According to the 2006 International Monetary Fund (IMF) Report on the Observance of Standards and Codes (ROSC) Fiscal Transparency Module, in recent years, Greece has made considerable progress in meeting the requirements of the IMF Code of Good Practices on Fiscal Transparency, particularly in the area of public availability of information due to increased publications and the use of the internet. The Constitution of Greece defines the roles and responsibilities of general government and clearly sets Greece's main government sector apart from the private sector in line with the European System of Accounts of 1995. According to the ROSC, the Greek Constitution, the Organic Budget Law and subsequent amendments define and formalize budget management and public finance. Furthermore, Greece disseminates a plethora of publications that report fiscal developments and aggregates, and much of such fiscal information on central government operations is readily available to the public. Established by the Constitution of Greece, the Court of Audit, which is part of the judicial branch (under the Ministry of Justice) but fully independent of the executive branch, provides assurances on regularity and legality of the budgetary process. However, the ROSC highlights several areas where transparency in fiscal policy could be improved in Greece. For example, to further clarify roles and responsibilities, the ROSC emphasized the need for Greece to present consolidated budget information and report on the general government sector on a regular basis. To improve the openness of the budget process, the ROSC recommends that Greece guide budget decision-making by policy-relevant information since a major barrier to fiscal transparency in Greece is the limited policy perspective in the budget. To improve the public availability of its fiscal information, the ROSC recommends that Greece move budgeting from an annual to a multi-year basis (i.e. by adopting a full multi-year budget framework) and institute a more extensive mid-year review of the implementation of the budget.

General Overview

The 2006 International Monetary Fund (IMF) Report on the Observance of Standards and Codes (ROSC) - Fiscal Transparency Module states the Constitution of Greece defines the roles and responsibilities of general government and clearly sets Greece's main government sector apart from the private sector in line with the European System of Accounts of 1995. According to the ROSC, the Greek Constitution, the Organic Budget Law, and subsequent amendments define and formalize budget management and public finance. Mechanisms for the coordination and management of budgeted and extra-budgetary activities are well defined in law, and so are the expenditure responsibilities of different levels of government. The main legal texts defining the jurisdiction of municipalities are the Constitution and the Municipality and Community Code. For prefectures, the main legal provisions are contained in the Law No. 2218 of 1994 on Organizations of Local Self-Administration of the Second Level and its subsequent amendments.

The 2006 IMF's ROSC states that the budget preparation process commences in the early months of the year with a publicly available macroeconomic forecast prepared by the Macroeconomic Analysis Department (MAD) of the Ministry of Economy and Finance (MEF). Also, the ROSC notes that macroeconomic assumptions used for budget preparation are openly presented in the budget memorandum. Furthermore, public procurement procedures are comprehensive and consistent with EU regulations as Greece has adopted the EU procurement directives (93-36), and made them consistent with domestic Law No. 2286 of 1995.

According to the 2006 ROSC, Greece has a plethora of publications (issued by various institutions) that report fiscal developments and aggregates, and "much fiscal information on central government operations is readily available to the public" (p. 48). The ROSC observes that Greece has made particular progress regarding the public availability of information due its increased publications and the expanded use of the internet. Under Law No. 2214 of 1994, Article 59, the Greek government is required to present a full account of tax expenditure to Parliament along with the budget proposal every year. As required by law, the ROSC notes that the publication and dissemination of the annual budget and accounts data, in addition to monthly budget execution reports and quarterly public debt bulletins, are conducted in a timely fashion. In accordance with Law No. 2362 of 1995, Greek authorities publish limited data on financial assets yearly in the balance sheet, which is then presented to Parliament and ratified by its Plenary Session.

Established by the Constitution of Greece (Articles 73, 79, and 98), the Court of Audit, which is part of the judicial branch (under the Ministry of Justice) but fully independent of the executive branch, is entrusted with the responsibility for conducting external audits of financial operations of the general Greek government and "providing assurances on regularity and legality of the budgetary process" (p. 40). One of the primary functions of the court, which is headed by a President chosen by Cabinet, is "to inform the Parliament on the legality and soundness of the management of public funds" (p. 40). All audit reports are publicly available.

Greece has been a subscriber to the IMF's Special Data Dissemination Standard (SDDS) since November 8, 2002. (IMF SDDS website)

The Principles

Clarity of roles and responsibilities.

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According to the 2006 IMF's ROSC - Fiscal Transparency Module, Greece has made progress in meeting the requirements of the IMF's Code of Good Practices on Fiscal Transparency. However, the assessment does not specifically address Greece's compliance with this principle. The 2006 IMF's ROSC states that, in terms of the structure and functions of government, the Constitution of Greece and the European System of Accounts of 1995, define the roles and responsibilities of general government and clearly set Greece's main government sector apart from the private sector. Also, the Bank of Greece is operationally fully independent of government, and it plays no fiscal role. The relative roles of the executive, legislative, and judicial branches are clearly defined in the Constitution. The Greek Constitution, the Organic Budget Law and subsequent amendments define and formalize budget management and public finance in Greece. Mechanisms for the coordination and management of budgeted and extra-budgetary activities are well defined in law, and so are the expenditure responsibilities of different levels of government. The main legal texts defining the jurisdiction of municipalities are the Constitution and the Municipality and Community Code. For prefectures, the main legal provisions are contained in the Law No. 2218 of 1994 on Organizations of Local Self-Administration of the Second Level and its subsequent amendments.

Laws and regulations governing private sector activity have been streamlined under the influence of EU directives. Company law, tax legislation, labor market regulation, sectoral regulation, procurement law; all broadly conform to harmonized EU standards. According to the 2006 IMF's ROSC, the legislative basis for taxation, regulation, and administrative procedures are clear. The general government is largely defined consistently with Government Finance Statistics (GFS) principles. Fiscal management of central government is assigned exclusively to the Minister of Economy and Finance, which is split into the Government Accountability Office (GAO), which prepares the Ordinary Budget, and the former Ministry of National Economy, which prepares the Investment Budget. While there is dialogue between the two, the ROSC notes that these two components remain distinct institutional entities.

The 2006 IMF's ROSC emphasizes the need for Greece to (1) present consolidated budget information and report on the general government sector on a regular basis; (2) bring a performance orientation into government operations (i.e. the legal framework for managing public funds could be more comprehensive to include modern principles of budget management and to meet higher standards of accountability and transparency); (3) consolidate and better integrate fiscal management functions (i.e. streamline the functions of the GAO and the former Ministry of National Economy); and (4) further simplify the legal framework for taxation and its administration (i.e. compulsory levies by various funds or third-party taxes are transparently disclosed in the budget).

However, in its 2007 Article IV Consultations, the IMF notes that Greece has made some progress since the ROSC in 2006, particularly regarding the strengthening of public expenditure management. For example, "measures are being put in place to introduce greater transparency and accountability in the operations and finances of local governments, public hospitals, and the pension funds through the adoption of standard budgeting and monitoring frameworks" (p.14). Also, the Greek government launched a pilot initiative in program-based budgeting for one-line ministry in 2008, "as a precursor to eventually integrating this approach fully into budget preparation and execution" (p. 15). The Consultations also stated that a primary focus of Greece's fiscal consolidation strategy in 2008 is on improving revenue collections through a comprehensive tax reform, which emphasizes, in addition to strengthening of tax administration, "tackling tax evasion through administrative measures, incentives and restructuring of a few taxes" (p. 18).

Open budget processes

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According to the 2006 IMF's ROSC, "while Greek budget preparation procedures are clear, they are not in line with international best practices," and "the annual budget process is to a large extent open, and for the most [part] is in line with the structure in other EU-countries" (p. 21). However, the assessment does not address Greece's compliance with this principle.

The 2006 IMF's ROSC states that the budget preparation process commences in the early months of the year with a publicly available macroeconomic forecast prepared by the Macroeconomic Analysis Department of the MEF. Also, the ROSC notes that macroeconomic assumptions used for budget preparation are openly presented in the budget memorandum. Furthermore, public procurement procedures are comprehensive and consistent with EU regulations as Greece has adopted the EU procurement directives (93-36), and made them consistent with domestic Law No. 2286. Furthermore, the 2006 IMF's ROSC observes that the GAO's accounting and reporting regime is comprehensive, fully accounting for all transactions on approved budget estimates. In addition, the legislature receives timely in-year reports on budget outturn, and conducts a mid-year review. The monthly budget execution data is made available approximately 20 days after month-end on various government websites.

To improve the openness of the budget process, the 2006 IMF's ROSC recommended that Greece: (1) guide budget decision-making by policy-relevant information since a major barrier to fiscal transparency in Greece is the limited policy perspective in the budget; (2) institute an overall consolidated expenditure plan as fiscal transparency is hampered by the lack of a fully consolidated central government budget; (3) move budget decisions away from the present annual timeframe (currently, the budget lacks a multiyear budgetary framework); and (4) streamline and consolidate the budget process, which is currently fragmented into a number of different budgets (i.e. the ordinary budget and the investment budget).

Regarding the transparency of Greece's budget presentation and approval process, the 2007 IMF's Article IV Consultations notes that Greece has made some progress since the ROSC in 2006. For example, "measures are being put in place to introduce greater transparency and accountability in the operations and finances of local governments, public hospitals, and the pension funds through the adoption of standard budgeting and monitoring frameworks" (p.14). Also, the Greek government launched a pilot initiative in program-based budgeting for one-line ministry in 2008, "as a precursor to eventually integrating this approach fully into budget preparation and execution" (p. 15).

Public availability of information.

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The 2006 IMF's ROSC states that "Greece meets many of the requirements of the fiscal transparency code in this area," (p. 48). However, the assessment does not specifically address Greece's compliance with this principle.

According to the 2006 ROSC, Greece has a plethora of publications (issued by various institutions) that report fiscal developments and aggregates, and "much fiscal information on central government operations is readily available to the public" (p. 48). The ROSC observes that Greece has made particular progress regarding the public availability of information due its increased publications and the expanded use of the internet. Under Law No. 2214 of 1994, Article 59, the Greek government is required to present a full account of tax expenditure to Parliament along with the budget proposal every year. As required by law, the ROSC notes that the publication and dissemination of the annual budget and accounts data, in addition to monthly budget execution reports and quarterly public debt bulletins, is conducted in a timely fashion. In accordance with Law No. 2362 of 1995, Greek authorities publish limited data on financial assets yearly in the balance sheet, which is then presented to Parliament and ratified by its Plenary Session.

Greece has been a subscriber to the SDDS since November 8, 2002 and meets its specifications for coverage, periodicity, and timeliness of data. Greece also provides annual general government fiscal data to the EU. According to the ROSC, while Greece's laws and decrees provide a timetable for the release of budget and accounting data, it lacks a formal announcement of an advance release calendar for fiscal data of the general government. Such a commitment only exists for central government fiscal data.

Nevertheless, regarding ways in which Greece can improve the public availability of its fiscal information, the 2006 IMF's ROSC observes that, while Greek authorities publish information on gross public debt, they do not publish information on government financial assets. Also, while Greece is committed to regularly publishing fiscal data, the ROSC notes that advance release data calendars are not always made available. Other issues that the IMF recommends that Greece address include "the lack of consolidation at the general government level, absence of programmatic classification, incomplete information on financing, improper quantification of contingent liabilities, off-budget activities and arrears" (p. 49). Perhaps most importantly, the ROSC recommends that Greece increase the scope and coverage of its budget documentation by: (1) moving budgeting from a purely annual to a multi-year basis by adopting a full multi-year budget framework and; (2) adopting a more extensive mid-year review of the implementation of the budget.

Independent assurances of integrity.

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According to the 2006 IMF's ROSC, "Greece continues to strengthen its capacity to meet the requirements of the fiscal transparency code in this area" and "budget data have improved in reliability, especially after the recent fiscal audit undertaken with the cooperation of Eurostat" (p. 49).

Established by the Constitution of Greece (Articles 73, 79, and 98), the Court of Audit, which is part of the judicial branch (under the Ministry of Justice) but fully independent of the executive branch, is entrusted with the responsibility for conducting external audits of financial operations of the general Greek government and "providing assurances on regularity and legality of the budgetary process" (p. 40). One of the primary functions of the court, which is headed by a President chosen by Cabinet, is "to inform the Parliament on the legality and soundness of the management of public funds" (p. 40). All audit reports are publicly available. Nevertheless, the ROSC states that, while Parliament discusses external audit reports, systematic review of the reports is limited, and "there is common agreement that [Court of Audit] COA reports, that are published and presented to Parliament with the following year's budget, do not have an impact on the quality of resource allocation" (p. 41). The National Statistical Service of Greece (NSSG), which is independent by virtue of Legislative Decree No. 3627 of 1956, manages Greece's national statistics system and reports to the EU.

To improve the openness of the budget process, the 2006 IMF's ROSC recommends that Greece: (1) strengthen its accounting policy and procedures by including statements on accounting policy in the budget and final accounts documents; (2) convert the Court of Audit from its overly legalistic approach to audit; and (3) ensure the independence of the National Statistics Service (NSS) as presently the NSS "is not given legislative assurance of independence" (p. 50).