Derby... first Greece – Italy for the most overcharged country in the 2026 Eurozone will be held in this year’s second half, with Greece attempting for the first time in decades to lose the title.
Having effectively covered its financial programme this year - the entire second half of the year only issues of interest notes and four small bond reissues are planned - the ODD in the second half will put the burden on planning new early debt repayments and maintaining the debt of the General Government at the level of EUR 360 billion.
This is the «key» to form debt at the level of 136% of GDP, which may prove sufficient to stop Greece being the country with the largest debt/GDP ratio in the Eurozone when Eurostat statistics are published for 2026. Reaching the goal is not only psychological but also essential. Amid a war in the Middle East, no rating agency has taken a step forward or even improved prospects.
However, in the autumn when a new round of evaluations is launched - and now the picture will be clearer, as the drafts of the state budgets have been published - there will be an argument in the evaluation houses' ranks to do better for Greece. The argument will be as follows: How it is justified for a country with a higher ratio of debt to GDP and more unfavourable features of its future course (such as Italy) to enjoy a better rating of a country that is now better off and forecasts for the future course are more favourable.
The ratio
For the end of 2026, the goal is to keep debt to GDP at 136.8% from 146.1% in 2025. This forecast has been based on the fact that the annual rate of real growth will be 2% and that the consumer price index will rise to 3.2%. There are currently different estimates of these two sizes. For the growth rate, forecasts for lower real growth are increasing at 1.8% to 1.9%. On the contrary, for inflation most analysts question the prospect of holding the average at 3.2%. We are already 4% for the first semester and July started with increases in fuel oil.
But what is bad for citizens' income - smaller growth and greater inflation - ends up being positive for debt. Because, while nominal GDP has been budgeted at 261.3 billion euros with a sum of growth and inflation of 5.2% (p.: 2% growth and 3.2% inflation), if we reach a scenario with 1.8% growth and 3.7% inflation, we will go to a sum of 5.5%, so nominal debt can form over 262 billion euros.
Debt issues
This is as regards the denominator of the debt-to-GDP fraction. For the numerator, after the reissue of previous weeks' bonds, the way for new early debt repayments was opened within the second half. Already two weeks ago, 6.9 billion euros were allocated for early instalments of bilateral loans under the first Memorandum, resulting in Greece's debt to retreat below 360 billion euros.
What's going on until the end of the year? In any case, two outstanding bonds will be repaid, totalling around 4.2 billion euros. On the other hand, there will be a new loan of around EUR 6.4 billion due to loans from the Recovery Fund. In this way, Greece will also be able to find a high liquidity in the second half, of more than 37-38 billion euros. This will allow for a new early repayment of debts, which this time will focus on loans from the 2nd Memorandum, namely EFSF, as revealed by the «N o». The amount planned to be paid is EUR 2.5 billion.
Με όλες αυτές τις κινήσεις, το χρέος της Γενικής Κυβέρνησης μπορεί να υποχωρήσει στα 356-357 δισ. ευρώ στο τέλος του 2026, χαμηλότερα από το 2025, με την αναλογία ως προς το ΑΕΠ να διαμορφώνεται στο 136% του ΑΕΠ. Το αν η Ιταλία θα μπορέσει να εμφανίσει αντίστοιχη επίδοση, είναι ένα ερώτημα. Προς το παρόν, οι διεθνείς οργανισμοί προβλέπουν χρέος άνω του 137% για τη γειτονική χώρα, όμως ο αντίστοιχος ΟΔΔΗΧ της Ιταλίας έχει και αυτός περιθώρια κινήσεων για να βελτιώσει τον δείκτη χρέους προς ΑΕΠ. Πέρα από τους οικονομικούς, υπάρχουν και πολιτικοί λόγοι, καθώς το 2027 θα είναι εκλογική χρονιά όχι μόνο για την Ελλάδα αλλά και για την Ιταλία.
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