The Public Debt Management Agency (PDMA) and the Ministry of Finance intend to reduce Greece’s borrowing program for 2025, aiming to reduce the debt-to-GDP ratio as well as public debt in absolute terms.
The loan program will be officially announced in December. However, it appears that there is room to raise no more than €8 billion over the course of 2025, compared to the €10 billion that is planned to be mobilized this year, through the two new bond issues already carried out, as well as the reissuance of existing bonds. .
The issue of deferred interest will also be clarified by December, meaning that both general government debt in absolute terms and the debt-to-GDP ratio can be calculated more accurately.
In the worst case, all interest (so far 12.5 billion euros) will be passed on to GDP, but without increasing the latter due to readjustment (a revision of GDP is imminent to use 2020 as a base year and not 2015 which is applied today), projections for 2025 will be recalculated, as public administration debt will now amount to around 365-366 billion euros, while the debt-to-GDP ratio will increase by around 5 percentage points.
If GDP increases, the burden on the debt/GDP ratio will be lower.
But whatever the “starting point”, that is, the debt/GDP ratio at the end of 2024, but also the public debt in absolute terms on 12/31/2024, the objective of the financing program will remain the same: to reduce debt balance by 2025 and improve the debt-to-GDP ratio by more than six percentage points.
The ability to request less capital from the markets is given because:
1. The financial needs for 2025 are limited, as a significant part of the obligations (such as, for example, the provision of GLFs, i.e. the bilateral loans that Greece contracted with the eurozone countries under the first memorandum) have already has been repaid in advance since last year.
The obligations that must be fulfilled in 2025 are as follows: 2,258 billion euros are the maturities of the obligations that must be repaid in 2025.
To this value must be added another 408 million euros that the country must pay to EIBT, but also one billion euros that originate from debt from the Sure program (used by Greece during the pandemic, with the remaining debt amounting to 6, 16 billion euros). ).
Regarding loans from the official sector, payments reach 1.738 billion euros.
2. Primary surpluses will rise again this year to higher levels than the annual target, which is also reflected in the country’s cash reserves.
Based on the budget project, the 2024 primary surplus will reach at least 2.4% of GDP against the 2.1% that was the target.
3. The country’s cash reserves are also reinforced by the implementation of the privatization program. The collection of around 4 billion euros is pending – in cash terms – and it remains to be seen whether the amount will be received by the end of the year or whether it will be transferred to the beginning of 2025.
