Greece to use 12.8 billion euros for early public debt repayment

Greek Finance Minister Kyriakos Pierrakakis has defended the government's decision to allocate 12.8 billion euros toward the early repayment of public debt. He stated that while easy decisions focus on the present, “difficult decisions look to the next generation,” aiming to prevent future fiscal burdens.

Pierrakakis clarified that the funds for these early repayments come from existing cash reserves and the current fiscal surplus, rather than new borrowing. He noted that under European fiscal rules, these specific funds cannot be redirected toward social benefits. He argued that using these funds to reduce debt is more economically advantageous than holding them, as the returns on reserves are lower than the cost of servicing the debt.

The Minister also addressed the nature of the loans being repaid, refuting claims that the government is paying off low-interest debt. He explained that first-memorandum loans carry a floating Euribor plus 0.5% rate, resulting in a current cost of approximately 3%. He emphasized the urgency of this strategy to avoid a significant fiscal burden in 2032, when an estimated 25 to 30 billion euros in deferred interest from the crisis period is expected to begin impacting the public debt.