Greece debt ratio set to pass Italy by 2026

If the projections hold, Greece’s debt ratio should fall to about 136.8% of GDP at the end of 2026 from roughly 146% in 2025, while Italy’s is expected to stay above 138%. That would end Greece’s long run as the European Union’s most-indebted state on a debt-to-output basis, a symbolic shift that matters because it anchors how rating agencies, bond investors and policymakers gauge fiscal credibility.

The path then gets harder, not easier. Greece wants to drop below 120% of GDP by 2029 and below 100% in 2033-34, a level that would have looked remote only a few years ago. Scope has projected Greek debt near 107% of GDP in 2031, versus 135% for Italy, 127% for France and 120% for Belgium, suggesting the country could move from the euro area’s fiscal outlier to a position closer to the pack.

That improvement is being driven by a rare combination of nominal GDP growth, high primary surpluses and debt management. Inflation has helped shrink the debt ratio mechanically by lifting nominal output, but the more durable support comes from the structure of Greece’s liabilities. Roughly 220 billion euros of debt was still owed to European institutions at the end of 2025, with repayment stretched out to 2070 and financing costs kept low by official-sector terms.

For investors, that structure is the key reason Greek debt has become more durable than its headline ratio suggests. Before the crisis, private investors held about 84% of the debt; after the bailout and PSI, official creditors held about 82% by 2012. That shift gave Greece long maturities, low coupons and a much lower refinancing wall than a typical sovereign carrying the same debt load. It is also why sustainability analyses remain positive even under weaker long-term growth assumptions of 0.4% to 0.8%.

Still, the debt is far from solved. Interest payments are running at about 3.2% of GDP, roughly equal to defense spending, leaving Greece with the second-highest interest burden in the euro area after Italy. That means fiscal space is improving, but it is not yet free. Any setback in growth, inflation or primary surpluses would slow the descent and could revive pressure on the budget.

For bondholders, the bull case is that Greece is steadily converting a rescue-era liability into a manageable long-duration official debt stock while reducing gross financing needs ahead of schedule. The bear case is that much of the decline in the debt ratio still depends on nominal growth, making the 2030s milestones vulnerable if inflation fades faster than expected or if growth weakens.

The next checkpoints are clear: 2026 for the Italy crossover, 2029 for sub-120% debt and 2033-34 for the symbolic 100% threshold. If Athens keeps hitting those marks, Greece’s debt story will shift from crisis management to balance-sheet normalization.