Greece will pay off loans granted under the first of three debt-crisis bailouts by 2031, two government officials told Reuters, as the country seeks to lose its label as the most indebted country in the European Union.
The payments, which will come in 5-billion-euro ($5.7 billion) annual increments, will allow Greece to pay off the debt 10 years before the loans expire, the officials said on condition of anonymity.
The Greek economy is gradually rebounding from a 2009-2018 crisis that saw it nearly drop out of the euro zone and that triggered years of social unrest as ordinary citizens fought against austerity-induced cuts in wages and pensions.
“Our aim is to fully repay, ten years earlier than scheduled, the rest of the loans from the first bailout which expire by 2041,” said one of the officials. The source said that Greece will tap a 37 billion-euro cash buffer, proceeds from higher-than-projected primary surpluses and new bond issues to fund the repayments.
In an interview with Reuters, Finance Minister Kyriakos Pierrakakis did not comment on the specifics of the timing or the size of the yearly payments, but did acknowledge that loans would be paid back ahead of schedule.
“We are confident that this approach will enable Greece to shed the title of the most indebted EU country within the coming years,” he said. “This is a realistic and achievable goal.”
Greece’s public debt, now the highest in the euro zone, is expected to drop below 140% by 2027, Pierrakakis said, without giving an exact figure.
Borrowing costs have fallen sharply since Greece regained investment grade status in 2023 and are now lower than Italy. The two officials said Greece’s public debt is expected to drop to about 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 hole 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 received three bailouts from euro zone countries and the International Monetary Fund between 2010 and 2015, worth 280 billion euros. Greece paid off the IMF in 2022 and by the end of 2024 had paid off 22 billion euros of its 53-billion-euro first bailout. The rest will now be paid by 2031.
Many Greeks who lost everything in the crisis are still struggling with lower wages and inflation. But the economy has rebounded and the government expects 2.3% growth this year, twice the euro zone’s average.
As the debt of major EU economies, including Germany and Italy, is rising in part due to increased defence spending, Greece has cut its debt burden by more than 50 percentage points since 2020, to 147% of GDP.
The second government official said that the debt will decline in 2024, as an absolute number, for the first time since it exited its third bailout, to 365.8 billion euros.
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Source: Reuters
