The 2005 budget contains summary information only for the six funds receiving grant transfers from the budget to cover operational deficits.
In recent years these equity injections were initially not classified as expenditure, i.e., as a capital grant, but as a financing transaction. In consultation with Eurostat this has now been amended.
This instrument has often been misused, because guarantees were given that were expected to be called, with no financial repercussions for the railway company. Normally, a company that has called a guarantee should not be allowed to receive any other guarantee on other financing until the financial situation of the company has been restructured. Guarantees were in effect used as delayed subsidies.
Surprisingly, this account is shared with the MEF which uses it to deposit separate receipts which are also used outside the budget process.
By law, the Minister of Economy and Finance represents any social security funds as shareholder in private or public enterprise. Noteworthy was the replacement of the governors and deputy governors of the three main commercial banks after the last elections. More generally this is also still a common occurrence in public enterprises.
In 1997 there was a consolidation of 5,751 units to 1,031 units.
Prior to 1994, prefectures were appointed administrations and part of central government.
Law 2503/1997 consolidated the existing regions into 13, to improve their role as units of planning and coordination.
The present tasks include: licensing storage and multi-story buildings; licensing explosives; licensing private enterprises with salaried employees; authorizing credit for land reclamation works; determination of protected zones; licensing import of livestock; supervision and control of health services; and licensing fishing activities. Subsequent laws gave them responsibility for school children's transportation, planning civil defense, and special programs for the promotion of public health in their area of jurisdiction.
Municipalities are entitled to a share of 20 percent of income tax; 50 percent of road duties; 20 percent of taxes on interest of deposits; and 3 percent of the real estate transfer tax. The general purpose grant of municipalities comprised approximately 7 percent of total central government tax revenue in 2004.
Similar as for municipalities parts of these transfers were in the form of a general revenue grant funded from tax sharing arrangements comprising 15 percent of road duties; 10 percent of the real estate transfer tax; 4.5 percent of car registration tax; and 2 percent of VAT.
The KEDKE, the Central Union of Municipalities and Communities of Greece, and the ENAE, the Union of Prefectures of Greece are associations of local government with no formal public status, but—as in many European countries—with a considerable role in negotiating on behalf of their members with the central government on public policy issues.
This great freedom applies to the MEF, not to the line ministries and agencies who in comparison to other EU countries have extremely limited powers to transfer amounts from approved budget lines.
Debt management and reporting is a task clearly delineated from fiscal management and reporting. Most OECD countries have found it useful for coordination of tasks, concentration of expertise, and transparency of accountability, to integrate all tasks related to debt management in one functional agency. Data integrity would also be an important reason to concentrate the debt management function in one agency, such as the PDMA.
There has been a recent effort by the authorities to institute greater clarity and certainty through the use of “objective standards,” in an effort to reduce the room for discretion on the part of tax officials and the bargaining between officials and taxpayers.
The Tax Reform Commission estimated that there were some 300 of these third-party taxes in 2002.
This bargaining is not necessarily based upon corruption, but contributes to a lack of transparency in the process of collecting lawfully owed taxes.
These standing committees are comprised of an inspector from the internal Economic Supervision Directorate, a member of the Chamber of Commerce, and the local Director of the office which has raised the assessment.
Appeals of minor amounts are heard only by the local office Director, at the administrative level.
A restriction of the deficit of the general government to no more than 3 percent of GDP and a target for the general government debt ratio to GDP of 60 percent.
The Ministry of Education accumulated unpaid obligations amounting to € 80 million at the end of December 2004, primarily due to inadequacy of budget provisions, and these were carried forward and paid out of 2005 budget. Such carry forward was authorized by the MEF for a number of ministries without a separate budget line allocated. Apparently arrears are being rolled over year to year. There is no regular reporting system toward the GAO to enable it to monitor outstanding commitments during the year.
It appears that the late release of budget funds for especially the investment budget makes tender procedures difficult to carry out by the end of the year. The Athens University usually receives its investment budget funds as late as September of the budget year.
The mission was given to understand that line ministries are yet to set up internal audit units, and all internal controls are exercised by DFS staff.
Also the COA needs to be persuaded to move out of their current role of pre-audit and rather assist the MEF and line ministries in developing the internal audit unit function. The COA could review during its post-audit the efficiency of internal audit.
In this regard, the MEF should take responsibility for developing the internal audit function in line ministries, including setting standards for both ex-ante control and internal audit, and supervising their functioning and compliance with its prescribed standards.
See paragraph 56 for details of balance sheet.
The details of 2004 fiscal data revisions were included in the last Fiscal ROSC update of December 2004. The most important reasons for the increase in the fiscal deficit were: (i) the off-budget recording of military expenditure; (ii) overestimation of the surpluses of social security funds, (iii) the misreporting of EU funded capital transfers as capital injections, (iv) nonreporting of capitalized interest payments, and (v) misclassification of expenditure of DEKA. Similarly general government debt was also revised upward. In the recent report of November 2004, Eurostat indicates that all major issues have been resolved with the Greek authorities.
The mission was given to understand that the mid-year report on budget review is usually in the form of a statement including brief data on budget execution by the Minister of Economy and Finance in July every year.
The budget documents include: (i) Ordinary Budget, (ii) Public Investment Budget, including budget of eleven off-budget funds, characterized as Public Entities, (iii) Ordinary Budget of Regions, (iv) Budget of Prefectures, (v) Tax Expenditures and (vi) Budget Introductory Report. All these documents are made available in electronic (CD) form.
The defense budget estimates include details of expenditure by major departments including Army, Navy, Airforce, and Intelligence Services.
In 1999, the government established the Public Debt Management Agency (PDMA) vide Law No. 2628/1998 to undertake the financing needs of the State and improve the cost of funding and achieve the best possible structure of the public debt according to the needs of the State. However the PDMA's operations do not include borrowing activities for special purposes such as loans for military purposes and debt issuance to cover obligations of the government to social securities funds and other public entities. The Public Debt Division of the GAO reports regularly on the market data on borrowings such as terms and amounts of outstanding securities, auction results, private placements etc, and this information is published in the public debt bulletin.
For example, interest payments are recorded in the accounts on a cash basis, however they are simultaneously reported on accrual basis as required by Eurostat.
These have been elaborated by two presidential decrees: 774/1980 which covers the rights of the Court; and 1225/1981 which outlines Court procedures, as well as 124 subsequent further legal amendments to these decrees. In addition to the decrees, more detailed audit procedures and rulings are promulgated in decisions of the Court's supreme authority.
As of December 31, 2004, the Court had 131 judges, and 1004 staff, of whom 599 were auditors, of which 270 were working in regional offices, with 315 vacancies.
Although Constitutional powers refer to audit, and do not differentiate between pre- and post-audit, the responsibility for “a priori audits” has been imposed in specifically issued laws. The COA views the pre-audit as an audit upon the coordinators, i.e., the officials authorized to assume payment obligations on behalf of the State and those who issue payment orders. It maintains that it should be regarded as an extension of its post-audit function, implying no duplication of its scrutiny.
It does “monitor State revenue,” through annual and monthly accounts, and at the same time the accuracy of collection is ascertained, but always on a sample basis.
While focusing on legality and regularity, it is generally accepted in the COA that audit may involve the so-called “substantial part of expenditure;” i.e., whether reported facts in documents correspond to reality and the administrative acts by which payment obligations are undertaken are done so according to sound financial management.
According to the Law No. 2362, the audit report along with annual final accounts is introduced in the parliament for ratification no later than the end of November.
The first fiscal ROSC for Greece was issued on October 6, 1999. The progress made since 1999 in enhancing transparency includes: the reporting on guarantees, tax expenditures, share participations and transfers to public entities; improving reporting on extrabudgetary funds, and improving the availability of information on the budget, taxes, public debt and civil service remuneration. A significant development in 2004 toward improving fiscal transparency was the “fiscal inventory” carried out by the government in agreement with Eurostat.