Athens facing major challenge in implementing, delivering more than 2 dozen milestones for second review

By G. Kouros

The “infamous” date of December 7 now looms as the milestone for finalizing the second review of the Greek program (third bailout), given that the specific day marks the last scheduled Eurogroup meeting for 2016.

As such, the Greek side will begin negotiations this week with institutional creditors’ top representatives, with expert-level contacts beginning on Tuesday and talks with institutions’ representatives on Friday.

The upcoming list of “prior actions”, called “milestones” by the Eurogroup”, is lengthy, and includes several “painful” interventions in the public sector, particularly in so-called special salary categories – such as physicians employed in state hospitals, judges, diplomats, military officers etc. – as well as pressing labor sector liberalization.

Additionally, the leftist Greek government must continue a liberalization of the electrical power sector, a standing demand by creditors, one which includes the transfer of a stake in the state-controlled Independent Power Transmission Operator (IPTO or ADMIE)

Beyond just European creditors’ demands, as foreseen in the third memorandum bailout signed in August 2015, the Tsipras government has committed to implementing various measures emanating from the OECD’s so-called “took kit” of reforms. The latter are part of decades-old efforts to boost competitiveness in the sluggish Greek economy and public administration.

Turning to the fiscal “front”, institutional creditors’ representatives will scour Greek public finances to ascertain whether revenue targets have been met, both in terms of obligations stemming from the third memorandum bailout to the most recent successful review of the Greek program last May.  

Specifically, the government must:

• Vote through a medium-term program for the 2017-2020 period, with prerequisites being an agreement on how to fund a so-called solidarity income fund, as well as the burning issue of the level of annual primary budget surplus goals – as a percentage of GDP -- after 2018.
• prove that it has paid off state suppliers, contractors and other third parties owed money by the public sector.
• A new regulatory framework for non-performing loans (NPLs).
• Ensure the review of the board of directors of Greece’s systemic banks by the Hellenic Financial Stability Fund.
• Draft a plan for adult continuing education and training, with proportional targets for 2017 and 2018.
• Ending the “closed profession” status of various types of engineers in the country, particularly civil engineers.
• Implementing a new framework for licensing in the country.
• Establishing a “one-stop-shop” service for businesses.
• New measures aimed to boost competitiveness, investments, to cut down on bureaucracy and to prepare risk management reports.
• Reforms in the energy sector, particularly a freeing up of the natgas market.
• Reforming internal regulations for the operation of state-run port authorities.
• A new regime to guarantee the concept of evaluations in the public administration.
• Changes in teh special public sector salary scales.
• Establish a permanent framework allowing the mobility of civil servants, i.e. transferring employees to under-staffed departments or agencies.
• Reforming the civil law framework, as well as setting minimum bid prices in the auction of properties.
• A new framework for state funding of political parties, with a view to much greater transparency and frugality.
• Modifying Greece’s outdated bankruptcy code.
• Harmonizing Greek law with EU “best practices” in terms of mass layoffs, collective bargaining and laws on trade unions.
• Restructuring land title offices, the current substitute in the country in lieu of a functioning, unified and digitalized land registry (cadastre).
• Proclaiming the first ever electricity tender in Greece, under the French-inspired New Organization of Market in Electricity (NOME) regime, which will also allow the Public Power Corp.’s (PPC) lignite-fueled unit and hydro-electric plans to sell electricity directly to suppliers, among others.
• Implementing a unified pricing regime for water resources by the state-run National Regulatory Authority for Water.
• Passing a new law modernizing the legal framework for logistics centers.
• Debuting a national action plan to combat off-the-books employment.
• Presenting an assessment study by the privatization fund (TAIPED) on the state airports and ports in its portfolio, followed by a decision on which facilities it will not exploit, so that the latter can be transferred to the new super-fund for privatizations.
• Determining which utilities and agencies will remain in the public sector and registering the real estate holdings of the latter that will be transferred to the new super fund.