Greece plans to repay Eurozone’s bailout loans whole decade in advance

Greece has announced plans to repay its first bailout loans a decade ahead of schedule, in a move that officials say underscores the country’s economic recovery and new fiscal credibility. The repayment strategy would see Greece pay off the remaining EUR 31bn of its initial EUR 53bn in bailout loans from Eurozone countries by 2031 instead of 2041.

Under the plan, Greece will make annual repayments of EUR 5bn, using a combination of its EUR 37bn cash buffer, continued primary budget surpluses, and issuing new sovereign bonds. The government projects the country’s debt-to-GDP ratio will fall from 147% in 2024 to below 135% by 2027.

Early repayments could increase bond market confidence

The loans in question date back to the 2010 Greek Loan Facility (GLF), which formed part of the country’s first EU-IMF rescue programme during the Eurozone sovereign debt crisis.

Greece’s three bailout packages between 2010 and 2015 amounted to a combined EUR 280bn. The first package in 2010 totalled EUR 110bn, including EUR 53bn in bilateral loans from eurozone states and EUR 30bn from the IMF.

The second programme, agreed in 2012, was worth EUR 130bn and coordinated via the European Financial Stability Facility, with additional debt restructuring from private bondholders. The third bailout, signed in 2015, was a EUR 86bn arrangement under the European Stability Mechanism (ESM).

IMF already repaid, Eurozone payments ahead of schedule

Greece repaid its IMF obligations in full by 2022 and returned EUR 5bn to eurozone lenders in 2023. The government now aims to repay the remaining EUR 31bn in bilateral loans a decade ahead of schedule, by 2031. Greece’s ability to service and repay those loans early is being presented as a mark of confidence to bond markets and the EU.The latest plan aims to repay the remaining bilateral loans from the first bailout by 2031, a full decade early.

Greece regained investment-grade status in 2023, allowing it to refinance debt more cheaply on international markets. Greek Finance Minister Kyriakos Pierrakakis said the plan was “realistic and achievable,” describing it as “a strong message of maturity and credibility.” Pierrakakis added that “Greece is no longer the symbol of crisis—it is becoming a case study in recovery,” at a recent press conference.

Nevertheless, Greece’s public debt remains among the highest in the EU, although it has been declining as a percentage of GDP. The debt-to-GDP ratio stood at around 168% in 2023, down from over 200% during the crisis. Early repayments could help lower borrowing costs and reinforce investor confidence, especially following the country’s return to investment-grade status last year.

Public response to the move, however, has been mixed. While international investors have welcomed Greece’s fiscal discipline, domestic critics point to persistent cost-of-living challenges, high inflation, and a weak welfare safety net. Public sector workers staged a 24-hour strike last week to protest stagnant wages and cuts to public services.

Repayment represents final cut for Syriza’s anti-austerity plan

The announcement also marks a dramatic u-turn from 2015, when Greece’s then-finance minister Yanis Varoufakis of the left-wing Syriza government, led by Alexis Tsipras, swept to power vowing to resist EU-imposed austerity.

Varoufakis clashed with Eurozone leaders over bailout terms, and his defiance and resignation during the third bailout negotiations became a defining moment of Greece’s confrontation with its creditors. Tsipras ultimately accepted a third bailout and implemented reforms. Today’s fiscal discipline and economic recovery, though hard-won, reflect the legacy of those painful choices.

Then IMF chief, now European Central Bank president, Christine Lagarde, was central to managing the bailout terms. Economists said the early repayment carries symbolic value as well as financial logic, as it draws a line under a crisis that saw successive Greek governments toppled, pensions slashed, and unemployment soar above 27%.

Plan comes with risks over inflation, global uncertainty

Despite recent fiscal improvements, many Greeks remain wary. The bailout years saw deep wage and pension cuts, tax increases, and public sector retrenchment. While employment has risen and growth has returned, social services remain under pressure, and disposable income has not recovered to pre-crisis levels for many households.

Analysts have also highlighted several risks to the plan. Continued reliance on primary surpluses could constrain public investment. The strategy also depends on sustained access to cheap credit markets, amid rising interest rates and global economic uncertainty.

Nevertheless, the plan positions Greece as an EU fiscal outlier in a positive sense, contrasting with rising debt burdens in Italy and France. It also gives Greece a stronger voice in EU negotiations on the bloc’s post-pandemic fiscal rules and recovery architecture.

Analysts suggest the move strengthens Greece’s negotiating position within the EU, when pushing for investment flexibility or debt relief mechanisms that benefit peripheral economies. “We used to be the problem,” a senior Greek official told media on condition of anonymity. “Now we are trying to be part of the solution.”

The Organisation for Economic Cooperation and Development (OECD) said Greece was one of several countries to achieve record-high employment in Q4 2024. This broader labour market recovery, paired with tourism-driven growth and improved tax collection, has created fiscal space for the government to pursue early repayment without compromising its spending plans, the OECD added.