Greece will repay loans 10 years early - Economic recovery "pushes" Athens towards reducing public debt
Greece will repay the loans granted under the first package against the debt crisis by 2031. At this rate, Athens aims to lose the label of the country with the highest debt in the European Union.
The payments, which will come in annual increments of 5 billion euros, will allow Greece to repay its debt 10 years before the loans expire, the officials said on condition of anonymity.
The Greek economy is gradually recovering from a 2009-2018 crisis that saw it almost out of the eurozone and sparked years of social unrest as citizens fought against wage and pension cuts caused by austerity measures.
“Our goal is to fully repay, ten years earlier than planned, the remaining tranche of loans from the first package that expires in 2041,” one of the officials said. The source said Greece would tap a 37 billion euro cash buffer, generated by higher-than-expected primary surpluses and new bond issues, to finance the repayments.
Greece's public debt, now the highest in the euro zone, is expected to fall below 140% by 2027. Borrowing costs have fallen sharply since Greece regained investment-grade status in 2023 and are now lower than Italy's. The two officials said Greece's public debt is expected to fall to around 135% by 2027, potentially above Italy, whose debt is expected to rise to 138% of GDP in 2026.
Greece's crisis began in 2009 when the government discovered a giant gap in the country's finances, caused by decades of tax evasion and bloated public services.
As the crisis threatened to derail the EU economy, Greece benefited from three bailouts from eurozone countries and the International Monetary Fund between 2010 and 2015, totaling 280 billion euros. Greece paid the IMF back in 2022 and by the end of 2024 had paid 22 billion euros of its first 53 billion-euro package. The rest will be paid by 2031.
Many Greeks who lost everything during the crisis are still struggling with low wages and inflation. But the economy has recovered and the government expects growth of 2.3% this year, double the eurozone average.
While the debt of major EU economies, including Germany and Italy, is rising partly due to increased defense spending, Greece has reduced its debt burden by more than 50 percentage points since 2020, to 147% of GDP.
The second government official said that the debt will decrease in 2024, as an absolute value, for the first time since it emerged from the third bailout package, to 365.8 billion euros.
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