Common use of Public Financial Management Clause in Contracts

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 end- December 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 macro- economic 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.

Public Financial Management. The authorities commit to continue continuing 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 (A key deliverable) to upgrade requirement of the Organic Budget Law to: aadopted in October 2015 is the transfer of financial management functions from the Fiscal Audit Offices (FAOs) introduce a framework for independent agencies; b) phase out ex-ante audits of the Hellenic Court of Auditors and account officers (ypologos); c) give to GDFSs exclusive financial service capacity and GAO powers to oversee public sector finances; and d) phase out fiscal audit offices by January 2017. The To manage the transfer of functions smoothly, the authorities will adopt secondary legislation to define will: (i) prepare an action plan listing all activities and milestones for the transitional arrangements 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 specifying and defining the new responsibilities of FAOs (August 2016); (iv) ensure that all ministries provide GDFSs with adequate staff (June 2016) based on an assessment of the OBL reform by end- December 2015, staff capacity; (v) ensure read-only access of GDFS staff to the FMIS IT system (September 2016) and complete the reform full access to GDFS staff by end-December 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 and immediately carry out training to be completed by December 2016. The authorities will complete the entire OBL reform by end-December 2016, including termination by January 2017 of the ex-ante audit of payments by the Hellenic Court of Audit for central administration and by December 2018 for Local government and other entities of the general government. In the meantime, the authorities in consultation with the Hellenic Court of Audit will produce by June 2016 a plan explaining how the Court will proceed with the abolition of ex ante controls and how they will reorient their activities. The Greek government 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 fully operational. 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 2015were appointed. The Authorities will complete a review with the help of technical assistance from the EC of the work of fully staff the Fiscal Council by December July 2016, and adopt legislation as needed (March 2017); the Fiscal Council is expected to issue its first opinion by September 2016. In line Greece shall discuss each year with the Fiscal Compact, Institutions the Greek Government shall present the main characteristics preparation 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 during the following year by 15 October month of each yearSeptember, along with including the independent macro- economic forecast macroeconomic assumptions on which it is basedbased as well as the main fiscal measures envisaged. The Government will design a new government Budget Classification structure and Chart of Accounts (September December 2016) in time for the 2018 budgetBudget. 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 will present update by September 2015 end May 2016 a plan to complete the clearance of arrearsarrears by June 2017 and will implement it as soon and as far as the liquidity situation allows them to do so, tax refund and pension claims, and immediately start implementationtaking account of the disbursement plan under the ESM programme (continuous action). 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 2016arrears, and clear the backlog of unprocessed including tax refund and pension claims also using designated programme financing . The authorities will conduct a thorough audit of spending arrears by end June and will produce detailed monthly reports on the arrears cleared since 1 May 2016 and on outstanding gross and net arrears. The authorities will submit a thorough report on the results of the audit of arrears conducted until January by end-December April 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, in line with the KPI targets. The Government will present present, by November 2015 June 2016, a medium-term action plan with the aim to meet the requirements of ensure that payments will be made in compliance with the Late Payment Directive, 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. By January 2016, the The authorities will complete an external provide the final report by June 2016 on the results of the 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 Government will continue the work on improving the fragmented cash management system, . The authorities will provide by mid-May 2016 a report on the Government will include all compliance of central government administration entities in with the treasury single account by end-December 2015Ministerial Decision requiring them to transfer their accounts to the Treasury Single Account (TSA). Following the implementation of a cash management reform the Authorities authorities will close accordingly general central government accounts in commercial banks and consolidate them in the Treasury single accountSingle Account and provide a report to the Institutions on the overall situation in July 2016. As The authorities will establish by May 2016 a prior actionworking group to develop the cash planning function and a high level cash management committee, which will include representatives from GAO, PDMA and SGPR that will provide by June 2016 an action plan to consolidate the ministry bank accounts of finance subordinate entities. The Ministry of Finance will establish a ring-fence the fenced account for the management of the EU structural Home Affairs Funds (AMIF/ISF) which will operate exclusively for the financing of the beneficiaries of the National Programs AMIF/ISF, credited by the inflows of AMIF/ISF and, to the extent necessary (co-financing requirement), national funds. By June 2016 at the latest the ring-fenced account will be endowed by the government with funds instruments and equivalent to the advance payment that has already been provided by the Commission. A bi-monthly detailed reporting of Greece’s national contributionsthe activities of this account will be provided to DG Home of the European Commission.

Public Financial Management. The authorities commit to continue continuing 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 (A key deliverable) to upgrade requirement of the Organic Budget Law to: aadopted in October 2015 is the transfer of financial management functions from the Fiscal Audit Offices (FAOs) introduce a framework for independent agencies; b) phase out ex-ante audits of the Hellenic Court of Auditors and account officers (ypologos); c) give to GDFSs exclusive financial service capacity and GAO powers to oversee public sector finances; and d) phase out fiscal audit offices by January 2017. The To manage the transfer of functions smoothly, the authorities will adopt secondary legislation to define will: (i) prepare an action plan listing all activities and milestones for the transitional arrangements 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 specifying and defining the new responsibilities of FAOs (August 2016); (iv) ensure that all ministries provide GDFSs with adequate staff (June 2016) based on an assessment of the OBL reform by end- December 2015, staff capacity; (v) ensure read- only access of GDFS staff to the FMIS IT system (September 2016) and complete the reform full access to GDFS staff by end-December 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 and immediately carry out training to be completed by December 2016. The authorities will complete the entire OBL reform by end-December 2016, including termination by January 2017 of the ex-ante audit of payments by the Hellenic Court of Audit for central administration and by December 2018 for Local government and other entities of the general government. In the meantime, the authorities in consultation with the Hellenic Court of Audit will produce by June 2016 a plan explaining how the Court will proceed with the abolition of ex ante controls and how they will reorient their activities. The Greek government 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 fully operational. 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 2015were appointed. The Authorities will complete a review with the help of technical assistance from the EC of the work of fully staff the Fiscal Council by December July 2016, and adopt legislation as needed (March 2017); the Fiscal Council is expected to issue its first opinion by September 2016. In line Greece shall discuss each year with the Fiscal Compact, Institutions the Greek Government shall present the main characteristics preparation 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 during the following year by 15 October month of each yearSeptember, along with including the independent macro- economic forecast macroeconomic assumptions on which it is basedbased as well as the main fiscal measures envisaged. The Government will design a new government Budget Classification structure and Chart of Accounts (September December 2016) in time for the 2018 budgetBudget. 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 will present update by September 2015 end May 2016 a plan to complete the clearance of arrearsarrears by June 2017 and will implement it as soon and as far as the liquidity situation allows them to do so, tax refund and pension claims, and immediately start implementationtaking account of the disbursement plan under the ESM programme (continuous action). 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 2016arrears, and clear the backlog of unprocessed including tax refund and pension claims also using designated programme financing . The authorities will conduct a thorough audit of spending arrears by end June and will produce detailed monthly reports on the arrears cleared since 1 May 2016 and on outstanding gross and net arrears. The authorities will submit a thorough report on the results of the audit of arrears conducted until January by end-December April 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, in line with the KPI targets. The Government will present present, by November 2015 June 2016, a medium-term action plan with the aim to meet the requirements of ensure that payments will be made in compliance with the Late Payment Directive, 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. By January 2016, the The authorities will complete an external provide the final report by June 2016 on the results of the 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 Government will continue the work on improving the fragmented cash management system, . The authorities will provide by mid-May 2016 a report on the Government will include all compliance of central government administration entities in with the treasury single account by end-December 2015Ministerial Decision requiring them to transfer their accounts to the Treasury Single Account (TSA). Following the implementation of a cash management reform the Authorities authorities will close accordingly general central government accounts in commercial banks and consolidate them in the Treasury single accountSingle Account and provide a report to the Institutions on the overall situation in July 2016. As The authorities will establish by May 2016 a prior actionworking group to develop the cash planning function and a high level cash management committee, which will include representatives from GAO, PDMA and SGPR that will provide by June 2016 an action plan to consolidate the ministry bank accounts of finance subordinate entities. The Ministry of Finance will establish a ring-fence the fenced account for the management of the EU structural Home Affairs Funds (AMIF/ISF) which will operate exclusively for the financing of the beneficiaries of the National Programs AMIF/ISF, credited by the inflows of AMIF/ISF and, to the extent necessary (co-financing requirement), national funds. By June 2016 at the latest the ring-fenced account will be endowed by the government with funds instruments and equivalent to the advance payment that has already been provided by the Commission. A bi-monthly detailed reporting of Greece’s national contributionsthe activities of this account will be provided to DG Home of the European Commission.