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ANNEXAnnex 1: Assessment of compliance with the Memorandum of Understandingon Specific Policy ConditionalityANNEX 1: ASSESSMENT OF COMPLIANCE WITH THE MEMORANDUM OF UNDERSTANDING ON SPECIFIC POLICY CONDITIONALITYI. Assessment of actions taken prior to the disbursement, included in the 10 th updatedMemorandum of Understanding – as of 16 th April 2014Prior ActionStatusPublic finances1 Strengthen the collection of social security contributions (SSC) to yield about ObservedEUR 500 million by imposing penalties on employers who do not declareaccurately their SSC obligations in the Periodical Analytical Statement (APD),which are equivalent to the penalties for failing to register employees.2 Strengthen the collection of social security contributions (SSC) to yield about ObservedEUR 500 million by introducing mandatory declaration of contributions forsupplementary and lump-sum pensions to ETEA and TAPIT in the APD.3 Strengthen the collection of social security contributions (SSC) to yield about ObservedEUR 500 million by expanding the automatic reminders to all employers whohave not paid their SSC obligations in the previous month, including employersdeclaring contribution obligations for supplementary and lump-sum pensionsthrough a SGPR Decision for matching of PAYE and APD data.4 Strengthen the collection of social security contributions (SSC) to yield about ObservedEUR 500 million by automate the off-setting of OGA and OAEE contributionsagainst EU subsidies.5 Undertake corrective actions to ensure implementation of the unified public Observedsector wage grid in extra-budgetary funds (EBFs) that will contribute (amongother savings mainly in operational expenditures) to the realization of thereduction in expenditure ceilings of EBFs by around 100 mn EUR to beprovided in the MTFS 2015-2018.6 Reduce military procurement spending in order to yield EUR 50 million from Observed2014 onward.7 Legislate the automatic off-setting of VAT and income tax refunds against SSF Observeddebts, eliminate OAED family benefits, reduce OAED training programs,rationalize OAEE exemptions in order to offset the reduction of IKAcontribution rates by 3.9 percentage points by EUR 230 million in 2014 andadditional EUR 115 million in 2015.8 Eliminate the TEADY dividend as part of the supplementary pensions. ObservedPrivatisation9 Amend the law to improve governance of HRADF and allow HRDAF to Observedcontrol directly companies in its portfolio. The Authorities will adopt, inconsultation with the EC/ECB/IMF, legislation to allow the CEO to act aschairman and reduce the number of Board members required to be present tohold a board meeting from 5 to 4, to ensure uninterrupted operations in theevent that the chair is vacant; provide personal contracts to the executivemembers of the BoD and narrow the grounds for dismissal of the board;introduce greater flexibility in tools and procedures for asset sales; amend therequirements of prior valuation of assets, by providing alternative mechanismsthat include a fairness opinion, while preserving strong ex-post safeguards; toestablish that super/extraordinary dividends (i.e., in excess of profits of theprevious year) or reductions in share capital from entities under privatizationare paid to the HRADF (and within 10 days to the segregated account); and toensure that Public Accounting Rules do not apply to the Fund which providesfinancial data as stipulated in Law 3986/2011 only10 Amend the law to improve governance of HRADF and allow HRDAF tocontrol directly companies in its portfolio. The Authorities will adopt, inconsultation with the EC/ECB/IMF, legislation requiring the HRADF toexercise its shareholders’ powers in the companies in which the HRADF is amajority shareholding, according to a framework of cooperation which sets outObserved75