Eurobank for the Greek economy: Fiscal outperformance and rapid debt reduction in 2025

Different facts in the Greek economy are highlighted by Eurobank Research, focusing on the overshooting of fiscal targets in the year 2025. In the latest issue of 7 Days Economy, the analysts examine the new European framework and the room for manoeuvre for 2026, against the backdrop of official data from ELSTAT.

The X-ray of the numbers shows that the general government balance strengthened to 1.7% of GDP, beating the previous year’s performance. At the same time, the primary surplus reached 4.9%, translating into €12.13 billion in absolute terms. The performance of public debt is also impressive, which was limited to 146.1% of GDP, down eight percentage points in one year.

This trend attests to the country’s steady fiscal consolidation over the past four years:

• Transition from deficits in 2022 to continuous surpluses over the last two years.
• A rapid decline in the debt-to-GDP ratio from 177.8% to 146.1%.
• Combined effect of rising nominal GDP and shrinking debt.

This situation creates a stable background, as debt in absolute terms was held at €362.9 billion., reflecting the systematic effort to improve Greece’s macroeconomic performance.

Compared to the 2025 targets in the Budget 2026, execution proved stronger on the fiscal outcomes side and marginally weaker on the debt side. In particular, the GF surplus was 1.7% of GDP, against a target of 0.6%, while the primary surplus was 4.9% of GDP, exceeding the target of 3.7%. This overshoot suggests stronger-than-expected budget execution and creates a better starting point for fiscal policy in 2026.

On the key GF side, revenues rose to €124.17 billion in 2025, equivalent to 50.0% of GDP, up from €117.06 billion in 2024. Expenditure also increased, to €119.88 billion in 2025 from €113.87 billion in 2024, but as a share of GDP changed marginally to 48.3% from 48.1%. This picture points to a maintenance of the fiscal position on the expenditure side, with revenue growth exceeding that of expenditure, leading to a strengthening of the fiscal outcome.

The government debt-to-GDP ratio fell sharply to 146.1%, but remained marginally higher than the Budget’s forecast of 145.9%. This small discrepancy can be attributed mainly to year-end cash movements, but also to slightly lower nominal GDP than the Budget assumption. The structure of government debt shows that the decline in the total stock in 2025 was mainly driven by a further deceleration in loans, which fell to €257.2 billion from €262.5 billion in 2024, while debt securities increased to €98.0 billion from €94.8 billion.

Government support to financial institutions continued to weigh on the general government balance in 2025, by €667 million. or -0.27% of GDP, although this negative impact was significantly lower than in 2024, when it was -0.5% of GDP.

Based on Eurostat data, Greece is among the strongest performing countries in the Eurozone in 2025 in terms of the general government balance. In a period in which the Eurozone as a whole remained in deficit at 2.9% of GDP, Greece recorded a surplus of 1.7% of GDP and was one of the few EU countries with a surplus result. The country is therefore well above the Eurozone average and among the best performers in 2025 – behind only Cyprus (3.4%) and Ireland (1.8%) – which reinforces the picture of continued fiscal adjustment after the pandemic.

The picture remains less favourable on the public debt side. Despite a significant deceleration in recent years, the debt-to-GDP ratio stood at 146.1% in 2025, remaining the highest in both the euro area and the EU. It is followed by Italy at 137.1%, France at 115.6%, Belgium at 107.9% and Spain at 100.7% of GDP. The Eurozone average was 87.8% of GDP in 2025. Therefore, Greece’s fiscal position in 2025 remains twofold: on the one hand, it shows one of the best performances in the Eurozone in terms of annual fiscal outcome, but on the other hand it still carries the highest stock of public debt as a percentage of GDP.

Overall, the data of the 1st ELSTAT release confirm that the Greek economy maintained a strong fiscal performance in 2025, with a surplus outcome, a high primary surplus and a marked deceleration of the public debt-to-GDP ratio. This development strengthens the country’s fiscal credibility and creates a better starting point for economic policy in 2026, within the limits of the new European framework. At the same time, the still high stock of public debt and heightened international uncertainty suggest that the available fiscal space should be used carefully, with interventions that support income and growth dynamics without eroding the medium-term sustainability of public finances.

The outperformance of the fiscal outturn for 2025 allowed the government to announce, following the first package of interventions in March, a second package of support to the economy, at a total cost of around €500 million. This new package is part of a broader package of measures for 2026 (to date), totalling €800 million, aimed at providing relief to households, farmers, pensioners, renters, businesses and debtors. This package includes both measures aimed at permanently boosting disposable income and temporary measures aimed at addressing the impact of the current energy crisis.

In particular, the measures include the extension of the diesel subsidy until May 2026, the continuation of the fertiliser subsidy until August, the exceptional support of €150 for each child, the increase to €300 of the permanent annual support for low pensioners, uninsured seniors and disabled people, and the extension of the beneficiaries of the one rent rebate per year. At the same time, interventions on private debt are envisaged, with more favourable arrangements for the lifting of seizures, expansion of the extrajudicial mechanism and the possibility of repaying overdue debts up to 72 instalments.

These interventions are part of the new European fiscal framework, where the main criterion for compliance is the path of net primary expenditure and not only the level of the primary surplus. For Greece, the analysis of the 2025 accounts by the economic staff, in consultation with the European Commission, led to the identification of fiscal space of €800 million for 2026. Of this, around €600 million is attributed to permanent expenditure savings and around €200 million to active revenue measures recognised within the expenditure ratio.

This space fully covers all the interventions already announced for 2026. Beyond that, the updated valuation of the expenditure ratio leaves an additional but limited margin of €150-200 million, up to the maximum allowed by European rules, which, under the current conditions of increased uncertainty, is not anticipated.

Both the 2026 Budget projections (November 2025) and the recent IMF projections (April 2026) converge on the basic direction of the country’s fiscal path in the coming years: maintaining primary surpluses and further decelerating the debt-to-GDP ratio. Specifically, for 2026, the Budget projects a GF balance of 0.2% of GDP in deficit, a primary surplus of 2.8% of GDP, and a government debt of 138.2% of GDP.

The IMF in its recent estimates is slightly more optimistic, with a GF balance of 0.2% of GDP in deficit, a primary GF balance of 3.8% of GDP in surplus, and a government debt of 136.9% of GDP.

The IMF in its recent estimates is slightly more optimistic, with a GF balance of 0.2% of GDP in deficit, a primary GF balance of 3.8% of GDP in surplus, and a government debt of 136.9% of GDP. The small divergence between the two sources reflects different technical assumptions regarding growth, inflation, expenditure execution and revenue dynamics.

Over the medium term, the IMF projects the overall general government balance to remain slightly in deficit, while primary surpluses will be maintained at levels above 2% of GDP, supporting a further reduction in public debt to 130.3% of GDP in 2027, 125.2% in 2028, 120.4% in 2029, 115.5% in 2030 and 110.9% in 2031.

Therefore, despite individual variations, both the Budget and the IMF converge on the assessment that the country will continue to record primary surpluses and a gradual deceleration of the public debt-to-GDP ratio in the coming years.