The repayment of debt that was originally scheduled to be settled after 2031—or even in the 2040s—represents a positive step in the country’s long-standing efforts to stabilize its public finances.
Greece completed this week the early repayment of loans totaling €5.3 billion from its first eurozone bailout program, Euronews reported.
The repayment of debt that was originally scheduled to be settled after 2031—or even in the 2040s—represents a positive step in the country’s long-standing efforts to stabilize its public finances.
Coordinated by the European Commission (EC), the payment is a clear signal that Greece is relying less and less on debt accumulated during the crisis and is reducing the burden of future interest payments.
The Greek Loan Facility (GLF) was the first emergency bailout instrument created within the eurozone, at a time when a permanent support mechanism did not yet exist. It was established prior to the creation of the European Stability Mechanism and alongside other adjustment programs during the eurozone debt crisis. In 2010, Greece lost access to financial markets, and this mechanism prevented the country’s immediate default while limiting the risk to other EU member states.
According to local media, the early repayment of this debt will save approximately €1.6 billion in interest payments through 2041. By directly reducing future budgetary expenditures, the debt-to-GDP ratio is expected to fall below 120 percent by 2029.
This is particularly significant for a country that has the highest public debt-to-GDP ratio in the eurozone.
A Greek Financial Tragedy in Three Acts
Between late 2009 and 2018, Greece endured a severe debt crisis caused by years of fiscal mismanagement, large budget deficits, and weak economic competitiveness.
The crisis necessitated three international bailout programs from the European Union and the International Monetary Fund, accompanied by strict austerity measures and painful structural reforms.
The rescue process unfolded in stages. Initially, between 2010 and 2012, emergency state aid was provided through bilateral loans from eurozone countries under the GLF, as well as support from the IMF. This was followed, beginning in 2012, by a restructuring phase that imposed losses on private investors and shifted debt toward public institutions. Finally, a third phase was launched in the form of a stabilization program through the European Stability Mechanism (ESM), which concluded in 2018. The GLF no longer functions as an active lending instrument, but the remaining loans under it continue to be repaid to this day. The private sector has been indirectly affected through impacts on borrowing costs, investor confidence, and credit ratings.
Around 2023, Greece regained its investment-grade credit rating from leading rating agencies, reflecting improved fiscal conditions and institutional stability. This, in turn, led to lower borrowing costs.
At times, yields on 10-year Greek government bonds fell below those of larger economies such as Italy and France—an impressive reversal from the crisis period, when markets viewed Greek debt as high risk. | BGNES