Public debt in steady decline

The recovery of the Greek economy and the return to primary surpluses after the Covid-19 pandemic have been the two key factors driving the steady and significant reduction of public debt as a percentage of gross domestic product (GDP). 

Thanks to this progress, Greece regained its investment grade status in 2023 and continues to enjoy upgrades from credit rating agencies. 

The latest data for the first quarter of 2024 show that the general government debt decreased to 159.8% of GDP from 169.4% a year earlier and from the 207% peak reached due to the pandemic and economic support measures at the end of 2020. 

While Greek debt is still the highest in the eurozone, it has fallen to its lowest level since 2012, when it dropped to 157.2% of GDP following the 53.5% haircut on Greek government bonds as part of the PSI (private sector involvement). 

Furthermore, all rating agencies indicate a clear downward trajectory, with Scope Ratings predicting that by 2026 it will be lower than Italian debt as a percentage of GDP. 

Bank of Greece forecasts, as recently presented by its governor, Yannis Stournaras, see Greek debt decreasing to 60% of GDP in approximately 40 years. 

This is assuming that primary surpluses close to 2% of GDP are maintained and economic reforms continue, ensuring a favorable difference between the debt repayment interest rate and the economic growth rate.