Its final decision to record retroactively from 2012 the deferred interest of the second memorandum, with a total value of 12.4 billion euros, to the amount of the public debt at the end of 2023 and then to record the interest annually until 2032, when the grace period, Eurostat informed the financial staff, creating new data in the statistical display of the debt, especially in view of the submission of the draft budget of 2025, but also of the Medium-term Fiscal and Structural Program of the period 2025-2028.
Thus, the 2023 debt is expected to increase from 356.69 billion euros to 369 billion euros, with the result that – with the nominal GDP at 220.3 billion euros – the debt to GDP ratio from 161.9% to increases to 167.4%.
Then, as the interest will be recorded on an annual basis, in 2032, which was expected to increase the debt by approximately 23 billion euros, after the grace period would have ended, it is no longer a milestone year and concerns the authorities and investors .
The latter have long been competently informed so that some do not think that they have to do with “Greek Statistics No. 2”, while in this field a relevant note from Eurostat that supports our country has also helped.
The final increase
On the other hand, however, the regular upward revision of Greece’s GDP is also expected, as a result of which it is estimated that the final increase in the debt-to-GDP ratio will be almost halved, since the numerator (debt) will increase both as well as the denominator (GDP).
However, Italy recently carried out a significant upward revision of its own GDP by 40 billion euros, reminding some of the large upward revision of the Greek GDP which was carried out by the then Minister of Economy before the Greek bankruptcy G. Alogoskoufis, using, among other things, the increased income from prostitution, as a result of which publications such as that of the “Financial Times” which scathingly pointed out that “the oldest profession in the world increases the Greek GDP” make the rounds of the world, in our country today we expect slanderous movements .
Greece aims to reduce its debt to around 130% of GDP by the end of 2028, Finance Minister Kostis Hatzidakis told Bloomberg.
Debt will shrink with the help of an economy that is outperforming most European economies, while the 2024 primary surplus will be higher than the 2.1% target, reaching 2.4% of GDP, a development that gives the the possibility of further spending growth of “slightly above 3%” in 2025 – against an initial forecast of 3% – and growth on average at this rate until the end of 2028.
Payback
On the other hand, it should be noted that on September 9, Mr Dimitrios Tsakonasgeneral director of the Public Debt Management Organization (ODDIX), submitted an official request requesting the Greek State to obtain the exceptional (waiver) possibility of early repayment of the three installments, totaling 7.935 billion euros, of the bilateral loans ( GLF) of the first memorandum for the period 2026-2028 and to enable the European Stability Mechanism (ESM) in Greece to use for this transaction the amount of 5 billion euros from the so-called “hard core” (of the 15 .69 billion euros) of the cash “cushion” of the country, which currently stands at 39.8 billion euros. The said early repayment of the debt will take place on December 15, 2024, while similar movements are expected in the following years, recommending the reduction of the debt, while the GDP of the country is estimated to have exceeded 260 billion in 2027. euro.
The surplus
As this year’s primary surplus will be six hundred and sixty million euros higher than initial estimates, affecting next year’s as well, the new medium-term fiscal program that Greece will submit to the Commission on October 7-11 is said to foresee a primary surplus of 2 .4% of GDP, with the Greek government claiming from Brussels increased spending close to 3.5% of GDP and in 2025 from the 3% set by the new fiscal rules, as due to carry over the forecast for the primary surplus for the new year, i.e. above the target for 2.1% of GDP.
The development
In the new medium term, the growth of the Greek economy from the initial estimate of 2.5% this year and 2.6% in 2025 is expected to be revised close to those of the Commission which expects a GDP growth rate of 2.2% and 2.3% respectively . On October 7, the draft of the new budget is expected to be submitted to the Parliament without major changes in relation to the final figures of November, while on October 15 the forecasts of the draft will be integrated into the Draft Budgetary Plan, which will be submitted to the Commission.
At the same time, according to the execution data of the state budget, for the period January – August 2024, there is a surplus in the state budget balance of 1,044 million euros against a target for a deficit of 2,774 million euros, while the tax revenues amounted to 43 billion. EUR, up by EUR 1.9 billion, which is due to better collections from income tax and VAT.
Bank of Greece
Growth expectations and risks
The Bank of Greece also predicts growth of 2.2% in 2024, 2.5% in 2025 and 2.3% in 2026, with investments (with the support of European funds) and private consumption as the main driver. Private consumption is expected to grow by an average of 1.9% over the forecast horizon, while investment is expected to grow by an average of 8.5% per year supported by EU funds.
Exports of goods and services will also move at a rate of 3.8% annually in the coming years. However, the contribution of the external sector to GDP is predicted to be marginally negative in the medium term, due to the strong investment activity, which will increase imports.
The risks for the Greek economy are located in the possibility of a worsening of the economic climate and in the weaker external demand from the Eurozone and the rest of the world, in the worsening of the geopolitical situation in Ukraine and the Middle East, in the possibility of lower forecasts for the absorption and utilization of the funds of the Recovery Fund , natural disasters related to climate change, a tighter labor market, delayed reforms and slowing progress in improving productivity, while a further overestimation of tourism receipts would be positive.
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