Greece Forecasts Debt Ratio for 2025 to Reach Pre-Bailout Low

Greece projects its public debt-to-GDP ratio will fall to 145.4% in 2025, marking the lowest level since 2009 and below the 147.8% recorded at the onset of its bailout crisis in 2010. This significant fiscal improvement from a 2020 peak of nearly 210% is expected to continue declining into 2026, signaling enhanced debt sustainability and a return to pre-crisis financial metrics.

Analysis

Greece Forecasts Debt Ratio for 2025 to Reach Pre-Bailout Low Greece’s pile of borrowings are now estimated to have fallen to the lowest since 2009, before financial turmoil then forced the country to seek the first bailout of its decade-long crisis. Public debt is expected to drop to 145.4% of output this year and decline further in 2026, according to a draft budget submitted to parliament on Monday. That’s down from a record high of almost 210% in 2020, and is just below the 147.8% level seen in 2010, when the country received an initial rescue package. Greece's fiscal consolidation is reaching a significant milestone, with its draft budget projecting the public debt-to-GDP ratio to fall to 145.4% in 2025. This level is notable as it would be the lowest since 2009 and falls below the 147.8% ratio recorded in 2010 at the onset of its international bailout. The forecast represents a substantial improvement from the peak of nearly 210% in 2020, demonstrating a rapid deleveraging that enhances the country's sovereign credit profile. The expectation for this declining trend to continue into 2026 signals a sustained improvement in debt sustainability and a structural recovery from the decade-long financial crisis.

Key Decisions for Investors

• Investors should view the continuous reduction in Greece's debt-to-GDP ratio as a strong positive for the creditworthiness of its sovereign bonds, potentially leading to further yield compression and capital appreciation.
• The improved fiscal stability reduces the sovereign risk premium, which could serve as a bullish catalyst for Greek equities and enhance the investment case for domestic-focused companies.
• While the forecast is optimistic, it is crucial to monitor the execution of the budget and macroeconomic performance to ensure the deleveraging trajectory is maintained as projected.