Greece is expected to proceed today with yet another early debt repayment, continuing to systematically strengthen the reputation for credibility that the country had lost in the previous decade.

This move has symbolic and strategic significance, as well as multiple measurable practical impacts on the economy, businesses and their loans, and all taxpayers. Above all, however, it is a move that relieves the future of burdens and unleashes the potential of the next generation, without burdening that generation today.

The move

The Greek state is proceeding with the early repayment of €5.3 billion in GLF (Greek Loan Facility) loans, which date back to the time of the first bailout and were due to mature after 2031.

The immediate and medium-term benefits for the country are:

• Faster reduction of public debt: For the first time since 2011, the country’s debt as a percentage of GDP is expected to fall below 140%. It is also expected to drop below 120% of GDP by 2029—faster than any other country in the world—so that by 2026 Greece will no longer be the most indebted country in Europe, handing that title to Italy.
• Credit rating upgrades: The early repayment “rolls out the red carpet” for new upgrades by rating agencies during 2026, which will further reduce borrowing costs for the Greek state and businesses.
• Market confidence: The credibility of the Greek state explains the reduction in borrowing costs to unprecedented levels. Greece’s ten-year borrowing rate is lower than that of France, Italy, the United Kingdom, and even the United States. Note: it is not the lowest of all time in absolute terms (around 3.5% today), but in today’s adverse international conditions it is comparatively better than those countries’, whereas historically it was always judged by how much “worse” it was in terms of the interest-rate spread.
• Preservation of reserves: All payments are financed from the cash buffer. Even after today’s repayments, the year is expected to close with more than €35 billion in the 2025 “treasury.”

Economic benefit for the country and citizens

Such a success seems incredible even to experts. For those who do not fully understand how and why this is happening, two main questions arise: whether Greek citizens ultimately benefit from early repayments, and why—given that the “treasury” has so much money—there are not additional benefits or handouts.

1. Benefits of early repayment

The budget—and, by extension, Greek taxpayers—are immediately relieved of a burden of €1.6 billion in interest, which would otherwise have been paid from 2026 through 2041 (8–16 years, or an average of 12 years). Together with other prepayments made over the past four years, the country has already reduced annual interest costs by a total of €3.5 billion—and more reductions are expected in the coming years.

As for the exact size of the future benefit, some experts disagree, offering alternative views that attempt to downplay the future valuation of this benefit.

What do they say?
The country does indeed save €1.6 billion in interest, but this is the nominal value. Since interest payments would have been made annually in the future (until 2041), they argue—correctly—that the future “real” benefit of the new early repayment is not the same as its nominal value today and should be assessed in terms of present value, implying it would be smaller than the nominal amount.

What do they not say—or perhaps overlook?
Using the same logic, retrospectively (in the past, not prospectively), the country has already paid and borne €1.8 billion in interest because it did not prepay these loans earlier. What would the real present value have been five to seven years ago of charges, interest, and costs with a nominal value of €1.8 billion today for these loans?

In practice, because proving any estimate requires complex analysis and specialized tools, the debate tends to obscure the issue in order to reduce or negate the benefits, since they are spread into the future. This does not change the fact that the people and the country have already paid dearly for these loans over many years—perhaps even more dearly than suggested by today’s “present value” arguments.

2. Why debt reduction instead of benefits

Another advantage of early repayment is that it does not burden the state budget.

This is an initial answer to the often-expressed question of why these available billions (whether the €5.29 billion to be paid this year or the €29 billion paid cumulatively over the last four years) are used for early debt repayment rather than for benefits, wage increases, or allowances.

On the contrary, precisely because this money genuinely exists, it allows this generation to gain the benefit of further reducing public debt without being burdened by new austerity measures.

Still, many understandably ask why benefits cannot be provided “here and now.”

This is either impossible or would require new austerity, for several reasons—two of which are the most basic and understandable:

a. The €5.3 billion does not come from the budget; it is “sleeping” in a liquidity buffer that the country does not need.

As noted in the relevant ESM/EFSF announcement, the early payment on December 15 to the states that lent Greece money in 2010 will be made using funds from the special account that holds the government’s cash reserves.

For those who may not remember, this account was created toward the end of the third bailout and effectively amounted to a “fourth bailout,” but with the money provided upfront rather than in quarterly tranches, on the condition that bailout-era measures would not be dismantled and that the funds would not be spent for at least four more years.

This special account—or “buffer”—has a single purpose: managing and paying public debt, not other benefits. From this account, €29 billion has already been used for early repayments, yet 2025 is expected to close with a record reserve exceeding €35 billion, according to estimates by the Ministry of National Economy and Finance.

b. The other reason lies in the basic distinction between financial and fiscal transactions under Eurostat rules and the Stability Pact.

In plain terms, comparing debt repayment with other government spending is invalid and not open to debate, as they are entirely separate categories that do not substitute for one another.

Under pan-European rules, every debt repayment is a financial (cash) transaction: it does not count toward the primary surplus, the overall deficit, or spending targets. Each early repayment is a one-off; it would have occurred anyway on a predetermined future date. Nevertheless, it produces an immediate effect (an equivalent reduction in debt) while also reducing future interest expenses.

The opposite applies to other government expenditures (benefits, wages, pensions, etc.): these are fiscal transactions, reduce the surplus, increase the deficit, are recurring, produce permanent effects, and count toward the annual expenditure growth cap applied across Europe—since they permanently burden the deficit and debt, creating future needs for new borrowing and additional interest expenses.

Therefore, whether out of ignorance or intent, many conflate “apples with oranges” in this comparison.

In reality, it is impossible—and prohibited—for funds from the special account to be used for fiscal spending. If that were done, an automatic spending brake would be triggered by Brussels.

However, as officials at the General Accounting Office of the State emphasize, using these funds for early repayment not only drastically reduces debt but also saves future interest resources, which provide breathing room for the budget and can then finance sustainable policies for future generations.