-up of the commitment/co-payment registries, theGovernment will:i. Ensure that IKA transfers (including both cash transfers and expenditures made byIKA on behalf of EOPYY) to EOPYY at least 97 percent of the revenue collected byIKA on behalf of EOPYY during the relevant period (June 2014).ii.Monitor the effectiveness of the commitment registers by conducting regular targetedinspections in the public entities covered by the system (continuous);
Memorandum of Understanding on Specific Economic Policy Conditionalityiii.iv.Set up a form in consultation with GDFS to provide regularly data to GAO concerningcost of uninsured population coverage by the NHS making the health budget moretransparent separating the component of expenses for insured covered throughcontributions and the expenses for non-insured subsidized through the State budgetwhile enhancing the fiscal oversight of Minister of Finance (June 2014).Pass legislation by June 2014 to ensure that all hospital invoices will be submittedelectronically to EOPYY (January 2015).v. Develop a comprehensive plan to clarify the transfers from SSFs to EOPYY (June2014).vi.Establish a timetable for conducting full audits on all invoices submitted from January2014, with a view that all grants from Ministry of Finance cover public hospitaldeficits and EOPYY payments to public hospitals are settled afterwards, based on thetotal claims fully audited by EOPYY (June 2014).9. The Government has reduced the arrears from € 9.4 billion at the end of 2012 to € 4.7 billionat the end of 2013. The Government will extend into Q3 2015 the special plan to clear pre-2012 stock of arrears. To clear expenditure arrears and tax refunds, the conditions for agovernment unit to allow funds for arrears clearance to be disbursed will include, forexpenditure arrears: (i) establishment by the unit of a fully functioning commitment registerand (ii) reporting of at least three months of consistent data on commitments, payments, andarrears (2 months for EOPYY); and, for both expenditure arrears and tax refunds: (iii)verification of claims. Entities that meet these conditions can clear their arrears even if theirparent agency does not meet the conditions.10. Once the clearance of all verified arrears is achieved, the Government ensures that no newarrears are accumulated (continuous).2.5. Safeguards for the delivery of fiscal commitmentsEnhancing credibility is essential to the success of the Adjustment Programme for Greece. One way isthrough the early implementation of the EU's Fiscal Compact. Greece has already signed and ratifiedthe intergovernmental Treaty on Stability, Coordination and Governance in the EMU. A key part ofthe Treaty is the fiscal compact that introduces national budgetary rules as well as enhancedenforcement mechanisms at European level. Within a comprehensive approach, key steps to safeguardthe delivery of fiscal commitments are necessary in the areas of: Budget preparation andimplementation, monitoring and reporting, corrective and sanctioning mechanisms, transparency,accountability and oversight, debt servicing.2.5.1. Enhancing national budgetary rules in line with the EU's Fiscal Compact1. The Government will submit the necessary legislation to transpose the Fiscal Compactprovisions with a view to introducing a structural budget balance rule with an automaticcorrection mechanism (April 2014).2.5.2. Budget preparation and implementationThe Government will:1. Submit to the Parliament the 2015-18 medium-term fiscal strategy (MTFS) including alowering of binding expenditure ceilings by €320 million to lock in the 2013 underspendingby May 2014.167
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OUTLINE OF THE REPORTEXECUTIVE SUMM
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LIST OF GRAPHSGraph 1. Economic cli
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ACKNOWLEDGEMENTSThe report was prep
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European CommissionThe Economic Adj
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1. INTRODUCTION1. INTRODUCTION1. Th
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2. MACROECONOMIC AND FINANCIAL DEVE
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2. Macroeconomic and financial deve
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Chart 3Graph 2.3. Exports of goods
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Chart 18Graph 13.1. Distance to Fro
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4. DEBT SUSTAINABILITY ANALYSIS AND
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4. Debt sustainability analysis and
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OCCASIONAL PAPERSOccasional Papers
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No. 46No. 47No. 48No. 49The Western
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No. 80 2011 Pre-accession Economic
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