The pre-election bustle has left the topics related to the Greek economy and the reforms under the bailout agreement in the background as if an awkward detail. One of the last acts of Lucas Papademos' office was to announce a list of measures that must be met by the end of June this year to enable Greece to keep the benefits from the second bailout. In the last month, political leaders of major parties have focused on promising salvation for Greece, but ignored the obligations under Memorandum 2.
One of the first tasks of the newly formed government will be to continue implementing the measures set out in the budget, including the 12% reduction of the additional remuneration in the public sector. This measure is part of the fiscal consolidation of public finances this year and the government will have to save 205 million euro. Costs for the next two years will have to be revised and draft budgets for 2013 and 2014 will have to be prepared by the end of June. Serious attention must be paid to the cost of medicines subsidized by the state as well as to the social benefits and operating costs of hospitals. Examining these obligations in detail makes it clear that additional cuts are expected in the sectors of health and social security no matter what government will enter into power next week.
Sales offers of key state enterprises such as the water supply companies in Thessaloniki and Athens, the state lottery, gas supply companies, state companies managing photovoltaic parks and other public enterprises must be prepared by the middle of the year. Concession offers for certain ports and airports as well as for the management and maintenance of the Egnatia Highway will have to be launched on the market in the second half of the year. In order to start the privatization with full force, the new government will have to remove the special rights over the management of public assets and to transfer them to the State Property Management Agency. It will be responsible for the privatization process and will have to disclose the full inventory of assets on the website of the Ministry of Finance. This year, it will have to be specified how the area of the old airport Elinikos will be utilized and the status and value of separate assets should be clarified.
The new government will take on the burden of reforming the tax system, which is constantly being reshaped, but has never fit the budgetary needs and is far beyond taxpayers’ means. The first change in this area that the new government must make is to regularize the new increases in property tax. As of June, individual and company obligations to the state that are 20 days overdue will be published on the Internet each month. Then, assessments and cuts of the middle management staff in the tax administration according to the revenue of regional tax offices will follow. As of June this year, payment of tax obligations in cash at regional tax offices will be permanently banned - this will only be done through either bank transfers or cheques. Thus, tax administration staff will focus on the performance of duties of greater use such as inspections, technical assistance to taxpayers and collecting revenues, as is specified in Papademos’ list of duties for the new government.
Within a month, the new government will have to establish a special unit in the tax administration, which will deal exclusively with the control and inspection of the healthcare system finances. Similar control units will be established to fight organized crime for money laundering and to track terrorist financing. The department receiving signals of corruption, which was created at the height of the economic crisis, is planned to be improved. Moreover, the government will have to establish a single register for the public sector obligations and must provide at least 70% of the government cost financing.
A task that has not been implemented for 20 years now, but must be enforced by the end of June, is the introduction of an electronic system for revenue management as a part of the commitments of Greece to modernize and simplify public administration. In less than a month, the new government will have to launch the pilot version of the procurement management and selection programme and revise the process of appeal for the procedures of already assigned procurement contracts.
As for the financial sector, the new government will have to quickly decide on the role and responsibilities of the supplementary fund for automobile accidents compensations along with the recapitalization of the banks. It must ensure that the fund will be able to meet its obligations for the second quarter of this year too. A series of reforms is also expected in the labour market, starting with the reorganization of the labour inspectorate. It must become more efficient and the optimization of its work must be translated into concrete results in fighting undeclared work and informal economy. The government will have to continue the process of labour market liberalization under the bailout agreement and monitor the implementation of the adopted laws in practice. By the end of the second quarter of 2012, Greece will have to adopt a law to eliminate all fixed prices and wages for services in various sectors, thus ensuring market-based pricing.