An important step forward in the process of reducing its public debt was achieved by the Greek government with the early payment of international loans from the Greek Loan Facility.
The total amount of the loans, which were originally due in 2024 and 2025, was 5.29 billion euros. This early repayment has resulted in multiple benefits for Greece, as it improves its relationship with its creditors and reduces its debt burden by 13 billion euros by 2023.
The loans in question were part of the first rescue package provided to Greece during the debt crisis of the previous decade. This package, agreed upon in May 2010, consisted of loans from Eurozone countries totaling 52.9 billion euros and loans from the International Monetary Fund amounting to 20.1 billion euros.
In total, the Eurozone and the IMF lent Greece more than 260 billion euros during the ten-year crisis, accompanied by harsh austerity measures. From the Eurozone's perspective, the loans extended to Greece within the framework of the Greek Loan Facility are set to mature by 2041.
The recent early repayment is not the first time Greece has lightened its debt burden ahead of schedule. The country began its history of early repayments in April 2022 with the full repayment of IMF loans and continued in December of the same year with the repayment of a portion of the European GLF loans amounting to 2.645 billion euros.
According to the 2024 Budget, Greece's public debt is projected to be 357 billion euros or 160.3% of GDP by the end of 2023, compared to 356.597 billion euros or 172.6% of GDP in 2022. This represents a decrease of 12.3 percentage points compared to 2022. By 2024, the public debt is forecasted to be 356 billion euros or 152.3% of GDP, showing a further decrease of 8 percentage points compared to 2023.
This third consecutive early payment by the Greek government is considered crucial in the process of reducing the public debt and achieving the set goals. Officials from the Ministry of Finance have emphasized to Reuters that similar early payments are expected to continue within the year 2024.
Since 2018, Greece has relied solely on bond markets for borrowing, following its exit from the memorandums. The Greek government's program for 2024 aims to raise around 7 billion euros through bond issuances, and it currently has a liquidity cushion of more than 35 billion euros. The country's high growth rates, enhanced tax revenues, and primary surpluses are considered strong assets in achieving these goals.
The repayment of 5.29 billion euros in 2023 holds significant importance for Greece, as it aims for further credit upgrades following Fitch Ratings' recent upgrade to investment grade. In addition, the creditor countries benefit from the discounting of Greece's debts, which is seen favorably, especially by Germany. This comes at a time when Germany itself is facing fiscal challenges following a decision by the Constitutional Court of Karlsruhe.
