Greece's economy has experienced a remarkable turnaround, with a rapid recovery and a return to primary surpluses significantly reducing its public debt.
The debt, which peaked at 207% of GDP at the end of 2020 due to pandemic-related expenditures, has now fallen to 159.8% in the first quarter of 2024.
This major improvement has allowed Greece to regain its investment-grade status and receive upgrades from credit rating agencies.
While still the highest in the Eurozone, Greece's debt has reached its lowest level since 2012. This progress can be attributed to several factors, including the fiscal surpluses achieved between 2016 and 2019, as well as the country's strong economic rebound following the pandemic.
Challenges that previously hindered debt reduction, such as low growth rates, borrowing from the European Stability Mechanism (ESM), and pandemic-induced support measures, are now being addressed. With its investment-grade status restored, Greece plans to use ESM funds for debt reduction, starting with the early repayment of loan installments from Eurozone countries.
Credit rating agencies are optimistic about Greece's future, forecasting a continued downward trend in debt. They predict that Greece's debt will fall below Italy's by 2026 and reach 130.7% of GDP by 2029. The Bank of Greece shares this optimism, projecting that with continued primary surpluses and ongoing economic reforms, the debt could even fall to 60% of GDP within the next four decades.