The International Monetary Fund (IMF) offered a cautiously optimistic assessment of Greece's public debt sustainability in its latest annual Article IV report, released yesterday. While acknowledging the country's impressive fiscal turnaround and significant debt reduction in recent years, the IMF warned that debt levels remain elevated and warrant continued vigilance.
Greece has made "remarkable progress" in restoring fiscal balance, the Fund noted, with the debt-to-GDP ratio having dropped by more than 55 percentage points since 2021. The ratio is expected to fall to 150.8% by the end of 2024, declining further to 142.4% in 2025 and below 130% by 2030, according to IMF projections.
However, the IMF emphasized that maintaining primary budget surpluses above 2% of GDP over the medium term is critical to ensuring debt sustainability. These surpluses, it said, would also help build fiscal buffers to withstand potential future shocks. Continued fiscal discipline, coupled with targeted increases in public investment—especially in areas such as green transition and energy security—are deemed essential for sustainable growth and further debt reduction.
Despite the improved outlook, the IMF flagged several lingering structural weaknesses. These include a large stock of private debt dating back to the crisis era—equivalent to about 30% of GDP—low productivity, underwhelming investment levels, and mounting demographic pressures. It also stressed the importance of controlling spending in sectors such as pensions and public sector wages, which remain high relative to other European countries.
