Is Greek debt sustainable?
The implementation of an ambitious growth strategy and prudent fiscal policies by the Greek government will be the key ingredients for debt sustainability. Through its long-term growth plan, Greece is committed to preserving its programme achievements, which includes completing the reforms that were enacted under the programme and continuing to implement further reforms designed to boost its growth potential.
In addition, the Greek government has committed to maintaining a primary surplus of 3.5 % of GDP until 2022, and around 2% in following years to continue to ensure that its fiscal commitments are in line with the EU fiscal framework.
Finally, the medium-term debt measures agreed by the Eurogroup, together with the significant cash buffer available to the Greek government, will provide strong support for Greece’s efforts. The European institutions’ Debt Sustainability Analysis (DSA) indicates that Greece’s gross financing needs are expected to remain below 15% of GDP over the medium term and to comply with the 20% threshold in the long run, and that Greece’s debt is therefore considered sustainable.
For the long-term, the Eurogroup also agreed to review at the end of the EFSF grace period in 2032, whether additional debt measures are needed to ensure the respect of these gross financing needs targets. However, additional measures can only be considered if Greece continues to respect the EU fiscal framework.