Another positive sign on the markets for the Greek economy the government is trying to send with the plan for the fastest reduction of the country’s public debt which is in full development. This is yet another key objective of the economic policy, which together with the positive signals sent by the high growth rates and the continued fiscal improvement is estimated to lead within 2025 to new upgrades of the country’s credit rating by the rating agencies.

In an international environment with a high degree of uncertainty, due to the consequences for the European economy from the war in Ukraine and the risk of tensions in international trade if the pre-election announcements of the President-elect to impose tariffs on European products are confirmed, the economic staff aims with the move this to create conditions of greater security for the Greek economy.

The next phase of the faster debt reduction plan is expected to be completed in mid-December when Greece will repay part of the triple 7.935 billion tranche early euro from the bilateral loan of 52.3 billion euros that the country had received from the Eurozone in 2010 as part of the first bailout program. The triple installment concerns payments which, according to the schedule, would be made in the period 2026-2028. The “green light” for this move was given last Thursday by the European Stability Mechanism (ESM) and the European Financial Stability Fund (EFSF). “Greece continues to make important steps in its economic development. It is one of the fastest growing economies in the EU and has returned to the investment grade”, noted, among others, in the relevant announcement the CEO of ESM Pierre Gramegna, adding that “The planned early repayment of GLF loans is another positive signal for financial markets and demonstrates the improvement of Greece’s fiscal position.”

The policy of early repayment of public debt will continue in 2025. The government within the next year will proceed with the early repayment of loans amounting to 5 billion. euros from Greek Loan Facility loans that would mature between 2033 and 2042.

The main goal of these moves is to reduce the country’s public debt faster in the coming years and for Greece not to be the Eurozone country with the highest debt as a percentage of GDP. According to forecasts, public debt from 163.9% of GDP at the end of 2023 is estimated to decrease to 154% of GDP at the end of 2024, to be further reduced to 147.5% of GDP at the end of 2025. The IMF taking into account the country’s fiscal progress and the growth rates of the Greek economy, he has predicted that the debt reduction will amount to 30 units of GDP by 2029.

The positive impact of all this is evident in the international bond markets. The difference in the country’s borrowing cost compared to the corresponding German one has decreased significantly.

The yield of the Greek ten-year bonds is at the level of 2.950 units, with the corresponding German one at 2.12 units. In fact, for the first time France’s borrowing costs exceeded the corresponding Greek borrowings and reached over 2,950 units, which is of course due to the serious fiscal problems facing the French economy, but also reflects the reduction in Greece’s borrowing costs in recent years.