Greece completed an early repayment of €5.3bn in loans from its first eurozone bailout programme this week.
The settlement of the debt, originally scheduled to mature after 2031 or even into the 2040s, marks a positive step in Greece’s decades-long effort to stabilise its public finances.
Coordinated by the European Commission, the payment is a strong indication that the country is relying less on crisis-era debt and lowering the burden of future interest payments.
The Greek Loan Facility (GLF) was the first emergency rescue mechanism ever created inside the euro area at a time when a permanent eurozone bailout system did not exist.
It was established before the creation of the European Stability Mechanism and alongside other adjustment programmes during the eurozone sovereign debt crisis.
Greece lost access to financial markets in 2010 and the loan facility prevented the country from defaulting immediately, limiting risk to other EU members.
Local outlets report that retiring this debt ahead of schedule will save around €1.6bn in interest payments through to 2041. By directly lowering future budgetary charges, the debt-to-GDP ratio is expected to drop below 120% by 2029.
This is particularly significant for a country that carries the highest public debt ratio per GDP in the euro area.
Between late 2009 and 2018, Greece suffered a severe sovereign debt crisis triggered by years of fiscal mismanagement, large deficits, and weak economic competitiveness.
The crisis necessitated three international bailouts from the EU and International Monetary Fund, accompanied by severe austerity measures and painful structural reforms.
Greece’s bailout unfolded in phases, first through an emergency state rescue of bilateral euro area loans via the GLF and the IMF in 2010–2012. Then, a restructuring phase was launched from 2012 that imposed losses on private investors and shifted debt onto public institutions. Finally, a third phase in the form of a stabilisation programme under the European Stability Mechanism (ESM) was set up, ending in 2018.
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The GLF is no longer active as a lending facility, but its remaining loans are still being repaid even today. Private businesses are affected indirectly through the effect on borrowing costs, investor confidence, and credit ratings.
By around 2023, Greece had restored investment-grade credit ratings from major agencies, reflecting improved fiscal performance and institutional stability. In turn, this has helped to push down borrowing costs.
