Greece Submits 2027 Budget Forecasting Growth and Debt Reduction

The Greek government submitted its 2027 draft budget on Monday, projecting economic growth of 2.3% for next year, an increase from the 2% forecasted for 2026. This growth is expected to outpace the eurozone average for a seventh consecutive year, supported by a 7.9% increase in investments and a 1.5% rise in private consumption.

The fiscal plan forecasts a budget surplus of 0.6% of output for 2026 and 0.3% of GDP for 2027, with a primary surplus of 3.3%. These balances are expected to drive the debt-to-GDP ratio down to 128.8% in 2027 from 136.8% this year. Due to early bailout loan repayments, Greece expects its ratio to drop below that of Italy by the end of the year.

To combat inflation, which is estimated to fall from just under 4% this year to 2.5% by 2027, the budget allocates approximately 2.2 billion euros in tax breaks and subsidies for low-income households and pensioners. Despite these gains, 1.5 million adults remain burdened by non-performing loans and average salaries remain at 2009 levels.

Greece and Italy are currently requesting greater fiscal flexibility from the European Union to address rising fuel prices. Greece proposes that governments be allowed to use additional VAT revenues from higher prices to support citizens and that temporary energy crisis measures be excluded from EU expenditure ceilings. Final decisions on these requests are expected at the European Council summit in Brussels on October 15-16.