This report provides an assessment of the progress made by Greece with respect to its Second Economic Adjustment Programme, based on the findings of a four-part joint Commission/ECB/IMF mission to Athens between 16-29 September 2013, 28 October-8 November 2013, 2-15 December 2013 and 24 February-17 March 2014. The report examines current macroeconomic, financial and fiscal developments and assesses compliance with programme conditionality. Greece has made delayed, but eventually substantive progress since the last review completed in July 2013. Building on the impressive fiscal consolidation effort in recent years, Greece has exceeded its fiscal target in 2013, as a primary surplus in programme terms has been recorded. On the back of several measures taken recently to assure achievement of its fiscal target for 2014, the scope was created for temporary support to the socially most vulnerable. The authorities have committed to achieve the 2015 primary surplus target of 3 percent of GDP, including as needed by extending expiring fiscal measures. Reforms continue in the areas of the revenue administration, taxation, public financial management, privatisation, public administration, health care, pensions, social welfare, education and the fight against corruption. The financial sector is undergoing a further recapitalisation, attracting significant private capital. Now banks and the supervisor need to swiftly and forcefully address the high level of non-performing loans, also by fully implementing laws and by enhancing initiatives which support the payment culture. Wages better aligned with productivity dynamics and falling unit labour costs are improving cost competitiveness, although the performance of exports will improve visibly only when reforms in other parts of the economy are fully implemented. Key structural reforms in the areas of product markets and business environment have been recently undertaken or are now being taken by the authorities to increase competition and reduce administrative burden. Still very sizeable challenges remain in many areas. Nevertheless, the amount and ambition of measures implemented since the previous review completed in July 2013 as well as of the new concrete commitments enshrined in the updated programme are significant.
