Next steps for reducing Greek debt

The Public Debt Management Agency (PDMA) will attempt to ensure the new significant de-escalation of the debt-to-GDP ratio in 2026 in two ways.

More specifically, the PDMA plan foresees a new early debt repayment of at least 5.3 billion euros in 2026 – a move that will also exhaust the “cushion” of the European Stability Mechanism – as well as moderate issuance activity of new bonds.

Next year’s financial program is expected to be issued shortly before Christmas and will provide for a further reduction in cash reserves to 28-30 billion euros at the end of the year, in order – among other things – to finance the new early repayment of the loans of the first memorandum.

Essentially, the 5-year plan for the full repayment of the loans of the first memorandum will begin to be implemented in 2026. The goal is for the remaining 26.1 billion euros, after yesterday’s early repayment of 5.3 billion euros, to be repaid in full by 2031, a year in which it is estimated that the ratio of Greek debt to GDP will have now fallen well below the 120% threshold.

Following the 5.3 billion euros paid, the early repayments are:

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1. An amount of 571 million euros for the 2041 installment of bilateral loans.

2. Approximately 1.939 billion euros for the installment of the distant 2040.

3. 15% of each annual installment from 2033 to 2039, which means that approximately 400 million euros will be deducted from each annual installment.

Bilateral loans of 26.1 billion euros

Following this specific early repayment, the balance of bilateral loans  will fall to 26.1 billion euros at the beginning of 2026. The goal is for this amount to be zero by 2031 at the latest, so that the “commitment” that the country has publicly undertaken through the Minister of Finance that the loans of the first memorandum will be repaid at least 10 years earlier than planned is also met.

To make this happen, new early repayments of around 5-5.5 billion euros per year will be launched for the next five years. The early repayment in 2026 will be financed with the last part of the “cushion” created after the end of the third memorandum. The ESM has given its approval for the use of this amount in order to repay debt, and in December 2026 the last amounts from the approximately 16 billion euros will be given.