Greece Is Paying It's Debt 10 Years Earlier

The Greek economy is doing better than some people think. Much better. And although I’m one of those who usually say that “nothing ever changes in this country”, today I might start rethinking a few things.

DEBT REPAYMENT
Greece announced that in 2025 it will pay off €5 billion of its bailout-era loans ahead of schedule. In fact, it has already repaid early the €1.1 billion loan it had taken from France. These were debts originally scheduled for repayment after 2033, and now they are disappearing almost a decade sooner.

Why does this matter? Because early debt repayment signals one thing: the country’s credit risk is falling. And when risk falls, the spreads on Greek bonds also fall. This means:
(a) the Greek state borrows more cheaply, which reduces interest expenses
(b) Greek companies borrow more cheaply, which makes growth easier
(c) Greek assets receive higher valuations, since investment risk declines
(d) and above all, confidence among foreign institutional investors increases.

All these factors together lead to significant capital inflows into the Greek stock market. And we are already seeing this happen. It’s no coincidence that the Athens Exchange has been one of the best-performing markets in Europe this year. Since the start of 2025, institutional funds have been returning, increasing positions in banks, industrials, and construction companies, with the general index up 44 percent from last year.

And this brings us to the second important development: the European Commission’s forecasts.

According to its latest report, Greece is expected to grow by 2.1 percent in 2025 and 2.2 percent in 2026. These growth rates are more than double the Eurozone average, which is projected below 1 percent. And this is no accident.

This growth is driven by:
Strong private consumption
High tourism activity
Investment inflows from the Recovery and Resilience Facility
Gradual decline in unemployment

What does this mean in practice? That the Greek economy continues to run with momentum, and this momentum acts as a form of stability guarantee for international investors. The more resilient the country appears, the easier it becomes to attract long-term capital. Greece has now regained the image of a country that is reliable, stable, and with strong growth momentum.

The European Commission also forecasts:

• Unemployment below 9 percent for the first time in 15 years
• Inflation easing toward 2.4 percent, within the ECB’s target
• Consistent primary budget surpluses, despite the social benefits and tax cuts announced

PRIMARY SURPLUS

This leads us to the third strong point: the very large primary surplus projected for 2025.

According to budget execution data through October, the primary surplus reached €10.3 billion, far exceeding the target of €7.1 billion. This is a difference of more than €3 billion, not due to higher taxes, but due to better collection of existing taxes and tighter spending control.

This gives the government room for two things:
Targeted social support (aid for vulnerable groups, tax reductions, benefits)
Further public debt reduction (which strengthens credibility and reduces servicing costs even more)

And as we know well, markets love fiscal responsibility. It is the key to maintaining investment grade, and maintaining investment grade is the key to sustained capital inflows. Especially in a period of global uncertainty, stability becomes an advantage.

Posted Using INLEO