Debt in euro countries is falling as a result of dynamic economic growth, with Greece standing out positively, the German economic newspaper points out Handelsblatt. “During the pandemic, the debt in Greece at one point reached a percentage of more than 200% of GDP. However, conditions have improved significantly, […] with the country’s public finances being in a better state than before the pandemic,” comments HB.

“The sharp increase in inflation also contributes to the reduction of the debt ratio, as the value of the nominal GDP increases, with the result that the debt automatically represents a smaller percentage of it. In addition, the state collects more taxes by increasing the prices of goods and services.” For the next two years, “it is predicted that debt levels will continue to decrease. However, the pace will slow down’, as inflation will affect social benefits and by extension cause an increase in government spending.

HB also reports that next year Greece is expected to create a surplus in its primary budget, as happened with Portugal in 2022. “Therefore, the rating agency Fitch has recently upgraded the credit rating of the two countries that were once in crisis.” Also, the funds from the European Recovery Fund are of vital importance, as “they are directed mainly to the countries of the European south and for them they represent a financial injection outside the national budget. […] At the same time, it is also a strong incentive for governments to remain fiscally disciplined, as, otherwise, they risk losing funds.” The increase in basic interest rates by E.K.T. it also doesn’t look threatening: “due to the long duration of European bonds, higher interest rates will weigh on government budgets in only two or three years,” the financial paper concludes.