The Public Debt Management Agency’s (PDMA) annual lending program provides for continuous presence in the markets in 2025 through early repayments of bilateral loans, issuance of bonds but also limited and targeted use of cash reserves.
More specifically, the Greek government intends to proceed with the issuance of bonds amounting to 8 billion euros in 2025 and the early repayment of loan installments totaling 5.29 billion euros, which are about to expire in 2033-2042.
It also looks forward to 3.07 billion euro revenue from various sources (Recovery Fund, European Investment Bank, etc.) and a reduction in cash reserves by 3.62 billion euros.
Cash reserves of 33 billion euros
According to PDMA, the State’s cash reserves, which will amount to 33 billion euros at the end of 2024, cover approximately three years of the gross financing needs of the Hellenic Republic and, as underlined, continue to provide a significant safety margin against any possible risk for the refinancing of the debt and interest rates in the medium term.
The Agency estimates that the financing needs of the Greek State are maintained below the limit of 10% of GDP, which supports the so-called sustainability of the Public Debt.
More specifically, it estimates that they will reach 6.7% of GDP in 2025, while they will be around 6.1% of GDP by 2070.
Greece’s modest borrowing needs for next year contrast with those of Italy, which reach 25.5% of the country’s GDP, and Spain, which amount to 16.3% of its GDP.
On a downward trajectory
At the same time, the sustainability of the Greek public debt, which is on a downward trajectory and will reach 146.8% of GDP in 2025 from 153.1% of GDP this year, is reinforced by additional factors such as:
- The fact that 70% of the debt is held by creditors of the official sector. The debt presents a long-term maturity profile and low interest rates compared to most other EU bonds.
- 100% of the debt, after its restructuring and the swaps that have been concluded, is at a fixed interest rate, which limits the remaining interest rate risks.
- The active debt management of the PDMA has allowed Greece’s debt portfolio to temporarily over-hedge against interest rate risk, which will contribute to further limiting financing costs in the future.
Primary surpluses
Finally, fiscal management and high primary surpluses contribute to the de-escalation of public debt to 142.7% of GDP in 2026.
Specifically, for 2025, the primary surplus is projected to remain at 2.9% of GDP, however, in 2026 it is projected to increase to 3.2%.
