The time when Greece’s high public debt dominated the economic news around the world is over.
However, it could become the first topic of discussion this time for the impressive downward trend it has recorded in recent years.
The Greek debt as a percentage of GDP, based on the draft 2026 budget, will fall to 137.6% of GDP next year, from historical highs of close to 210% in 2020 and slightly below the levels of 147.8% recorded in 2010, when Greece received the first rescue package.
At the same time, other European countries are seeing their public debt follow an upward trend. The latest case is France, which has been in a political crisis for some time. The French economy, the second largest in the eurozone, seems weak to contain fiscal deficits, increasing the risk of a higher public debt.
Greece, on the other hand, may have even more debt than France and Italy as a percentage of GDP. However, the markets are now lending to our country at a lower interest rate than France, which is reflected in the yield of the 10-year bond, which has fallen to 3.4%, when France is just shy of 3.6%.
One factor contributing to the reduction of public debt is the increase in GDP, thus affecting its percentage. Based on the 2026 budget projections, GDP is estimated to increase further and reach 261 billion euros. In addition, general government debt is projected to reach 359 billion euros or 137.6% of GDP, compared to 362.8 billion euros or 145.4% of GDP in 2025, recording a decrease of 7.8 percentage points. High cash reserves and primary surpluses cover interest expenses, which means that we do not need to borrow to cover debt service costs. Debt deleveraging is also supported by limited new government borrowing and continued early repayments of support mechanism loans, which reduce risk and enhance debt sustainability.
What will the country gain? Given current market conditions, the repayment is expected to bring about an immediate reduction in the general government debt by approximately 2.2% as a percentage of GDP, as well as savings through a reduction in annual interest expenses by approximately 150 million euros, on average over a period of 12 years.
In addition, it reduces the interest rate risk and the refinancing risk of the debt and contributes to the further improvement of the creditworthiness of the Greek economy by international rating agencies. At the same time, the risk of increased debt servicing costs from 2032 onwards is mitigated.
