Greece prepays all of its debt to the IMF
However, the impact of the war in Ukraine and high inflation are of concern to the IMF, which fears “energy shortages and the addition of stronger than expected pressures on domestic inflation, tourism and risk aversion. which could lead to a more rapid tightening”. The mission note was both hot and cold.
On the one hand, its report states that “public debt is expected to decline and rollover risks appear manageable over the medium term. The debt-to-GDP ratio is expected to fall below pre-pandemic levels by 2023, driven by a robust growth, and higher inflation, in a context where the share of fixed-rate and long-term debt is very high”.
On the other hand, that “although the overall risk of sovereign stress is moderate, considerable uncertainty remains about Greece’s ability to maintain high primary surpluses and about the future evolution of interest rates as the country is beginning to replace public financing with market financing”. government’s large liquidity cushion and active liability management, Greece’s ability to service its debt in the event of a severe shock depends on continued regional support.
IMF experts recommended “maintaining an accommodative fiscal stance in 2022, achieving a primary surplus in 2023 and aiming for a primary deficit below 2% of GDP” in 2022.
1.5 billion bonds issued
In June 2021, the European Union approved a €17.8 billion recovery package for Greece in the form of grants and €12.7 billion in loans under the Recovery and Recovery Facility. resilience (RRF).
In addition to this windfall, which will offset part of the consequences of the pandemic on its economy, several good news have followed one another in recent days. On Wednesday, April 27, 2022, Athens raised €1.5 billion in seven-year bonds at a rate of 2.4%. “Our country has managed to resolutely enter the category of euro zone issuers, thus ensuring a lasting presence on world markets, (…) despite the unstable international environment”, commented Christos Staikouras. This is the second time Greece has issued government bonds, the first in April 2020 when the Covid-19 outbreak occurred. The Greek debt agency plans to issue 12 billion euros of bonds against 14 billion euros in 2021.
S&P decided at the end of April 2022 to raise Greece’s long-term sovereign debt by one notch (from BB to BB+) with a stable outlook.