Greece

VII - Six-Pack

The ‘Six-Pack’ is a package of six legislative measures (five regulations and one directive) improving the Economic governance in the EU. The Commission made the original proposals in September 2010. After negotiations between the Council and the European Parliament, the package was adopted in November 2011 and entered into force on December 13, 2011. Part of the ‘Six-Pack’ measures applies only to the Eurozone member states (see the individual titles below).   
The ‘Six-Pack’ measures reinforce the Stability and Growth Pact (SGP), among others by introducing a new Macroeconomic Imbalances Procedure, new sanctions (for Eurozone member states) and reversed qualified majority voting. Also, there is more attention for the debt-criterion.   
(
http://ec.europa.eu/economy_finance/economic_governance/index_en.htm)

Negotiation
VII.1
What positions did Greece adopt in the negotiation of the ‘Six-Pack’, in particular in relation to the implications of the ‘Six-Pack’ for (budgetary) sovereignty, constitutional law
, socio-economic fundamental rights, and the budgetary process?

The position of the Government during the negotiations of the “six-pack” was not much discussed in public debates or in Parliament. Negotiations took place at the same time with the Greek bail-out negotiations and thus the latter monopolized public and parliamentary discussion. The “six-pack” enhanced budgetary surveillance and discipline was generally perceived by the Greek Government as a necessary step for further European integration.

The position of the Government was clarified by Papandreou, the Prime Minister at the time of the negotiations, in an interview given immediately after the September 2010 Euro-Summit. According to Papandreou, Greece was not opposed to a European mechanism of fiscal surveillance and to sanctions; he observed that, if such a mechanism existed some years before, it would have prevented the Greek crisis. However, he accentuated issues of justice and other aspects of economic governance, such as issues concerning fiscal paradises, sanctions against banks, growth and competitiveness. He stressed that austerity should be replaced by responsibility concerning macroeconomic figures, growth strategy and transition to a “green” economy. Papandreou proposed three tools to this direction: issuing of “green bonds”, imposition of the Tobin tax and of CO2 taxation.[1]

Directive 2011/85/EU
Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States

Implementation
VII.2
What measures are being taken to implement Directive 2011/85/EU on requirements for budgetary frameworks (required before 31 December 2013, article 15 Directive 2011/85/EU)?

Statute 4270/2014 implemented Directive 2011/85/EU into the Greek legal order.[2] The statute was introduced to Parliament on the 3rd of June 2014 and was discussed and voted on the 26th of June 2014. It entered into force on the 28th of June.[3] Apart from the implementation of the Directive, the statute aimed at the systematization of the Greek budgetary process, until then dispersed in various legal texts.

Implementation difficulties          
VII.3
What political/legal difficulties
did Greece encounter in the implementation process, in particular in relation to implications of the directive for (budgetary) sovereignty, constitutional law and the budgetary process?

No serious political/legal difficulties were encountered during the implementation of Directive 2011/85/EU. Since Greece was subject to an Economic Adjustment Programme already providing for stringent economic supervision rules, the Directive was hardly a matter of public discussion. The Directive was implemented with statute 4270/2014.[4]

During parliamentary debates for the voting of the statute, the Directive was presented by the Government as a move for the consolidation of Euro-area Member States’ economies through the adoption of common rules and principles. It was also perceived as a proof that the Eurozone functions within the EU legal framework. In substance, the Government representative argued that the statute implementing the Directive would modernize the Greek budgetary procedure in order to avoid the deficits of the past.[5]

The representative of SY.RIZ.A. objected that the statute was imposing more stringent economic governance and was further removing issues from the political forum, in order to subject them only to evaluation according to technocratic standards. He contested the effectiveness of the measures from the point of view of economic rationality and he reproached the limited participation of Parliament to the choice of the members of the Fiscal Council instituted by the statute.[6]

The representative of PA.SO.K. responded that the adoption of growth policies would be only possible at a European level, while the political will of European leaders is absent.[7]

Macroeconomic and budgetary forecasts         
VII.4
What institution will be responsible for producing macroeconomic and budgetary forecasts (article 4(5) Directive 2011/85/EU)? What institution will conduct an unbiased and comprehensive evaluation of these forecasts (article 4(6) Directive 2011/85/EU)?

According to article 21 of statute 4270/2014, the General Accounting Office of the State (a service under the Ministry of Finance) is competent for producing macroeconomic and budgetary forecasts. The same statute instituted an Independent Fiscal Council according to the provisions of Directive 2011/85/EU, which is charged with the evaluation of these forecasts.[8]

Fiscal Council    
VII.5
Does Greece have in place an independent Fiscal Council (article 6(1) Directive 2011/85/EU: ‘independent bodies or bodies endowed with functional autonomy vis-à-vis the fiscal authorities of the Member States’)? What are its main characteristics? Does Greece have to create (or adapt) a Fiscal Council in order to implement Directive 2011/85/EU?

Greece instituted a Fiscal Council (called Hellenic Fiscal Council) with statute 4270/2014,[9] in order to implement Directive 2011/85/EU. This Council is an Independent Administrative Authority; its main characteristic is its functional independence and the personal independence enjoyed by its members.

The Council’s Board of Directors (President and four members) is staffed following an open call: a committee composed by the Minister of Finance, the Governor of the Bank of Greece and the President of the Court of Audit select the most competent candidates (according to objective and predetermined criteria). The final selection of the members of the Board among these candidates belongs to the discretion of the Government. The selected persons must be subsequently approved by the special permanent parliamentary committee for Institutions and Transparency. They are nominated by the Minister of Finance for 5 years. Technocratic economic knowledge is the main criterion for being eligible as a member of the Council.

The Council is financed by the Budget and is responsible for managing its revenues and expenses.[10]

Regulation No 1176/2011 on the prevention and correction of macroeconomic imbalances     
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32011R1176:EN:NOT)

MEIP difficulties      
VII.6
What political/legal difficulties
did Greece encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process?

No serious political/legal difficulties were encountered by Greece about the implications of Regulation No 1176/2011. Generally, debates at the time were focused on the Economic Adjustment Programme. However, the “six-pack” was perceived by the opposition as a prolongation of budgetary surveillance and discipline in EU Member States. Chountis, an MEP of SY.RIZ.A. (at the time in the opposition), in a relevant question to the European Commission in September 2013, argued that the “six-pack” and the “two-pack” limit Member States’ sovereignty and democratic rights. He further argued that these EU legal instruments “institutionalize unprecedented interventions by EU institutions and by strong Member States to the sovereign exercise of economic and fiscal policy at the domestic level, and render permanent a stringent austerity regime to the detriment of European peoples”.[11]

Regulation No 1175/2011 on strengthening budgetary surveillance positions
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1997R1466:20111213:EN:PDF)

MTO procedure
VII.7
What changes to the rules on the budgetary process are made to accommodate the amended Medium-term Budgetary Objective (MTO) Procedure?

Law 3871/2010 first established the obligation to draw up a Medium term budgetary framework.[12] Subsequently law 4270/2014 incorporated the rules concerning the medium term framework into the new budgetary process that it instituted and further harmonized Greek law to the precepts of the “six-pack” and especially to Directive 11/85/EU.[13]

Article 14 of the statute defines the MTO as “the medium term budgetary objective, according to what is defined in paragraph 1 of article 3 of the Treaty on the Stability, Coordination and Governance in the EMU”. Article 35 of the statute announces the Budgetary Position Rule, according to which the annual General Government structural balance should correspond to the MTO. Further, the same article defines maximum and minimum limits for the MTO, following Section 1-Aa of the consolidated Regulation (EC) No 1466/97. Article 35 provides that the MTO is mentioned in the Medium term budgetary framework and in the introductory report to the Annual Budget; the Minister of Finance re-examines the MTO at least every three years, according to the Stability and Growth Pact procedures.

Temporal deviation from the MTO is allowed only in exceptional circumstances, and only under the condition that such deviation will not endanger medium term fiscal sustainability, or in times of implementation of major structural reforms. Finally, article 35 defines for the first time a MTO on structural balance. Article 36 sets the MTO concerning the debt/GDP ratio according to the precepts of Directive 11/85/EU and article 2 of the consolidated Regulation (EC) No 1466/97. Article 37 announces the adjustment path rule, according to the precepts of amended Section 1-Aa of Regulation (EC) No 1466/97 and allows for deviations from this rule only in exceptional circumstances, and only under the condition that such deviation will not endanger medium term fiscal sustainability, or in times of implementation of major structural reforms.

Articles 38-40 regulate the corrective mechanism procedure, activated after initiative of the Minister of Finance, the Fiscal Council, or automatically after recommendation by the European Council, in case of important deviations from the MTO or the adjustment path. They describe the procedure and the content for the adoption of a corrective action plan, whose implementation is monitored by the Fiscal Council with the regular publication of relevant reports. Finally, article 41 provides that, if the country is under an economic adjustment programme (which is the case of Greece), the fiscal rules of articles 35 f. and their adjustment path are defined in this programme, in which the corrective action plan is incorporated as well.[14]

European semester  
VII.8
What changes have to be made to the rules and practices on the national budgetary timeline to implement the new rules on a European Semester for economic policy coordination (section 1-A, article 2-a consolidated Regulation 1466/97)?

Law 3871/2010 for the first time defined a specific budgetary time-line, before the “six pack”.[15] According to this statute, the timeline of the budgetary cycle is divided in calendrical stages accordingly:

1) January-March (1st Stage): the General Governmental Strategy is defined and the Medium Term Framework of Budgetary Strategy is compiled.

2) April-May (2nd Stage): The Medium Term Framework of Budgetary Strategy is approved by the Ministerial Council and is approved by the Parliament.

3) June-July (3rd Stage): The budgetary process for Central Government begins, together with the preparation of the budget of the rest of the institutions of General Government.

4) August-October (4th Stage): Negotiations between the Ministry of Finance and the Ministries concerning their budget and timely preparation of the Social Budget.

5) November-December (5th Stage): Submission and voting of the Central Government Budget by Parliament with a parallel publication of the budget of the remaining institutions of General Government (Social Security Funds, Hospitals, Local Authorities).[16]

Statute 4270/2014 incorporated this time-line into the new budgetary process that it instituted (article 54) and further harmonized domestic law to the “European semester”.[17] Thus, it provided that the Fiscal Council (an independent administrative authority instituted for the first time by the same statute) will publish twice per year, in conformity with the “European Semester” time-line, a report in which it will elaborate its conclusions concerning the macroeconomic and fiscal forecasts, the fiscal objectives and the fiscal results.[18]

MTO difficulties       
VII.9
What political/legal difficulties
did Greece encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

The regulation was not particularly discussed during public or parliamentary debates. The MTO was perceived as a rule imposed by Directive 11/85/EU. During parliamentary debates for the voting of the statute 4270/2014, which harmonized Greek budgetary process with the “six-pack” precepts, the representative of SY.RIZ.A. objected that the statute was imposing more stringent economic governance and was further removing issues from the political forum, in order to submit them only to technocratic standards. He contested the effectiveness of the measures from the point of view of economic rationality and he reproached the limited participation of Parliament to the choice of the members of the Fiscal Council.[19] The representative of PA.SO.K. responded that the adoption of growth policies would be possible only at a European level, while the political will of European leaders is absent.[20]

Respect MTO       
VII.10
How is respect of the Medium-term Budgetary Objective included in the national budgetary framework (section 1A, article 2a consolidated Regulation 1466/97)?

Statute 4270/2014 harmonized the Greek budgetary process with the “six-pack” precepts and introduced the MTO procedure.[21] Article 35 provides that the MTO is mentioned in the Medium term budgetary framework and in the introductory report to the Annual Budget; the Minister of Finance re-examines the MTO at least every three years, according to the Stability and Growth Pact procedures. Temporal deviation from the MTO is allowed only in exceptional circumstances, and only under the condition that such deviation will not endanger medium term fiscal sustainability, or in times of implementation of major structural reforms. Finally, article 35 defines for the first time a MTO on structural balance. Article 36 sets the MTO concerning the debt/GDP ratio according to the precepts of Directive 11/85/EU and article 2 of the consolidated Regulation (EC) No 1466/97. Article 37 announces the adjustment path rule, according to the precepts of Section 1-Aa of the consolidated Regulation (EC) No 1466/97 and allows for deviations from this rule only in exceptional circumstances, and only under the condition that such deviation will not endanger medium term fiscal sustainability, or in times of implementation of major structural reforms. Articles 38-40 regulate the corrective mechanism procedure, activated after initiative of the Minister of Finance, the Fiscal Council, or automatically after recommendation by the European Council, in case of important deviations from the MTO or the adjustment path. They describe the procedure and the content for the adoption of a corrective action plan, whose implementation is monitored by the Fiscal Council with the regular publication of relevant reports. Finally, article 41 provides that, if the country is under an economic adjustment programme (which is the case of Greece), the fiscal rules of articles 35 f. and their adjustment path are defined in this programme, in which the corrective action plan is incorporated as well.[22]

Current MTO      
VII.11
What is Greece’s current Medium-term Budgetary Objective (section 1A, article 2a consolidated Regulation 1466/97)? When will it be revised?

Greece was expected to increase its primary surplus from 2.5% GDP in 2015 to 5.3% GDP in 2018. The debt/GDP ratio was expected to gradually decrease from 168.3% GDP in 2015 to 139.1% GDP in 2018.[23] In 2013 and 2014, Greece achieved its MTO. The objective, announced in the Medium term budgetary framework, should have been revised by April 30; however, though the procedure for its revision was initiated in March, the lack of agreement with Greece’s creditors has perturbed the process.[24]

Adoption MTO   
VII.12
By what institution and through what procedure is Greece’s Medium-term Budgetary Objective adopted and incorporated in the stability programme (Eurozone, article 3(2)(a) consolidated Regulation 1466/97)?

According to article 35 of statute 4270/2014, the MTO is mentioned in the Medium term budgetary framework and in the introductory report of the Annual Budget. These documents are drawn up by the General Accounting Office of the State, a service of the Ministry of Finance (articles 20 and 21). The same article imposes that the Minister of Finance re-examines the MTO at least every three years, according to the procedures set in the Stability and Growth Pact.[25]

Regulation No 1177/2011 on the excessive deficit procedure
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1997R1467:20111213:EN:PDF)

EDP difficulties         
VII.13
What political/legal difficulties
did Greece encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

No serious political/legal difficulties were encountered by Greece about the implications of Regulation No 1177/2011. Generally, debates at the time were focused on the Economic Adjustment Programme. However, the “six-pack” was perceived by the opposition as a prolongation of budgetary surveillance and discipline in EU Member States. Chountis, an MEP of SY.RIZ.A., in a relevant question to the European Commission, argued that the “six-pack” and the “two-pack” limit Member States’ sovereignty and democratic rights. He further argued that these EU legal instruments “institutionalize unprecedented interventions by EU institutions and by strong Member States to the sovereign exercise of economic and fiscal policy at the domestic level, and render permanent a stringent austerity regime to the detriment of European peoples”.[26]

Regulation No 1173/2011 on effective enforcement of budgetary surveillance
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32011R1173:EN:NOT)
Sanctions
VII.14
What political/legal difficulties
did Greece encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

No serious political/legal difficulties were encountered by Greece about the implications of Regulation No 1173/2011. Generally, debates at the time were focused on the Economic Adjustment Programme. However, the “six-pack” was perceived by the opposition as a prolongation of budgetary surveillance and discipline in EU Member States. Chountis, an MEP of SY.RIZ.A., in a relevant question to the European Commission, argued that the “six-pack” and the “two-pack” limit Member States’ sovereignty and democratic rights. He further argued that these EU legal instruments “institutionalize unprecedented interventions by EU institutions and by strong Member States to the sovereign exercise of economic and fiscal policy at the domestic level, and render permanent a stringent austerity regime to the detriment of European peoples”.[27]

General changes        
VII.15
What further changes have to be made to the rules on the budgetary process in order to comply with the Six-Pack rules?

Law 3871/2010 brought about important amendments to the Greek budgetary process, some months after the agreement of the First Economic Adjustment Programme (cf. questions II.1 f.). These amendments overlap with the “six-pack” rules. Subsequently, statute 4111/2013 established fiscal rules and practices for General Government institutions and services. Most importantly, every institution or service must set budgetary objectives according to the Annual Budget voted by Parliament.[28]

Statute 4270/2014 incorporated these changes into a systematic text and further harmonized the Greek budgetary process with the “six-pack” rules. Apart from the particular changes discussed in the previous questions (creation of an independent fiscal council, harmonization with the European semester, MTO and medium term budgetary framework etc.), the statute established the legal framework for the fiscal surveillance of General Government sub-sectors. Thus it imposes the adoption of specific fiscal rules at the level of General Government combined with clear economic objectives and with a clearly defined adjustment path for their achievement, as well as with a corrective mechanism in case of deviation from these objectives. The function of Authorizing Officer is separated from and incompatible with that of the Head of Financial Service of General Government institutions and the Head of Financial Service acquires more competences. Both the Authorizing Officer and the Head of the Financial Service of each institution must sign decisions concerning the assuming of obligations by General Government sectors (articles 24 f.). Further, the statute clearly defines the institutional framework of the budgetary process and the competences of the various authorities (articles 18 f.). It states the general principles governing the management of General Government finances (principle of reasonable financial management, of responsibility and reason giving, of transparency, of sincerity (article 33). The statute also enounces some principles concerning pluriannual fiscal planning (article 34): it should give priority to the repayment of the debt and to the consolidation of fiscal and economic stability, it should be unitary and concern all General Government sectors, it should be based on medium term forecasts, it should be transparent and subject to scrutiny by independent authorities.[29]

Miscellaneous
VII.16
What other information is relevant with regard to Greece and the Six-Pack?

No information retrieved.

[1] Cf. the reportage on Papandreou’s speech after the Summit, To Vima, 16 September 2010, available at http://www.tovima.gr/finance/article/?aid=354834.

[2] ΦΕΚ Α’ 143/28-6-2014, principles of fiscal management and supervision (incorporation of Directive 1176/2011), public accounting and other provisions. For the situation before this statute, cf. European Commission, Occasional Paper on the European Economy, no 128, Interim Progress Report on the implementation of Council Directive 2011/85/EU on requirements for budgetary frameworks of the Member States, February 2013, available at http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp128_en.pdf.

[3] Cf. http://www.hellenicparliament.gr/Nomothetiko-Ergo/Anazitisi-Nomothetikou-Ergou?law_id=9be63580-976a-4580-a440-8bb787a2c0bc.

[4] Cf. question VII. 2.                                                

[5] Cf. Minutes of the Greek Parliament, 26 June 2014, http://www.hellenicparliament.gr/UserFiles/a08fc2dd-61a9-4a83-b09a-09f4c564609d/es20140626.pdf, 290 f.

[6] Cf. the relevant debates, cited above, at 295 f.

[7] Cf. ibid, 297 f.

[8] Cf. Part A’ of the Statute.

[9] Cf. question VII. 2.                                                

[10] Cf. Part A’ statute 4270/2014.

[11] Cf. the relevant question by N. Chountis, available at http://www.europarl.gr/el/greek-meps/meps-activity/meps-activity-2013/september/sepmep14.html;jsessionid=5AD5723EAD20226EBB639DF77A7880C4.

[12] See question II.2.

[13] Cf. Part B’ statute 4270/2014.

[14] See the explanatory report to statute 4270/2014, available at http://www.hellenicparliament.gr/UserFiles/2f026f42-950c-4efc-b950-340c4fb76a24/a-apred-eis-olo.pdf.

[15] Cf. question II.4.

[16] See the informative note accompanying the bill, http://www.hellenicparliament.gr/Nomothetiko-Ergo/Anazitisi-Nomothetikou-Ergou?law_id=22cdbbfe-ed73-4fe5-8f49-d6a1c6f88494. See also the explanatory report to the bill, available at http://www.hellenicparliament.gr/Nomothetiko-Ergo/Anazitisi-Nomothetikou-Ergou?law_id=22cdbbfe-ed73-4fe5-8f49-d6a1c6f88494.

[17] ΦΕΚ Α’ 143/28-6-2014, principles of fiscal management and supervision, public accounting and other provisions.

[18] Article 2 paragraphs 4 f.

[19] Cf. the relevant debates, cited above, at 295 f.

[20] Cf. ibid, 297 f.

[21] ΦΕΚ Α’ 143/28-6-2014, principles of fiscal management and supervision (incorporation of Directive 1176/2011), public accounting and other provisions, Part B’.

[22] See the explanatory report to statute 4270/2014, available at http://www.hellenicparliament.gr/UserFiles/2f026f42-950c-4efc-b950-340c4fb76a24/a-apred-eis-olo.pdf.

[23] Cf. the Medium term budgetary framework (Law 4263/2014), ΦΕΚ 117 Α‘/14.05.2014, available at http://www.hellenicparliament.gr/Nomothetiko-Ergo/Anazitisi-Nomothetikou-Ergou?law_id=b65768b8-fbd9-42c8-ab30-627e8c36bdf1.

[24] Cf. circulars 2/16590/ΔΠΔΣΜ/6.3.2015 and 2/17310/ΔΠΓΚ/10.3.2015, published on 11/3/2015, available at https://diavgeia.gov.gr/.

[25] ΦΕΚ Α’ 143/28-6-2014.

[26] Cf. the relevant question by N. Chountis, available at http://www.europarl.gr/el/greek-meps/meps-activity/meps-activity-2013/september/sepmep14.html;jsessionid=5AD5723EAD20226EBB639DF77A7880C4.

[27] Cf. the relevant question by N. Chountis, available at http://www.europarl.gr/el/greek-meps/meps-activity/meps-activity-2013/september/sepmep14.html;jsessionid=5AD5723EAD20226EBB639DF77A7880C4.

[28] Cf. Law 4111/2013, ΦΕΚ 18 Α‘/25.01.2013, available at http://www.hellenicparliament.gr/Nomothetiko-Ergo/Anazitisi-Nomothetikou-Ergou?law_id=3cde3e1c-d018-4244-af66-c69249f657f6.

[29] See the explanatory report to the statute, available at http://www.hellenicparliament.gr/UserFiles/2f026f42-950c-4efc-b950-340c4fb76a24/a-apred-eis-olo.pdf.