This presentation was made by Eftichia Gratsia & Nektaria Papatzanaki, Greece, at the 40th OECD Senior Budget Officials (SBO) meeting held in Tallinn, Estonia, on 5-6 June 2019

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

2. The Economic Adjustment
Programs
 Early 2010 : lost access to international capital markets
 May 2010 : First Economic Adjustment Program (loans)
with EU and IMF
 March 2012 : Second Economic Adjustment Program
(loans) with EU and IMF
 August 2015 : Financial Assistance Facility Agreement
with the EU
 Broad objectives
 Fiscal consolidation
 Structural reforms
2

3. After the Adjustment
Programs…
Hellenic Republic - Ministry of Finance - General Accounting Office
3
Since August 2018:
 EU Enhanced Surveillance Mechanism
 Integration into the European Semester
timetable for economic policy coordination
Broad objectives
 Continue implementing structural reforms
 Meet fiscal targets, sustainable public debt

4. Public Financial Management
reforms
Hellenic Republic - Ministry of Finance - General Accounting Office
4
Weaknesses
 Fragmentation of functions
 Centralization of budget procedures
 Overlaps in controls
 Lack of multiannual planning and fiscal risks identification
 Low accountability
Treatment
 Adoption of Budget Law (OBL)
 Rationalization of the functions of the General Accounting
Office
 PFM reforms in the following areas

5. Public Financial Management Reforms
5
Areas of reforms
 Budgeting – medium term planning
 Cash management
 Payments processes
 Fiscal reporting
 Accounting
 Institutional reforms
MTFS
Budget
Budget
Execution -
Payments
Fiscal
Reporting
Financial
reports

6. General Government in Greece
State + 1,696 entities
6
Social
Security
Funds
(26 entities)
Central Government
(State +552 entities)
Local
Government
(1,118
entities)
LGs Legal
Entities
(780)
Regions
(13)
Municipaliti
es (325)
Employment
Fund
(OAED)
Health Fund
(EOPYY)
Pension
Funds (24)
Legal entities (452)
State (27)
(Central
administration)
Presidency
Parliament
Decentralized
Administrations
(7)
Ministries (18)
Hospitals (100)

7. Multiannual Planning
 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
 No policy change scenario and scenario incorporating
policy changes
 First MTFS in 2011: for the period 2012 – 2015
7

8. Top-down Budgeting
 Τop-down budgeting
 From analytical budget
lines to major
categories of
expenditure (max 10)
 Fiscal discipline built
in the process of
budget drafting and
8
General
Government Fiscal
Targets
State
Sub-
sectors
Reven
ue
targets
Balanc
e
Targets
Expenditur
e ceilings
Breakdow
n within
ceilings
Breakdow
n within
targets

9. 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
9

10. Budget Execution
 Budget execution monitoring
 Monthly monitoring & quarterly comparison 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
10

11. Fiscal reporting
11
State Budget Bulletin
 Publication twice a month (data on modified cash basis)
General Government Monthly Bulletin
 On a monthly basis (data on cash basis)
Other Bulletins and reports (public debt)

12. Cash management
Hellenic Republic - Ministry of Finance - General Accounting Office
12
 Consolidation of State fragmented accounts into a
Single Treasury Account
 Transfer of other GG entities accounts into the
Single Treasury Account
 Repo operations
 Objectives
 More efficient liquidity management
 Reduced financing needs of the State
 Improved cash flow projections

13. General Directorates of Financial
Services
 “Budget Bureau” in each spending Ministry:
General Directorates of Financial Services (GDFS)
13
Mo
F
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

14. Payment processes
14
 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

15. Accounting
 2010: Double-entry accounting of 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. New chart of accounts
Ongoing reforms: New GG Chart of accounts
New accounting rules & budget
classifications
 Single chart of accounts for all GG subsectors (PD
54/2018)
 Unified accounting rules for all GG subsectors
 Different types of classifications
 2019 new economic and administrative classification
applied for the Central Administration
16

17. Spending Reviews
 Spending reviews
 KEPE – GAO 1st spending review February – July
2012
 SR in 6 ministries summer 2014
 2016/2017 SR over the GG, with 3 pilots in 2016
 2018 establishment of a new Directorate in GAO
(SRs organization and monitoring among its
responsibilities) – 3 pilots more targeted
 2019 : 4 ministries under SR
17

18. Performance Budgeting
Hellenic Republic - Ministry of Finance - General Accounting Office
18
 Performance budgeting
 2018 establishment of a new Directorate in GAO
 2019: pilot project - 6 ministries
present 2020 budget under the new
architecture
 2022: present the whole 2023 budget in new
structure, in parallel with existing
format
 2024: execute performance budgeting (program
appropriations)

19. Institutional reforms (1)
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 (2)

21. Summing up – what has been
accomplished
 Binding fiscal rules
 Medium Term fiscal planning
 Strict top-down budgeting
 Monitoring of MoF on the whole GG
 Simplification in payments procedures
 Improved, transparent 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 and unified accounting
rules
 transition to accrual accounting
 Cash management
 Cash flow forecasting for large GG entities
 Regular monitoring of entities’ cash reserves
 Performance budgeting
 Assessment of efficiency
22

23. Next steps
23
 Continue the reforms
 Meet fiscal and economic goals
 Focus on the “quality” of public spending

24. THANK YOU FOR
YOUR KIND
ATTENTION
Hellenic Republic - Ministry of Finance - General Accounting Office 24