WOOD Flash – Greece macro: debt remains on a steep downward path

Heading into the pre-election year, the government has announced a fiscal easing package, aimed at redistributing the gains from efforts to formalise the economy and to ease voter discontent following the inflation shock. The budget continues to outperform and, while the cautious approach to fiscal easing underscores the government’s commitment to debt reduction, we believe another modest package is in the making for next year, particularly if growth fails to exceed 2%. We remain more constructive on the debt trajectory than the government, although most privatisation gains are likely behind us, making structural reforms and growth increasingly important, going forward. The funding position remains exceptionally strong, with ample cash reserves that will be utilised to reduce the debt stock further, supporting potential credit rating upgrades deeper into investment-grade territory.