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Greece
Score Rank
Financial Standards Index 53.33 out of 100 28
Business Indicator Index 9.65 out of 12 42

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Overall Standards Summary

Greece achieves medium overall compliance with international standards and codes, with a score of 53.33 out of 100 in our Standards Compliance Index. Greece's compliance in the area of macroeconomic policy and data transparency is high, with the exception of fiscal transparency, where despite progress in meeting the requirements of the Code of Good Practices on Fiscal Transparency, there is still need for Greece to present consolidated budget information and report on the general government sector on a regular basis. Regarding institutional and market infrastructure standards, the country is in the process of complying with anti-money laundering and auditing requirements but is not in line with international accounting practices. However, Greece complies with international standards in the areas of payment systems and corporate governance. In the financial regulation and supervision area, Greece's banking supervision and securities regulation standards are largely in line with international practices. The insurance industry is now supervised by an independent supervisory authority, the Private Insurance Supervisory Committee (PISC). It became operational in January 2008, and no further information on its supervisory practices is available to grant Greece a higher compliance level.

Choose a standard for a detailed compliance report:
12 Key Standards for Sound Financial Systems

Compliance Level
Special Data Dissemination Standard
CP
Code of Good Practices on Transparency in Monetary Policy
FC
Code of Good Practices on Transparency in Fiscal Policy
EN
Effective Insolvency and Creditor Rights Systems
II
International Financial Reporting Standards
NC
Principles of Corporate Governance
EN
International Standards on Auditing
ID
Anti-Money Laundering/Combating Terrorist Financing Standard
ID
Core Principles for Systemically Important Payment Systems
CP
Core Principles for Effective Banking Supervision
CP
Objectives and Principles of Securities Regulation
CP
Insurance Core Principles
ID
II = Insufficient Information | NC = No Compliance | ID = Intent Declared | EN = Enacted | CP = Compliance in Process | FC = Full Compliance

Macroeconomic Policy and Data Transparency

CPSpecial Data Dissemination Standard

Greece has been a subscriber to the Special Data Dissemination Standard (SDDS) since November 8, 2002. The International Monetary Fund's (IMF) 2007 Article IV report notes that Greece's economic data is adequate for surveillance purposes but needs to be strengthened. The IMF acknowledges that in its effort to meet the European Union's requirements, the country has improved substantially on its statistical methodologies and practices. The IMF, in 2007, released an Observance Report on Greece's data standards, in which it notes that the country meets or exceeds the SDDS' specifications for coverage, periodicity, and timeliness for all data categories except for Central Government Operations where Greece avails itself of the flexibility option for periodicity. Per the same report, Greece, where applicable, meets the requirements for the dissemination of advance release calendars for all months. With regards to the SDDS' integrity dimension, information provided on the SDDS website indicates that Greece meets the bulk of the requirements, except that some entry points, such as International Investment Position and External Debt, offer methodological changes at the time of release as opposed to in advance as required by the SDDS. The requirements for the quality dimension are largely met except for a few data categories like Central Government Operations and Interest Rates where no information is provided on the SDDS website regarding the dissemination of component detail and statistical frameworks.

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FCCode of Good Practices on Transparency in Monetary Policy

Greece became a member of the Euro Area on January 2001. With this act, Greek monetary policy ceased to be governed by the Bank of Greece. Rather, the Governing Council of the European Central Bank (ECB) determines Greek monetary policy, and the Eurosystem (consisting of the ECB and the central banks of the member states that have adopted the euro) is responsible for policy implementation. According to the IMF, the Eurosystem and the ECB maintain high transparency standards and a commitment to openness. The ECB observes the IMF's codes and standards for monetary policy transparency and pursues an active policy of communication with the public.

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ENCode of Good Practices on Transparency in Fiscal Policy

According to the 2006 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.

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Institutional and Market Infrastructure

IIEffective Insolvency and Creditor Rights Systems

According to a report prepared for the European Commission in 2003, as of 2002, in Greece 10 of the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank had been fully adopted, 12 had been almost fully adopted, 18 had been partially adopted, and only 1 had not been adopted. In a supplementary country report prepared by Philippe & Partners and Deloitte & Touche in 2002, the authors concluded that overall the existing bankruptcy regime was ill-suited for the needs of modern business environment. Although the authorities, according to the report, had made several attempts to improve the insolvency framework by introducing amendments to the existing requirements, the legal framework was found to be "complex and rigid." The authors therefore called for reforming the system with a view of giving companies in financial distress more chance for survival and reorganization. In this context, the World Bank Doing Business 2009 report notes that in Greece a new bankruptcy law has been adopted aimed at providing solutions for the insolvent companies for the survival and restructuring. However, there is insufficient information publicly available as to the compliance of the new law with the World Bank Principles.

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NCInternational Financial Reporting Standards

As a member of the European Union (EU), Greece has to comply with the European Commission (EC) Regulation No. 1606 of 2002 which requires all EU listed companies to prepare consolidated accounts following the International Financial Reporting Standards (IFRSs) endorsed by the EC starting January 1, 2005. Member states may extend this permission/requirement to other companies as regards the preparation of their consolidated accounts and/or their annual accounts. According to the 2008 EC report, Greece requires the application of IFRSs for annual accounts for listed companies and permits the use of IFRSs in the consolidated and annual accounts for other companies which are audited by certified auditors. Other companies continue to report according to Greek Generally Accepted Accounting Principles, thus, according to the International Monetary Fund's 2006 publication, "limiting overall transparency."

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ENPrinciples of Corporate Governance

Corporate governance in Greece started to be explicitly codified with the original 1999 Principles which were released as a voluntary corporate governance code, and were closely modeled according to the Organization for Economic Co-operation and Development (OECD) Principles on Corporate Governance. These were supplemented by the 2000 Stock Exchange Code of Conduct and finally, in 2002, by the Law on Corporate Governance No. 3016 of 2002, which applies exclusively to listed companies. In addition, the regulatory authority for the capital markets in Greece--the Hellenic Capital Market Commission--together with the Athens Stock Exchange has taken steps to improve internal control mechanisms, and enhance the role of minority shareholders in corporate management, according to a 2005 study by the Lambadarios and Associates law firm. The OECD believes that the effectiveness of the corporate governance principles in the 2002 Law could be enhanced by adding them to the listing requirements, on a comply or explain basis. In the European context, the legislative framework of the Greek capital market is fully harmonized with European Union guidelines and directives, as reported in the 2005 study by Spanos. While Spanos' study acknowledges positive developments in the corporate governance framework in Greece, it finds that the majority of listed companies in Greece lack sufficient corporate governance mechanisms. Greece predominantly applies a one-tier board system, and is also characterized by a high degree of ownership concentration. Companies are often family-owned, and the state is a majority shareholder in a significant number of listed companies. In addition, there is a lack of disclosure regarding institutional investors' voting and investment policies.

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IDInternational Standards on Auditing

The Accounting and Auditing Oversight Board of the Ministry of Economy and Finance is the body responsible for setting auditing and other assurance standards in Greece. On May 17, 2006, Directive 2006/43/EC of the European Parliament and the Council came into force requiring all statutory audits to be carried out on the basis of International Standards on Auditing (ISAs) as adopted by the European Commission. Being a member of the European Union, Greece has to transpose the Directive into its national legislation. Member States may impose additional requirements relating to the statutory audits of annual and consolidated accounts for periods expiring on June 29, 2010. As stated in the Financial System Stability Assessment prepared by the International Monetary Fund in 2006, at the time of the writing Greece was planning to adopt ISAs by 2007. However, as of September 2008, there is insufficient information on whether the plan has been implemented.

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IDAnti-Money Laundering/Combating Terrorist Financing Standard

The Financial Action Task Force (FATF) conducted a mutual evaluation of Greece's Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime against the FATF's 40+9 recommendations and special recommendations. The FATF published its findings in a 2007 report, in which it concludes that Greece is compliant with only 2 FATF recommendations and special recommendations; largely compliant with 10; partially compliant with 23; non compliant with 13; and one recommendation is not applicable to Greece. Overall, the mutual evaluation notes that Greece's AML/CFT framework is inadequate to meet FATF standards. More specifically the FATF report mentions the lack of adequate legal systems to prevent money laundering and terrorist financing, and the lack of adequate preventive measures and regulatory oversight. The FATF report notes that Greece's AML/CFT system is undermined by the money laundering offence only including predicate offences where the offence generated property worth at least EUR 15,000. Furthermore, the scope of the terrorist financing offence is prohibitively narrow as it does not criminalize collecting or providing funds or material support to terrorist individuals or for specific terrorist acts. Regarding customer due diligence (CDD) measures, the mutual evaluation states that the requirement to conduct CDD does not extend to all of the financial sector (i.e. insurance brokers and agents) and that the basic obligations (i.e. when to conduct CDD or measures to identify legal persons) are not consistently set out in Greek laws or regulations. Most recently, according to a July 2008 press release by the Greek Ministry of Economy and Finance, a bill was tabled in the Greek Parliament on July 17, 2008 requiring the transposition of the European Union's Third Directive and the FATF's recommendations on AML/CFT into Greek law.

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CPCore Principles for Systemically Important Payment Systems

The Hellenic Real-time Money transfer Express System (HERMES), Greece's large value interbank payment system was replaced on May 19, 2008 by the European Union's Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) 2 system. TARGET2 is the successor to TARGET, to which HERMES was linked. A 2004 European Central Bank (ECB) assessment of TARGET components revealed that HERMES observed seven of the ten Core Principles for Systemically Important Payment Systems (CPSIPS) as defined by the Committee on Payment and Settlement Systems (CPSS). While with TARGET, the large value interbank payment systems of member countries were interlinked, TARGET2 provides harmonized payment services under a single shared platform across its member countries. However, there is little information assessing TARGET2's compliance with the CPSIPS except for a statement in a 2008 ECB report on TARGET2, in which it indicates that the system is expected to fully observe all the CPSIPS. Despite the lack of information on TARGET2, it is generally believed that the system is an improvement over its predecessor and its component systems. Therefore, the level of compliance assigned to HERMES by the 2004 ECB assessment is maintained until TARGET2 is fully implemented in all its member countries and assessed against the CPSIPS, which according to the 2008 ECB report, is expected in late 2008.

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Financial Regulation and Supervision

CPCore Principles for Effective Banking Supervision

The banking sector in Greece remains healthy, adequately capitalized, and highly profitable, according to the IMF's 2007 Article IV Consultation. While the banking system is relatively concentrated in comparison to the EU average, the number of state-controlled banks has decreased as a result of the far-reaching privatization program in Greece, notes the U.S. Department of Commerce's (DoC) 2008 Country Commercial Guide. According to the IMF's 2006 Financial System Stability Assessment of Greece's compliance with the Basel Core Principles (BCPs) for Effective Banking Supervision, the Greek supervisory regime is largely compliant with the BCPs. Per the IMF's 2006 report, the Greek supervisory regime is essentially sound, and was found to be in full compliance with twenty-two BCPs; largely compliant with eight; and materially non-compliant with one BCP. In addition, the IMF's assessment highlights the progress in the legal framework for banking supervision over the past decade, as well as steps taken to fully incorporate all EU directives into Greek Law. Shortcomings were identified with regards to the legal protection of supervisors, the supervision of credit and provisioning, the monitoring of risk management methodologies, accounting and auditing standards, and the anti-money laundering and combating the financing of terrorism framework. Responding to the IMF's assessment, Greece's banking supervisory authority--the Bank of Greece--noted that it would be addressing these weaknesses with amendments under way or planned measures to bring Greek regulations in line with the IMF recommendations. The Basel II framework was scheduled to be introduced in March 2008, according to the IMF's 2007 Article IV Consultation.

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CPObjectives and Principles of Securities Regulation

Greek authorities have implemented a robust program of review of relevant law and practice, according to the IMF's 2006 Financial System Stability Assessment. In addition, as reported in a 2005 study by Spanos, Greece's legislative framework for the capital markets is fully harmonized with European Union guidelines and directives. The IMF report states that market capitalization of the Greek stock exchange is in line with the European average, and the corporate bond market has been growing in line with its European counterparts. However, capital markets in Greece are still characterized by weak turnover rates, low levels of liquidity, highly concentrated stock trading, and a quasi non-existent secondary market. According to the IMF report, which includes an assessment of Greece's compliance with the International Organization of Securities Commission's (IOSCO) Objectives and Principles of Securities Regulation, Greece is highly compliant with the IOSCO principles. Regulation and supervision of the securities market is also considered sound. The IMF report underlines that market oversight of the Hellenic Capital Market Commission (HCMC)--the independent regulatory authority for the capital markets--could be further strengthened by enhancing its operational independence and accountability. The IMF further stresses the importance of prioritizing the implementation of standardized procedures for the inspection work of the HCMC. Finally, while accounting and auditing standards are considered to be of high and internationally acceptable quality, Greek authorities must ensure compliance by all listed companies with these standards.

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IDInsurance Core Principles

According to the IMF's 2006 Financial System Stability Assessment, the insurance sector in Greece is inefficient and small. Greece remains relatively underinsured, and market penetration is low in comparison to the European Union (EU) average. According to the IMF's 2006 report, in which insurance supervisory practices were benchmarked against the revised Insurance Core Principles (ICPs) and Methodology issued by the International Association of Insurance Supervisors in October 2003, Greece's compliance with ICPs is mixed, although the legislative and supervisory initiatives that are being pursued could potentially improve the level of observance in the coming years. In some areas, including on-site inspections, off-site analysis of financial information, valuation of liabilities, and solvency, the basic legal requirements are in place but need implementation guidance. In other areas such as corporate governance, risk management, and internal controls, there is a need to develop more complete and explicit legal requirements. At the time of the IMF's 2006 assessment, the supervisor for the insurance sector was the Directorate of Insurance Enterprises and Actuaries, which was found to have limited resources to supervise the insurance sector. Pursuant to Law on Supervision of Private Insurance No. 3229 of 2004, supervisory responsibility was transferred to an independent supervisory authority, the Private Insurance Supervisory Committee (PISC), which became operational in January 2008, as reported in the IMF's subsequent 2007 Article IV Consultation. The IMF's 2007 report notes that the PISC has adopted a risk-based approach to insurance supervision, which occurs within a legal framework incorporating the relevant EU Directives. No further information on the implementation of the recommendations made by the IMF in 2006 is publicly available.

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Business Indicators

With an overall score of 9.65/12, Greece is at standard on the economic, legal, and political indicators that make up our Business Index. Greece is a market-based economy which welcomes foreign investment and makes no discrimination between foreign and domestic investors regarding the screening criteria. Greece opened its telecommunications market and is in the process of slowly liberalizing its energy sector. Restrictions exist on land purchases in border regions and on certain islands due to national security considerations. Although Greece's investment climate is adequate, the country is heavily regulated. Tax and other investment incentives are offered to both domestic and foreign investors. Court enforcement of property and contractual rights is time-consuming and often complex in Greece. The judiciary is nominally nonpartisan but tends to reflect the government's political sensibilities. Expropriation of property is unlikely and the enforcement of intellectual property rights remains lax. Greece ranks 57th out of 180 countries in the Transparency International's 2008 Corruption Perception Index, although corruption is widespread in the country as reflected in its score of 4.7 out of 10. The Government has made the fight against corruption and the promotion of transparency in all government and business transactions a top priority on its agenda.

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Global Indices & Quick Facts

Greece is ranked either in the 2nd or the 3rd quintile of the global indices benchmarking political, economic, business, and human capital climates, as shown below. The exception is the UNDP Human Development Index, where Greece ranks in the 1st quintile, reflecting high achievements in life expectancy, literacy, and standard of living. Although the Heritage Foundation Index discloses a low average tariff rate, there are numerous non-tariff barriers and the country suffers from exceptionally high government spending and restrictive labor market policies. Greece is also limited in terms of capital access, due to its institutional environment. An inefficient bureaucracy remains the most problematic factor for doing business, as is highlighted by the Global Competitiveness Index.

Name Year Rank Score Quintile
Bertelsmann Transformation Status Index 2010
Heritage Foundation Economic Freedom Index 2010 73/179 62.7% 3
Economic Freedom of the World Index 2009 52/141 7.11/10 2
World Economic Forum Global Competitiveness Index 2009 71/133 4.04/7 3
Milken Institute Capital Access Index 2009 41/122 5.52/10 2
World Bank Ease of Doing Business Index 2009 109/183 N/A 3
UNDP Human Development Index 2009 25/177 0.94/1 1
Transparency International Corruption Perceptions Index 2009 71/180 3.8/12 2
Freedom House Index 2009 Free 1.5/7

Credit Ratings

A-/Negative Fitch

A3/Ratings under Review Moody's

A-/Stable Standard & Poor's

Macroeconomic Data

2009 GDP (Current Prices): 325.2 billion USD (IMF)

2009 GDP (Per Capita): 29043 USD (IMF)

2010 GDP (Growth Forecast): -0.1% (IMF)


2009 Inflation (CPI): 1.7% (IMF)

2008 Unemployment: 7.7% (CIA)


2008 Foreign Direct Investment

FDI (Inward): 5.1 billion USD (UNCTAD)

FDI (Outward): 2.70 billion USD (UNCTAD)


2007 Official Development Assistance

ODA (Received): N/A million USD (OECD)

ODA (Disbursed): 501 million USD (OECD)

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