Supported by strong economic growth and tight fiscal discipline, Greece aims to accelerate its debt reduction strategy, slashing roughly 20 percentage points off its debt-to-GDP ratio over the next four years, and will proceed with early repayment of outstanding debt for a third time later this year.

According to the Greek government’s Medium Term Fiscal Plan, which was unveiled along with the draft 2025 budget, public debt is expected to decline to 133.4% of GDP by 2028 from 153.7% of GDP in 2023. This December, the government will also pay off €7.9 billion in loans stemming from the European financial crisis, which are due to mature in 2026, 2027 and 2028.

During the almost decade-long crisis, Greece received hundreds of billions of euros in special support from its Eurozone partners and the IMF. Its sovereign rating was reduced to junk status and the country’s debt-to-GDP ratio peaked at over 200% in 2020. Since then, however, Greece has twice repaid loans ahead of schedule – in December 2022 and December 2023 – and has regained investment grade status.

Over the same period, the Greek economy has boomed, outpacing growth in the rest of the Eurozone and supported by strong public and private investment. “This solid performance is expected to continue, despite the challenging external environment, with projections indicating a continued positive trajectory in 2024 and 2025,” according to the MTFP. “Real GDP is projected to grow by 2.2% in 2024 and 2.3% in 2025, supported by rising disposable income, increased investment, strengthening foreign demand and the waning impact of monetary policy tightening.”

With respect to investment, gross fixed capital formation is projected to accelerate, growing at a 6.7% rate next year, and an 8.4% rate in 2025, up from 4.0% last year.