Greece is preparing another major move on public debt, with plans for around €13 billion in early repayments during 2026, according to Bloomberg.
If the plan proceeds as expected, Athens could achieve a milestone that would have seemed almost unthinkable during the sovereign debt crisis: Greece may end the year with a lower debt-to-GDP ratio than Italy.
The faster reduction is being supported by strong fiscal performance, sizeable cash reserves and economic growth that continues to outperform several large European economies.
What the €13bn plan includes
The early repayment strategy is expected to cover several different forms of debt.
Key figures include:
- around €13bn in total early debt repayments during 2026
- approximately €2.5bn linked to EFSF loans
- a €2.2bn bond maturing in 2027
- a €1.2bn reduction in outstanding Treasury bills by December 31
- cash reserves expected to remain above €30bn at the end of 2026
Final decisions have not yet been taken, but the direction is clear: Athens intends to use part of its excess liquidity to reduce future financing needs.
Debt ratio seen falling to 137%
The Public Debt Management Agency now expects Greece’s debt-to-GDP ratio to fall to around 137% this year.
The previous estimate stood at 138.2%.
That 1.2 percentage-point improvement may look modest, but on a public debt stock running into hundreds of billions of euros, it is significant.
More importantly, the trend remains firmly downward.
The symbolic race with Italy
This is where the story becomes particularly striking.
For more than a decade Greece was Europe’s most prominent debt-crisis case. Now it could move below Italy in terms of public debt as a percentage of GDP earlier than previously expected by the European Commission.
If that happens, Italy would become the EU country with the highest debt ratio.
That does not mean Greece’s debt is suddenly low. A ratio of 137% of GDP remains extremely high by European standards.
What has changed is the trajectory.
Greece is reducing debt rapidly, while maintaining market access and sizeable liquidity buffers.
Markets are already noticing
The shift is not only visible in government accounts.
Greek sovereign bond yields have traded below those of countries once considered significantly safer borrowers, including Italy, France and the United Kingdom.
Earlier this summer, Greece had already accelerated repayments by using around €6.9bn to retire debt ahead of schedule.
The strategy offers several advantages:
- lower future interest costs
- smaller refinancing needs
- reduced exposure to market volatility
- greater flexibility for future bond issuance
In practical terms, the less Greece needs to borrow, the stronger its negotiating position in the markets becomes.
Primary surplus gives Athens room to move
The backdrop is the continued strength of the budget.
Greece is expected to outperform its primary-surplus target again in 2026, helped by economic growth and stronger-than-expected revenues.
That gives the government two options at the same time:
- accelerate debt reduction
- fund targeted tax and income-support measures
The challenge is balancing the two without weakening the fiscal credibility built over the past several years.
And then comes the Thessaloniki International Fair
The timing matters politically.
Prime Minister Kyriakos Mitsotakis is preparing to unveil the government’s next economic package in early September, along with a broader strategy extending toward 2030.
If fiscal performance continues to exceed expectations, there could be additional room for relief measures aimed at self-employed workers and other groups.
According to Bloomberg, such measures remain under discussion and have not yet been finalized.
Athens does not want to gamble with credibility
The government’s broader strategy is based on a simple principle: strong fiscal performance should not lead to a return to uncontrolled spending.
After a decade in which Greece depended on international bailout programs, Athens is keen to show investors and rating agencies that it is using favorable conditions to reduce vulnerabilities rather than recreate them.
That is why early debt repayment carries significance beyond the accounting effect.
It acts as a signal that Greece intends to lock in the gains of the post-crisis period.
The €30bn safety cushion remains
Even after the planned repayments, Greece’s cash buffer is expected to stay above €30bn at the end of 2026.
That is crucial.
It means Athens can retire debt while still maintaining substantial protection against market turbulence or a sudden rise in borrowing costs.
Lower refinancing needs also mean that the government’s 2027 issuance strategy could remain relatively conservative.
From bailout symbol to early repayment story
The deeper significance of the €13bn plan is historical.
A little more than a decade ago, the question was whether Greece could finance itself without emergency international assistance.
Today, the question is how quickly it can repay debt before maturity.
That is a profound reversal.
Greek debt remains high and still demands discipline, but the country is now operating from a very different position: investment grade, strong liquidity, regular market access and the ability to actively manage down its debt burden.
If Greece does indeed move below Italy in debt-to-GDP terms this year, it will be one of the most symbolic milestones of the entire post-bailout era.
Source: pagenews.gr