Greece's economy braces for busy period of debt reduction, potential upgrades

Greece's economy is entering a crucial four-month period marked by significant developments in public debt reduction and potential credit rating upgrades. Prime Minister Kyriakos Mitsotakis is set to unveil the government's economic policy for the upcoming months, leading up to the 2027 elections, and a strategic plan with targets extending to 2030 at the Thessaloniki International Fair (TIF).

The government is intensifying preparations for the TIF announcements, which sources indicate will prioritize reducing tax and insurance burdens. Support for small and medium-sized businesses, pensioners, and the middle class will be central to the economic package. These interventions will follow the pattern of previous TIF announcements, focusing on measures for housing and tax reductions for families.

The core message from the prime minister's announcements will be the continuation of social support policies while ensuring fiscal stability. This dual approach is underpinned by strong economic growth and efforts to combat tax evasion, leading to primary surpluses. These surpluses are then returned to society as dividends or used for further public debt reduction.

In line with this strategy, the government has already announced an increase in early public debt repayment for this year, reaching 13 billion euros, up from the initially planned 8.79 billion euros. This was made possible by the economy's strong fiscal performance. The total includes 6.94 billion euros repaid in June for bilateral GLF loans, 2.5 billion euros for EFSF loans, a 1.2 billion euro reduction in treasury bills, and the early repayment of a 2.2 billion euro bond maturing in December 2027. These measures are projected to save approximately 2.6 million euros over the next seven years.

These financial data will be considered in the upcoming credit rating assessments. The Canadian agency DBRS will initiate the cycle on September 4, followed by Moody's and the German agency SCOPE on September 18. The government anticipates further upgrades, building on its strong economic performance and fiscal management.

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