Once in the thick of a debt crisis, Greece now leads the bloc’s growth as the country repays its multi-billion-dollar loans ahead of time
Greece plans to repay bailout loans worth a total of €8 billion ($8.6 billion) ahead of schedule, underscoring the country’s progress in recovering from the debt crisis, Prime Minister Kyriakos Mitsotakis said.
The early repayment corresponds to three years of installments and represents the third time that Greece has moved to accelerate reimbursement of a loan package received in its first bailout program in 2010. The latest move will be the first time the country is making that much of a dent in the Greek Loan Facility.
“We actually did a lot since we were reelected” last year, he said in a Bloomberg interview on Wednesday at the prime minister’s office in Athens. “When it comes to the market transactions, they probably exceeded expectations.”
The move, which covers loan amortizations from 2026 to 2028, is a confident signal to financial markets about the country’s ongoing economic recovery. Even though the government lowered its growth target for 2024 to 2.5% from a previous estimate of 2.9%, the country is performing well above the average growth forecasts in the European Union.
“There was a real appetite for Greek assets,” he added. “The market seemed to believe our long-term goal story and also believe that this government is stable and here to stay in the long term.”
Under Mitsotakis, who won a new term last year, Greece has clawed its way back to an investment-grade rating, but still has plenty of work to do. Debt as a percentage of economic output still remains one of the highest in Europe, though it’s expected to decline to 152.7% of GDP this year from a high of 207% in 2020.
The Greek premier said the trends will continue. The country’s net debt decreased in nominal terms in 2023, not just as a percent of output, and “I think it’ll probably fall again this year,” he said.
Part of the funds to make the early repayment will come from the country’s cash buffer, which was built up during the debt crisis as a safety net. Now that the bailout era is over, Athens has access to debt markets and Mitsotakis said he plans to use €5 billion of these funds to make the early repayments.
The center-right government has pledged to achieve a primary surplus — an index that shows revenues minus spending excluding interest payments — of 2.1% of gross domestic product this year and in 2025. The measure was 1.9% in 2023.
Stake Sale
Mitsotakis’s administration is taking advantage of the positive momentum and has moved forward with the privatization initiatives. Since October, the state has completely divested its holdings in three big lenders and is now preparing to sell all or part of its remaining stake in National Bank of Greece SA.
The state still holds a 18% in National Bank and we’ll do something “come fall, subject to market conditions,” the Greek prime minister said, without providing further details.
In February, the government also concluded its biggest initial public offering in decades with the listing of a minority stake in Athens International Airport SA.
In December, Greece and Latsis Group sold a combined 11% stake in Helleniq Energy Holdings SA for €235.3 million, and Mitsotakis said there are “no immediate plans” for any further sale in the company.
Taking advantage of the rebound in tourism following the Covid-19 pandemic, Greece launched a process to privatize Lavrio Port in March. Close to Athens airport and the popular Cycladic islands, the port is suitable for tourism development with the operation of a cruise terminal and a marina for yachts. Eight groups submitted interest in May to buy a majority stake in the port authority,
Regarding Greece’s largest utility Public Power Corp., the premier made clear that the government will hold on to its 34% stake. “We’re very happy with the turnaround of the company,” Mitsotakis said.
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