This presentation was made by Stavroula Miliakou, Greece, at the 38th Annual Meeting of OECD Senior Budget Officials held in Lisbon on 1-2 June 2017.

1. GREECE
RECENT DEVELOPMENTS IN PUBLIC FINANCIAL MANAGEMENT
Hellenic Republic
Ministry of Finance
General Accounting Office (GAO)

2. Greece at the outbreak of the crisis
2
Fiscal Balance & Current account Balance (%GDP)
Source: Eurostat and Bank of Greece, SDDS monthly data
-16
-14
-12
-10
-8
-6
-4
-2
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
GG Balance (%GDP) Current account balance (%GDP)

3. Greece at the outbreak of the crisis
3
Source: EurostatSource: Eurostat
100.000
120.000
140.000
160.000
180.000
200.000
220.000
240.000
260.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
GDP (million euro)
80,0
90,0
100,0
110,0
120,0
130,0
140,0
150,0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
GG Debt (% GDP)

4. The Economic Adjustment Programmes
 Early 2010: lost access to international capital markets
 May 2010: Economic Adjustment Programme (loans) with EU
and IMF
 March 2012: Second Economic Adjustment Programme (loans)
with EU and IMF
 August 2015: Financial Assistance Facility Agreement with the EU
 Broad objectives
 Fiscal consolidation
 Structural reforms
4

5. Economic Adjustment Programmes
Public Financial Management Reforms
5
Areas of reforms
 Budgeting
 Cash management
 Payments
 Fiscal reporting
 Accounting
 Institutional reforms
Objectives
 Improve budget preparation, execution, monitoring
 Improve budget transparency
 Increase accountability
 Strengthen fiscal discipline
MTFS
Budget
Budget
Execution -
Payments
Fiscal
Reporting
Financial
reports

6. General Government in Greece
State + 1660 entities
6
Social Security
Funds
(26 entities)
Central Government
(State +540 entities)
Local
Government
(1,094 entities)
LGs Legal
Entities (756)
Regions
(13)
Municipalities
(325)
Unemployment
Fund
Health Fund
Pension Funds
(24)
Legal entities 440)
State (28)
(Central administration)
Presidency
Parliament
Decentralized
Administrations (7)
Ministries (19)
Hospitals (100)

7. Budgeting (1)
7
Hospitals & Primary Health CareHospitals & Primary Health Care
System
SSFsSSFs
State
Budget
State
Budget
subsector
LGs
subsector
Budget
Social
Budget
Social
Budget
Budget for the
rest of the GG
entities

8. Budgeting (2)
 Ministry of Finance (MoF):
focus on General Government instead of State
 Binding fiscal targets for the General Government
 Enhanced monitoring and management capacity of MoF
 Availability of needed information for
 fiscal projections
 potential fiscal risks
 making policy decisions
8

9. Budgeting (3)
 From annual to multiannual fiscal planning:
MTFS - Medium Term Fiscal Strategy
 Expand the horizon to 4 years (budget year + 3 years ahead)
 Targets for fiscal balance set for General Government (GG)
 Targets and expenditure ceilings incorporated into the annual
Budget
 Fiscal projections for all sub-sectors
 Baseline scenario and scenario incorporating policy changes
 First MTFS in 2011: 2012 – 2015
 Latest MTFS in 2017: 2018 – 2021
9

10. Budgeting (4)
 Τop-down budgeting
 From analytical budget
lines to major categories
of expenditure (max 9)
 Fiscal discipline built in
the process of budget
drafting and executing
10
General Government
Fiscal Targets
State Sub-sectors
Revenue
targets
Balance
Targets
Expenditure
ceilings
Breakdown
within
ceilings
Breakdown
within
targets

11. Budgeting (5)
 Commitment Registries
 Detailed registries of obligations in all GG entities
 No obligation assumed in excess of appropriations
 Accurate monitoring of outstanding commitments, accounts
payable and arrears
 Data on payables and arrears collected in the General
Accounting Office (GAO) on a monthly and quarterly basis
11

12. Budgeting (6)
 Budget execution monitoring
 Monthly monitoring by GAO against targets
 Sanctions if divergence from targets exceeds 10%
 Local Governments’ Observatory
 Constitutional restriction to the extent of MoF
intervention in LGs
 Sanctions & corrective actions
12

13. Fiscal reporting
13
State Budget Bulletin
 Publication twice a month
General Government Monthly Bulletin
 On a monthly basis
Other Bulletins and reports

14. Cash management
 Objectives:
 address cash constrains
 enhance efficiency
 improve accuracy of cash-flow projections
 improvement in cash flow projections
 consolidation of all GG accounts into a Treasury Single
Account (TSA)
 repo transactions between the State and the GG entities
14

15. Accounting (1)
 2010: Double-entry accounting from cash to modified cash basis
 Facilitation of reporting
 Improved annual financial statements of the State
 Statement of Financial Position (Balance Sheet)
 Income Statement (Profit and Loss Statement)
 Cash Flow Statement
 Statement of Changes in Equity
15

16. Accounting (2)
Ongoing reforms: New GG Chart of accounts
New accounting rules & budget classifications
 Single chart of accounts for all GG subsectors
 Unified accounting rules for all GG subsectors
 Different types of classifications
Target: transition from cash and modified cash to accrual accounting
16

17. Payment processes
17
 Until 2014:
 2014:
 2017:
 2019: Abolition of ex-ante HCA audits for the rest of GG
Line
Ministry
MoF/GAO
ex-ante audit
(legality &
regularity)
HCA
ex-ante audit
(>15.000)
MoF/GAO
payment
voucher
Local tax
offices
Payment
Line
Ministry
MoF/GAO
ex-ante audit
(legality &
regularity)
HCA
ex-ante audit
(>30.000)
MoF/GAO
Electronic
payment via
Bank of Greece
Line Ministry entire process

18. Institutional reforms (1)
 “Budget Bureau” in each spending Ministry:
General Directorates of Financial Services
18
MoF
LM1
Financial
services X
Entity1
LM1
Financial
Services Y
Entity2
Entity3Entity4
LM2
Financial
Services X
LM…
Entity…
MoF
GDFSs in
Ministries
Financial Services in
GG entities
LM: Line Ministry

19. Institutional reforms (2)
19
2010: Parliamentary Budget Office
 Information to Parliament via an independent institution
 Strengthen institutional controls on government’s fiscal policy
 Monitoring of the budget

20. 20
2014: Hellenic Fiscal Council Independent Authority
 Monitoring - Assessment of:
 macroeconomic and fiscal projections
 compliance to fiscal rules
 budget & MTFS targets & outcomes
 Publishes biannual fiscal reports
Institutional reforms (3)

21. Summing up – what has been
accomplished
 Binding fiscal rules
 Strict top-down budgeting
 Monitoring of MoF to GG
 Simplification in payments
 Improved fiscal reporting
 More efficient cash management
 Comprehensive financial statements
 Institutional reforms
21

22. Summing up – what remains to be done
 Accounting for all GG entities
 single Chart of Accounts
 unified accounting rules
 transition to accrual accounting
 Cash management
 centralized management of all GG entities’ reserves
 Performance budgeting
 Assessment of efficiency
 Spending reviews on regular basis
22

23. Outcomes
23
Are the objectives met?
Source: Hellenic Statistical Authority and Bank of Greece
-15,1
0,7
-10,1
3,9
-15,1
-0,6
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
GG Balance (%GDP) GG Primary Balance (%GDP) Current account balance (%GDP)

24. Outcomes
24
…but 2008-2015
 Economy in
recession
 GDP
decreased
continuously
 Cumulative
decrease of
27.4%Source: Eurostat
150.000
160.000
170.000
180.000
190.000
200.000
210.000
220.000
230.000
240.000
250.000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
GDP

25. Outcomes
25
Source: Eurostat, Unemployment as percentage of active population
7,8
27,5
0
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
EA-19 Greece
Unemployment rate (% of active population)
… but

26. Outcomes
26
20
22
24
26
28
30
32
34
36
38
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
People at risk of poverty or social exclusion (% of population)
Total - EA19 Total - Greece
Source: Eurostat (Percentage of population that are either at risk of poverty, or severely materially deprived or living in a
household with a very low work intensity)
… but

27. Targets for the fiscal rules
27
 Stable Primary Surpluses
 Sustainable Public Debt
Detailed framework currently under discussion among the
Greek government, EU institutions and the IMF

28. Next steps
28
 Continue the reforms
 And the most important ...
The budget will be called in the coming years to play
its redistributive role, using all the available tools, in
order to enhance growth and correct problems and
inequalities that have been created in Greek society
over the last seven years.

29. Thank you for your attention…