The European Commission has given a favorable assessment of Greece’s updated Medium-Term Fiscal and Structural Plan for 2025–2028, placing the country among the EU’s strongest performers in terms of economic progress. The review, conducted as part of the European Semester, acknowledges the significant strides Greece has made—particularly in 2024—toward fiscal stability and reform.
According to the Commission, Greece delivered a fiscal surplus of 1.7% of GDP in 2024, a sharp improvement from a 0.7% deficit the previous year. At the same time, the country reduced its public debt by 10.3 percentage points of GDP, outperforming the requirements of the EU’s new fiscal rules. This achievement is partly credited to a strong performance in revenue collection, supported by targeted structural measures against tax evasion. These efforts helped Greece record a primary surplus of 4.8% of GDP, the highest in its recent history.
Spending discipline also featured prominently in the Commission’s evaluation. In 2024, primary government expenditures fell by 0.3%, well below the EU’s 2.6% ceiling. Projections indicate that Greece will continue to meet fiscal targets in 2025, keeping expenditure growth below the allowed average increase over the two-year period.
Despite the strong fiscal performance, the Commission highlights lingering vulnerabilities in the Greek economy. Public debt remains high by EU standards, and the country continues to run a current account deficit. Unemployment also remains elevated—second only to one other EU member state. Greece is among 16 EU countries that have requested the activation of a national defense escape clause, which allows additional flexibility in accounting for defense spending within the broader EU security framework.
On the economic growth front, Greece outpaced the euro area average in 2024 with GDP growth of 2.3%. This pace is expected to continue in 2025 and 2026, supported by robust EU-funded investments and rising household incomes that are boosting private consumption. However, weak net exports and a persistent current account imbalance are seen as ongoing constraints.
Inflation is expected to gradually moderate but remain above the European Central Bank’s target, reaching 2.8% in 2025 and 2.3% in 2026. While the labor market is showing signs of improvement, structural issues—such as low workforce participation and skill shortages—continue to hinder stronger employment gains.
Greece also posted a general government surplus of 1.3% of GDP in 2024, exceeding forecasts thanks to higher-than-expected tax revenues and tight spending controls. The Commission projects continued fiscal surpluses in the coming years, with a primary surplus of 3.8% in 2025 and 4.4% in 2026, even after accounting for a new €1.1 billion benefits package.
The country's banking sector is showing renewed strength, driven by solid profitability and improved capital ratios. Non-performing loans have fallen to 3.8% of total loans, mainly due to securitizations. Progress is also noted in out-of-court debt restructuring and public debt repayment.
As of the end of 2024, Greece’s government cash reserves stood at €36.3 billion, while financing needs for 2025 and 2026 remain modest, staying below 10% of GDP. The country continues to benefit from long debt maturities—over 20 years on average—and stable borrowing costs. The early repayment of crisis-era loans and the recent restoration of Greece’s investment-grade credit rating are viewed by the Commission as key milestones in securing long-term debt sustainability.
