2024-08-04 10:03:45
Extensive early repayments of public debt, which will reach 7.9 billion euros for the period until the end of the year, the Public Debt Management Organization plans.
The goal of the SDG is to capture by the end of 2024 not only the reduction of the ratio of debt to GDP, but also the reduction of the debt in absolute number by at least 2.82 billion euros by the end of December.
In the interim report on the progress of the public debt published by the Public Debt Management Organization, it is reflected the fact that in the first half of the year all the “obligations” of the year have been fulfilled, which now leaves room for the debt repurchase program to proceed.
In particular: 1 The largest part of the debts for the whole of this year has been paid. For the whole of 2024, a total of €5.463 billion of debt had to be repaid. From the first half of the year, 4.841 billion euros have been given and now only 622 million euros are outstanding for the period until the end of the year.
2. The total expenditure for the interest servicing of the public debt has been budgeted for this year at 4.85 billion euros. 3.281 billion euros have already been paid and only 1.569 billion euros are outstanding.
3. Of the 10 billion euros that Greece had set as a goal to draw from the markets in 2024, it has already “raised” 8.465 billion euros since the first half of the year, and for the July-December period, only 1.535 billion is outstanding. euro. Essentially, that is, the program can only be covered by the reissues of bonds that have been launched for the coming months. August does not have a reissue, but there is a process underway for the months of September, October and November.
To date, the total amount raised from the markets is €8.8 billion, as we have also raised €450 million with the two reissues in June and July (€200 million in June and another €250 million on July). Cumulatively, there have been two new bond issues (which brought in a total of €7 billion) and eight reissues which brought in €1.8 billion. For the rest of the time until the end of the year, reissues can yield the remaining 1.2 billion euros, but ODDIX also holds the “paper” of issuing a third new bond.
To raise a total of much more than 10 billion euros is not within the goals of the Ministry of Finance and the ODDIX, as the main goal is now to limit the debt and as an absolute amount.
GLAs and interest-bearing notes
The goal at the beginning of the year was to reduce debt in absolute terms by €3.268 billion by the end of the year. In the first half of the year, the reduction was in the order of 441 million euros and came mainly from the “scissoring” of the issues in interest-bearing bonds of the Greek State. For the second half, the goal is to reduce the debt of the General Government by an additional 2.827 billion euros. How will this goal be achieved? Once most of the financing costs have been covered, the early debt repayments will proceed much more aggressively.
For the whole of 2024, early repayments of the order of 12 billion euros were planned. In the first half, 4.065 billion euros were given (mainly with the reduction of debts on interest-bearing bonds of the Greek State) and for the second half the early repayments will reach 7.935 billion euros.
There are two main ways to repay this debt: 1. The early repayment of even three annual installments of bilateral loans (the so-called GLAs) with money that will also be secured from the “hard cushion” of cash reserves. It is recalled that the procedures have already been launched for the ESM to give the “green light” and allow the release of 15.3 billion euros from the “hard cushion”, in order to repay three annual installments of the GLAs (this is how the amount of 7.935 billion). Not only the resources from the “hard cushion” will be used, since about one third of the total 15 billion euros will be released this year. The remaining amount will be covered by the country’s remaining cash reserves.
2. The ongoing debt reduction in the remaining issues until the end of the year in interest-bearing bonds of the Greek State. The goal is for the end of 2024 to find ODDIX with debts in interest-bearing bonds lower than 8 billion euros.
Cash available
Plans to pay off debt early and reduce the nominal debt are facilitated by the continued overproduction of surpluses, as this keeps the country’s cash holdings high. The first half ended with a “piggy bank” of 34 billion euros, while at the moment it is estimated that the balance exceeds 38 billion euros. ODDIX, in fact, highlights to investors the fact that, this year, the debt will decrease more than the cash reserves.
Already in the first half of the year, the cash reserves decreased by 280 million euros and the debt by 441 million, while for the second half the debt reduction by 2.827 billion is planned, with the decrease in cash reserves being limited to 2.76 billion. euro. This leads to an improvement in an indicator that is increasingly taken into account by the markets: the “net debt”, which is calculated as the difference of the debt of the General Government to the cash reserves of the country. At the end of the year, Greece will have a General Government debt of around 353 billion (from 356 billion in 2023) and cash available just over 30 billion euros. The ratio to GDP is expected to reach 153.9%, from 161.9% in 2023.