A strong message of strength for the Greek economy is about to be sent by Athens to Brussels and international markets. Despite huge international uncertainties and under the shadow of two wars in its region, Greece looks set to achieve another year of significant growth and a very strong primary surplus-surprise. And to top it all off, just before the end of the year it will make a spectacular early repayment of expensive loans from the first memorandum era, further reducing the national debt. Not only as a percentage of GDP, as in recent years, but also in absolute terms, that is, in Euros.

The last 100 days of 2024 are predicted to bring surprises and twists and turns. Not all of them always pleasant, but capable of showing that Greece is managing for another year and standing better than many other strong economies in Europe. Against this backdrop, the economic staff and the Maximou building are preparing the announcements to be made in Thessaloniki and Brussels on economic policy for 2025, with the prospect of even better performance and more relief measures – instead of austerity – by 2028.

Two Sides

The bad news is that, as now assessed by the economic team, the predictions made in April while drafting the Stability Program for a 2.5% GDP growth this year are being disproved. The growth of the Greek economy will be around 2.2%—in line with the revised summer forecasts of the European Commission for our country. However, this revision is smaller than the one made by the Commission for the Eurozone as a whole, where growth is expected to not exceed 0.7% compared to an initial forecast of a 1.1% GDP increase. Thus, the growth forecast for the EU is slashed by more than 30%, while for Greece, it is reduced by less than 15%. Given this, despite the general stagnation, our country will record three times the growth this year compared to the rest of Europe.

Milestone: December 15th

On the other hand, the good news, according to exclusive information from “business stories,” will begin to unfold from September as follows:

1. Athens had announced in the Budget that it would borrow €10 billion this year. So far, it has borrowed around €8 billion, but it may ultimately not borrow the remaining €2 billion scheduled in this year’s borrowing program. Such a development would mean €2 billion less public debt at the end of the year.
2. As of the start of September, the state’s cash reserves amount to €40 billion. This is perhaps the highest level the country has had in at least 15 years!
3. At the beginning of next month, Athens will initiate the process for a new early debt repayment of €8 billion, extinguishing debts that were originally due to be repaid by 2028! This concerns loans from the first bailout program with a high-interest rate, thereby relieving the country of interest burdens of around €1 billion, which would further strain the debt over the next three years. The €8 billion will be sourced from the record €40 billion in cash reserves available in state coffers. However, even after this move, the state’s cash reserves will still exceed €30 billion.

December 15th has already been set as the milestone date for the early repayment. The process, however, begins in early September, when Athens will inform the Euro Working Group of its intentions. In September, the request will become official and receive the green light from the Eurogroup, triggering procedures in a series of foreign parliaments (Germany, Finland, etc.), which must also approve the modification of the loan program, as in December, the installments that our country would have normally repaid (along with the interest) by 2028 will be canceled.

Surplus with Increased Income

Amid market turmoil, with rollercoaster stock exchanges, energy prices in Europe reaching new highs, and half of the Eurozone countries on the brink of surveillance and austerity measures due to excessive deficits, Athens is preparing to present a surprise surplus, exceeding 0.4% of GDP, or about €800 million. This development is due to the overperformance of tax collection measures, which brought in nearly €2 billion more than expected. This excess mainly arises from an increase in income tax collections by two-thirds, and secondarily from the rise in indirect taxes (excise duties and VAT) due to high prices.

However, everything will be scrutinized by Brussels, both with the approval of the new Budget and the Medium-Term Program for 2025-2028 in September, and with Eurostat’s confirmation of growth rates in October. Achieving the fiscal targets in full, with Eurostat’s endorsement, will provide a strong springboard for new upgrades from rating agencies at the end of 2024 and throughout 2025. Crucial will also be the achievement of a faster reduction in public debt, not only as a percentage of GDP (due to growth or high inflation) but also in absolute terms. Public debt has already stabilized and decreased from €356.8 billion in 2022 to €356.7 billion in 2023, and to €356 billion as of March 31 this year, with a prospect of falling below €350 billion following a one-off early repayment of €8 billion expected to be announced for the loans of the first bailout program, and an additional reduction of €2 billion from the reduction in Greek government treasury bills.