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European CommissionThe Second Economic Adjustment Programme for Greece. Fourth ReviewTable 2. Bridge table from ESA General Government Balance toProgramme Primary Balance Definition2013 2013(bn EUR)(% of GDP)ESA General government balance -23.1 -12.7%(+) EDP interest expense 7.2 4.0%ESA primary balance -15.9 -8.7%(+) Programme Adjustors 17.3 9.5%(-) Privatization receipts 0.3 0.2%(+) Operations related to banking support 19.7 10.8%(+) Cost of clearing pre-October 2012 tax refunds 0.5 0.3%(+) Adjustment in accounting treatment of PPC property tax 0.4 0.2%(-) ANFA & SMP transfers 2.7 1.5%(-) Greek Loan Facility (GLF) cost reduction 0.3 0.2%Programme primary balance 1.5 0.8%Source: European Commission servicesGraph 15. State primary payments 2013(cumulative, EUR million)Quarterly outcomes and criteriaGraph 16. General Government primary balance2013 (cash basis, cumulative balance, EUR million)Quarterly outcomes and criteria6000050000Performancecriteria 201340003000Performancecriteria 201340000200030000100020000010000-1000Outcome0OutcomeQ1 Q2 Q3 Q4-2000Q1 Q2 Q3 Q420132013Source: GAO and Commission services.Source: GAO and Commission services.Table 3. Fiscal quantitative performance criteria (EUR billion)Mar-13 Jun-13 Sep-13 Dec-13Progr. Actual Progr. Actual Prog. Actual Prog. ActualPerformance criteria1. Floor on the modified general government primary cash balance 1/ 1.5 1.6 -1.2 -0.5 -0.8 3.1 -0.3 0.52. Ceiling on state budget primary spending 1/ 13.9 11.8 26.0 24.1 38.8 36.1 53.2 52.43. Ceiling on the overall stock of central government debt 347.0 309.4 347.0 321.4 335.0 321.9 335.0 321.54. Ceiling on the new guarantees granted by the central government /2 0.2 0.2 0.0 0.0 0.0 0.0 0.0 0.05. Ceiling on the accumulation of new external payments arrears on external debtcontracted or guaranteed by general government 3/0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.06. Ceiling on the stock of domestic arrears (narrow definition) 3.0 2.6 2.0 1.9 1.0 2.0 0.0 1.3Indicative targets7. Ceiling on the stock of domestic arrears (general government definition) 4.5 7.3 3.0 6.4 1.5 5.8 0.0 3.91/ Applies cumulatively from start of the target's calendar year2/ Applies cumulatively from 1 Oct 20123/ Applies on a continuous basis from program approval.Source: IMF and Commission services.22
Chart 10 Graph 4.2. Implied increase of arrears in 2013 (cumulative)Chart 11 Graph 4.3. Stock of general government arrears3. Programme implementationBox 4. Public sector arrears to the private sector in Greece2013 was an important year for clearance of arrears due to the implementation of a special plan financed within theprogramme. The second programme, adopted in March 2012, provided EUR 8 billion to clear all the pre-2012 arrears. Theimplementation of such a plan for arrears' clearance topped up the normal payment of past arrears resulting in a paramountreduction of outstanding arrears paid out in 2013. After delays in the repayment of arrears throughout 2012, theimplementation of the plan picked-up in 2013. However, out of the EUR 8 billion in arrears originally envisaged, EUR 2billion could not be cleared in 2013, and therefore are expected to be paid out in 2014.Despite the significant reduction of arrears in 2013 amounting to EUR 4.2 billion compared to end 2012, it remained belowexpectations as a significant amount of new arrears (EUR 1.9 billion) were accumulated in 2013. Accumulation of newarrears was mainly observed at the state hospitals sector, EOPYY and Local Governments. Accumulation of arrears byhospitals is partially due to EOPYY’s failure to pay its debt. A number of factors explain the poor performance of EOPYY:• Delays occurred in the past in transferring health care contributions by SSFs.• Structural malfunctions within the organization, while at the same time its revenues cannot be increased due to therecession• Lack of capacity for the clearance and repayment of old debts and current’s year expenditure. It must be noted that at theend of September EOPYY’s recorded cash was about EUR 729.3 million, which should be used to repay unpaidobligations.Concerning Local Governments, the change (reduction) in arrears recorded in 2013 is less than the payment of arrears for thesame period, because LG's repayments to EYDAP (the water company in Athens) are included as arrears payments but animportant part of them has not been recorded at the level of arrears stocks; this stems from agreements that are in placeallowing the repayment of debts by instalments.The stock of general government arrears to the private sector (including tax refunds) at the end of December 2013 stillstood at EUR 4.67 billion therefore missing by a large margin the end-December 2013 performance criterion (as per theprogramme definition) for the stock of domestic arrears. The biggest share of the stock of arrears comes from social securityfunds, at EUR 2.55 billion (55 percent of total) with public healthcare provider EOPYY being by far the largest contributor.This amount will be revised downwards when the clawback (a system that ensures a payback by pharmaceutical companiesand private providers of all the expenditure in excess of the expenditure ceiling set for specific EOPYY spending categories)will be fully implemented. However problems in EOPYY are still related to past arrears with OPAD (the former healthcareFund for public employees). Next in the list of outstanding arrears per amount are state hospitals with EUR 687 million (15percent) and local authorities EUR 431 million (9 percent).hart 9 Graph 4.1. Special plan for arrears' clearance (cumulative)8765Graph 4.1. Special plan for arrears' clearance(cumulative)Bn. EUR3.02.52.0Bn. EURGraph 4.2. Implied increase of arrears in 2013(cumulative)41.53211.00.500.0Dec-12Jan-13Feb-13Mar-13Apr-13May-13Jun-13Jul-13Aug-13Sep-13Oct-13Nov-13Dec-13Jan-13Feb-13Mar-13Apr-13May-13Jun-13Jul-13Aug-13Sep-13Oct-13Nov-13Dec-13Outcome - FinancingBenchmark - FinancingSource: GAOOutcome - PaymentsBenchmark - PaymentsSocial security funds Hospitals Local governmentsLine ministriesTax refund arrearsSource: GAO109876543210Jan-13Graph 4.3. Stock of general government arrears(after clearance and implied increase of arrears)Bn. EURFeb-13Mar-13Apr-13May-13Tax refund arrearsSocial security fundsLocal governmentsSource: GAOJun-13Jul-13Aug-13Sep-13Oct-13Nov-13Extrabudgetary fundsHospitalsLine ministriesDec-1323
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OCCASIONAL PAPERSOccasional Papers
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