The State will save 85 million euros per year or 850 million euros in ten years from the interest that it will pay, from the improvement in the interest rate alone on the latest ten-year bond issued last month.

Specifically, the annual benefit is 8.5 million euros per billion of debt. So, given that the Government’s borrowing program for 2024 is 10 billion euros, the benefit is 85 million per year and 850 million over the decade.

By reducing this benefit to 20 years, which is the weighted average duration of the Greek debt and for the entire public debt, a benefit of 60 billion euros is obtained. It is also indicative that the long-term debt sustainability analysis prepared by the ODDIX results in debt levels of 44% of GDP in 2060 and 32% of GDP in 2070, taking into account higher borrowing rates than the recent ten-year bond and not counting early repayments of “expensive” borrowing that are planned for the next period and which further improve the debt profile. All of this, provided of course that the global conditions so far will not be overturned drastically due to geopolitical turmoil.

It is also characteristic, that in the last year the yield spread of the Greek 10-year bond compared to the corresponding German one decreased by more than 50%. On February 1 this year it was 107 basis points, up from 200 basis points a year ago and is now lower than the Italian counterpart.

It is noted that according to Eurostat, public debt was formed in the third quarter of 2023 at 165.5% of GDP, from 177.5% in the corresponding period of 2022. Greek debt, according to the European Statistical Service, recorded the largest decrease among EU countries on an annual basis (12 percentage points of GDP between Q3 2022 and Q3 2023) and one of the largest compared to the previous quarter (1.6 percentage points of GDP between B and C quarter 2023).

At the same time, the latest forecasts of the European Commission (November 2023) indicate that the debt will continue its downward course and is expected to reach 147.9% of GDP in 2025. Whereas, according to the forecasts of the International Monetary Fund, public debt in 2028 will further decrease to 142.5% of GDP.

As officials of the Ministry of National Economy and Finance report to APE-MPE, the reduction of debt as a percentage of GDP is supported by three main factors:

-The strong growth that increases the denominator of the fraction.

-The primary surpluses that are formed at the level required in order to continue the downward trend of the debt.

-The gradual de-escalation of lending rates which is the result of a combination of factors, such as political stability after the elections, the improvement of the economy, serious fiscal policy, the restoration of investor confidence, the recovery of the investment grade and further upgrading in the future of the country’s credit rating.