Strong growth at levels above 2% and a primary surplus of 2.4% will be forecast in the draft budget for 2026, expected to be submitted to parliament on October 6.

This will be followed by the submission to the Parliament of the new tax bill which will include all the reliefs and aids announced by Prime Minister Kyriakos Mitsotakis from the platform of the TIF. Following the TIF’s announcements on the use of the 1.7 billion euro fiscal space for the benefit of society, with a focus on the middle class, the economic staff will send a clear message through the new budget that in 2026 and the following years the policy of ensuring primary surpluses through high economic growth rates and interventions to reduce tax evasion will continue. The aim is to reduce public debt to levels below 120% of GDP at the beginning of the next decade when it will be repaid early by 2031, ten years earlier than originally planned, the first memorandum.

In 2025, for yet another year, the primary surplus will exceed not only the original target of 2.4% but also the higher updated projections that put it at 3.2% of GDP. Already in the eight months from January to August the primary surplus amounted to €8.5 billion against a budget target of €4.929 billion. Newer estimates raise this year’s primary surplus to levels above 3.5%. This means that the country’s fiscal performance this year will again be much higher than the original targets.

The growth rate this year is expected to move above 2% significantly. The long-term forecasts GDP growth in 2025 of 2.3%, while the Bank of Greece recently updated its estimate to 2.2%. The resources of the Recovery Fund are critical for the continuation of the high growth rates of the Greek economy. The programme is expected to be completed in September 2026 with the completion of all milestones and the payment of tranches. In November, the 7th request is expected to be submitted to the EU for €3.5 billion of financing. Of this amount, €1.7 billion are grants and €1.8 billion are loans. This request is linked to the implementation of specific milestones related to reforms and projects. The 8th and 9th requests will be submitted in 2026.

Reducing public debt is a key priority for the government’s economic staff and will be reflected in the new budget’s projections. With the aim of repaying the loans of the first memorandum by 2031 instead of 2041, the Finance Ministry will make another early repayment of €5.29 billion next December. The forecast for the path of public debt this year is that it will decelerate to levels of 145% of GDP to fall further in 2026 to below 140% of GDP.