Greek Finance Minister Kostis Hatzidakis told Reuters that the government would maintain fiscal prudence to ensure growth and a way out of the crippling debt crisis of a decade ago, even amid higher wage demands from striking teachers and ferry workers.
Speaking on the sidelines of the annual meeting of the International Monetary Fund and the World Bank in Washington this week, Hatzidakis said any concession on wage increases should not jeopardize the downward trend in the country’s debt ratio.
“We have learned the lessons of the last decade. Greece has lived beyond its means,” said Hatzidakis. He added that it was important to keep primary surpluses and an overall deficit after debt service “close to zero.”
“We are under the watch of the markets and investors. So we know that fiscal prudence is a prerequisite for us to convince everyone – the markets and the investors – that we are a credible government and a credible country,” said he.
Asked whether the government could meet the demands of public school teachers and port workers who went on strike on Wednesday, he said it would depend on how it would affect the broader economy.
“We always try to meet the demands of different groups, as long as these demands do not jeopardize the implementation of the budget and the objectives set for the country and the Greek economy as a whole,” Hatzidakis said.
Tourism-dependent Greece is currently experiencing one of the highest growth rates in Europe. The government forecasts growth of 2.2% for 2024, the IMF of 2.3%. This is well above the weak overall growth of 0.8% that the IMF forecasts for the euro zone, where developed countries including Germany and Italy are struggling.
Greece’s finance ministry has committed to early repayment of about $8 billion in bilateral debt in 2026, 2027 and 2028, estimating that this will bring the country’s debt-to-GDP ratio – the highest in Europe – to 162% this year to 149% in 2025 and 133.4% in 2028.
If it stays on this path, Greece’s debt-to-GDP ratio in 2028 would be lower than Italy’s, which Rome forecasts at 135.8% this year and which would rise to 137.5% by 2027.
Athens’ medium-term financial plan calls for a further decline in debt to 114.8% of GDP in 2038, a target that, according to Hatzidakis, requires “a combination of fiscal prudence and a pro-business approach.”
Greece’s fiscal buffers would remain in place and any change would have to be made in consultation with creditors and EU partners, he said.
Hatzidakis added that being at the IMF headquarters, where tense negotiations took place at the height of Greece’s debt crisis more than a decade ago, was a reminder of the need to maintain fiscal discipline.
“When I come to this building, I always remember the past decade, and I always remember that I should not allow Greece to return to the past decade, but also to grow in a sustainable way for the benefit of the Greeks,” he said. “This is our patriotic duty.”
