The amount of the Greek debt is revised upwards and even retroactively.
In application of the new framework of rules, Eurostat imposes the inclusion of deferred interest, the amount of which is estimated at approximately 12-12.5 billion euros until the end of last year.
The change is expected to increase the debt-to-GDP ratio by 5-6 percentage points, bringing it close to 167.5% (from 161.9% now) for fiscal year 2023, with a similar impact in the following years.
It is likely that the change will be reflected on October 17, with the release of the final estimates of GDP and debt figures. There is a possibility that the integration will be postponed to March 2024, although the registration is considered a given decision. The main impact will be a worsening of the debt-to-GDP ratio.
Retrospective since 2012
The impact from the recording of interest on the debt is essentially limited to the deterioration of the debt-to-GDP ratio, which will be calculated retroactively from 2012. At the fiscal level, there is no change, as the amounts have been recorded normally in all previous financial years.
This means that there will be a burden on the general government deficit due to this change. Regarding the cash level (i.e. when the country will start repaying these interests), what is foreseen by the loan agreement with Greece’s lenders (they are loans of the official sector, i.e. the EFSF) is that the payment will start from 2032 onwards, at a rate of around 1 to 1.2 billion euros per year. There will be no impact on the target “enforced” by the new Stability Pact to de-escalate the ratio of debt to GDP by at least one point for those countries showing a percentage above 90%. This is because the change is being implemented retroactively from 2012 to 2023.
