With the aim of fully repaying its expensive bilateral debt obligations to eurozone countries (first memorandum) by 2031, a decade before the original maturity date of 2041, the country on 15 December embarked on a new early debt repayment move.
Having received the green light from the ESM, European loans of the Greek Loan Facility (GLF), with variable interest rates maturing between 2033 and 2041, amounting to €5.287 billion, have been repaid. This move was in addition to previous repayments (which in total have exceeded EUR 15 billion), contributing substantially to improving debt sustainability and reducing exposure to floating interest rates. In particular, EUR 7.935 billion of debt was paid in December 2024, EUR 5.29 billion was repaid in December 2023, while EUR 2.645 billion was paid in December 2022.
In fact, a new early repayment of €8.8 billion is planned for 2026, with the aim of further reducing these expensive obligations of the first memorandum.
It is noted that an additional €7.9 billion has been allocated for the early repayment of loans to the IMF, leading to the cancellation of the corresponding debt. In total, the country has repaid €29 billion in early loans, saving more than €3.5 billion in interest to date. From the 15 December repayment alone, the interest relief is estimated at €1.6 billion.
After the bilateral loans (GLF), the next in line are the expensive liabilities to the European Financial Stability Facility (EFSF), totalling €141.8 billion, maturing in 2070. The Ministry of Economy and Finance and the Public Debt Management Agency (PEMA) are considering scenarios to further relieve the budget from the burden of the memorandum loans, as €61.9 billion in debt to the European Stability Mechanism (ESM) will be added from 2034, which will have to be repaid by 2060.
Due to the cash cushion, which is estimated at around €44.8 billion, and the high primary surpluses (3.8% of GDP this year), the country can on the one hand cover interest expenditure and, on the other hand, engage in parallel discounting, thus reducing borrowing costs.
It is noted that, according to the PPO, the total financing needs in 2026 amount to EUR 24.7 billion. The State will pay EUR 8,9 billion for debt interest and EUR 5,2 billion for interest, including interest rate swaps. At the same time, revenues of EUR 4.2 billion are expected from other sources, such as the Recovery and Resilience Fund and the European Investment Bank, while an additional EUR 618 million is expected to be raised from equity and investment funds. As a result, there is no pressure for a hasty exit to the international capital markets and the moves of the SWF are aimed at maintaining regularity in issuance, a stable presence in the markets and a continued improvement of liquidity in the secondary market.
Homer Emmanouilides
