2.4 Public Financial Management and Public Procurement
2.4.1 Public financial management
The authorities commit to continuing reforms that aim at improving the budget process and expenditure controls, clearing arrears, and strengthening budget reporting and cash management.
A key requirement of the Organic Budget Law adopted in October 2015 is the transfer of financial management functions from the Fiscal Audit Offices (FAOs) to GDFSs by January 2017. To manage the transfer of functions smoothly, the authorities will: (i) prepare an action plan listing all activities and milestones for the transfer of responsibilities ([May] 2016); (ii) issue a joint MoF and MAREG circular defining responsibilities and organisation structure of GDFSs ([June] 2016); (iii) issue a joint MoF and MAREG circular defining the new responsibilities of FAOs ([June] 2016); (iv) provide GDFSs with adequate staff (June 2016) based on an assessment of the staff capacity; (v) ensure access of GDFS staff to the FMIS IT system (September 2016). The authorities will also work on a solution for the regional offices of ministries who lack access to the FMIS IT system; (vi) provide a training plan for GDFS staff by [June] 2016 and carry out training until October 2016.
The authorities will complete the entire OBL reform by end-December 2016, including termination by [June 2016] of the ex-ante audit of payments by the Hellenic Court of Audit.
The Greek Government is committed to making the Fiscal Council fully operational. The members of the Board were appointed. The Authorities will fully staff the Fiscal Council by [July 2016]; the Fiscal Council is expected to issue its first opinion by September 2016.
Greece shall discuss with the Institutions the preparation of the draft budget during the month of September, including the macroeconomic assumptions on which it is based as well as the main fiscal measures envisaged.
The Government will design a new government Budget Classification structure and Chart of Accounts (December 2016) in time for the 2018 Budget. To advance the work on the Chart of Accounts, the authorities commit to: (i) agree a phased approach and the structure for the Chart of Accounts for central and general government (by [June] 2016); and (ii) develop the economic classification in consultation with the concerned stakeholders (by September 2016).
The authorities presented a plan to complete the clearance of arrears and will implement it as soon as the liquidity situation allows them to do so (continuous action). The authorities will then clear the outstanding stock of spending arrears of [EUR XX billion] by end-Programme, including the clearance of the backlog of unprocessed tax refund and pension claims The authorities will provide a preliminary report on the results of the audit of arrears conducted in January [by end-May 2016] and a full report by [end-June 2016]. TheGovernment will ensure that budgeted social security contributions are transferred from social security funds to health funds and hospitals so as to clear the stock of health-related arrears, in line with the KPI targets.
The Government will present, by [June] 2016, the medium-term action plan to meet the requirements of the Late Payment Directive (key deliverable) including concrete measures and safeguards to ensure the transfer of IKA liabilities (cash transfers and expenditures) to EOPYY during the relevant period. The authorities will provide a report by [June 2016] on the results of the audit of EOPYY’s accounts payables. The authorities will continue to improve operations as measured by key performance indicators.
The Government will continue the work on improving the fragmented cash management system. The authorities will provide by [April 2016] a report on the compliance of central administration entities with the Ministerial Decision requiring them to transfer their accounts to the Treasury Single Account (TSA). The authorities will establish by [May] 2016 a working group to develop the cash planning function and a high level cash management committee, which will include representatives from GAO, PDMA and SGPR. The authorities will provide by June 2016 an action plan to consolidate the bank accounts of subordinate entities and establish by May 2016 a working group to this effect. Following the implementation of a cash management reform the authorities will close accordingly central government accounts in commercial banks and consolidate them in the Treasury Single Account and provide a report to the Institutions on the overall situation in [July] 2016.
[The Ministry of Finance will establish a ring-fenced account for the management of the EU Home Affairs Funds (AMIF/ISF) and of Greece's respective national contributions. The account will operate exclusively for the financing of the beneficiaries of the National Programmes AMIF/ISF.The ring-fenced account will be by May 2016 at the latest endowed by the government with funds equivalent at least to the advance payments provided by the Commission and to the corresponding national co-financing. Monthly reporting of the activities of this account will be provided to DG HOME of the European Commission].{This fund will be managing EU moneys. The capital will only be going to NGO's and the management will fall solely with the EU}
2.4.2 Public procurement
Greece needs to take further action in the area of public procurement to increase efficiency and transparency of the Greek public procurement system, prevent misconduct, and ensure more accountability and control. {This must obviously be the reason why previous govenments have tried twice to abolish the Government Transparency website} Based on the Action Plan on Public Procurement agreed with the European Commission in October 2015, the authorities will:
i. [By May 2016], adopt a consolidated, comprehensive and simplified legislative framework (primary and secondary legislation) agreed with the European Commission on public procurement and concessions, including the transposition of the new EU Directives on public procurement and concessions (2014/23, 2014/24, 2014/25), and the establishment of a Remedies Review Body to provide fast and effective remedies as provided for in the EU Remedies Directives (first-instance remedies). The Remedies Review Body shall start operating by 31 December 2016.
ii. By February 2017, the authorities will adopt measures to improve and reform the judicial remedies system in the area of public procurement (second-instance remedies), taking into account the establishment of the Remedies Review Body. In preparation, by June 2016, the authorities in cooperation with the Commission will complete a comprehensive assessment of the existing judicial remedies system, identifying problems (e.g. lack of effective and rapid remedies, delays, difficulty of obtaining damages, litigation costs) and proposing specific actions for reform.
iii. The authorities will continue to implement the actions on e-procurement as agreed with the European Commission in the action plan.
iv. By [1 June] 2016, a new central purchasing scheme for the needs of 2017 (onwards), on the basis of a plan developed in cooperation with the European Commission, will enter into force.
The authorities will ensure that the SPPA remains the principal institution in the area of public procurement in Greece. The SPPA will cooperate with other Greek Institutions and the Commission in order to agree by May 2016 a national strategy that will identify systemic deficiencies of the national public procurement system, and propose realistic solutions to be implemented by the authorities through an action plan.
2.4.1 Public financial management
The authorities commit to continue reforms that aim at improving the budget process and expenditure controls, clearing arrears, and strengthening budget reporting and cash management.
The authorities will adopt legislation by October 2015 (key deliverable) to upgrade the Organic Budget Law to: a) introduce a framework for independent agencies; b) phase out ex-ante audits of the Hellenic Court of Auditors and account officers (ypologos); c) give GDFSs exclusive financial service capacity and GAO powers to oversee public sector finances; and d) phase out fiscal audit offices by January 2017. The authorities will adopt secondary legislation to define the transitional arrangements of the OBL reform by endDecember 2015, and complete the reform by end-December 2016.
The Greek government is committed to making the Fiscal Council operational before finalizing the MoU. For this to happen, the government adopted a Ministerial Decision to start the open procedure to select the members of the board. Following completing the process for the appointment of the Board Members of the Fiscal Council, the Government will by September 2015 issue the needed secondary legislation to make the Council fully operational (including budgeting and staffing) by November 2015. The Authorities will complete a review with the help of technical assistance from the EC of the work of the Fiscal Council by December 2016, and adopt legislation as needed (March 2017).
In line with the Fiscal Compact, the Greek Government shall present the main characteristics of their medium-term public finance plans to the European Commission and the ECOFIN Council in spring of each year and will update its Medium Term Fiscal Strategy before end May of each year in line with the programme targets. In addition, as part of a common budgetary timeline, Greece shall submit to the European Commission the draft budget for the following year by 15 October of each year, along with the independent macroeconomic forecast on which it is based. The Government will design a new government Budget Classification structure and Chart of Accounts (September 2016) in time for the 2018 budget.
The authorities will present by September 2015 a plan to complete the clearance of arrears, tax refund and pension claims, and immediately start implementation. The authorities will then clear the outstanding stock of spending arrears of 7.5 billion by end-December 2016 after completing a thorough audit by end-January 2016, and clear the backlog of unprocessed tax refund and pension claims by end-December 2016;
The Government will ensure that budgeted social security contributions are transferred from social security funds to health funds and hospitals so as to clear the stock of health-related arrears. The Government will present by November 2015 a medium-term action plan to meet the requirements of the Late Payment Directive, including concrete measures and safeguards to ensure the transfer of IKA liabilities (cash transfers and expenditures) to EOPYY during the relevant period. By January 2016, the authorities will complete an external audit of EOPYY’s accounts payables, and rationalize the payment process in the social security and health system by end-June 2016 (key deliverable). The authorities will continue to improve operations as measured by key performance indicators.
To improve the fragmented cash management system, the Government will include all central government entities in the treasury single account by end-December 2015. Following the implementation of a cash management reform the Authorities will close accordingly general government accounts in commercial banks and consolidate them in the Treasury single account. As a prior action, the ministry of finance will ring-fence the account for the management of EU structural funds instruments and of Greece’s national contributions.
2.4.2 Public procurement
Greece needs to take further action in the area of public procurement to increase efficiency and transparency of the Greek public procurement system, prevent misconduct, and ensure more accountability and control. By September 2015 the authorities will agree with the European Commission, which will assist on implementation, an action plan to spell out the details of the actions below (key deliverable).
- By January 2016, a consolidated, comprehensive and simplified legislative framework (primary and secondary legislation) on public procurement and concessions, including the transposition of the new EU directives on public procurement and concessions (2014/23, 2014/24, 2014/25) will enter into force. 13 • By December 2016, the reform of the system of non-judicial/administrative remedies will enter into force. The authorities will present a detailed proposal for this reform to the Commission by October 2015.
- By February 2017, the authorities will adopt measures to improve the judicial remedies system. In preparation, the authorities will perform by September 2016 in cooperation with the Commission a comprehensive assessment of the effectiveness of the existing judicial remedies system, identifying problems (e.g. lack of effective and rapid remedies, delays, difficulty of obtaining damages, litigation costs).
- The authorities will continue to implement the action plan on e-procurement as agreed with the Commission.
- By May 2016, a new central purchasing scheme, established in cooperation with the Commission and the OECD will enter into force, to be applied for the needs of 2017.
The authorities will ensure that the SPPA remains the principal institution in the area of public procurement in Greece; the SPPA will cooperate with other Greek institutions and the Commission to prepare by March 2016 a national strategy, identify systemic deficiencies of the national public procurement system, and propose realistic solutions to be implemented by the authorities through an action plan.