The early repayment of loans from the first bailout program is accelerating, while plans for new debt issuances are being slowed down due to international uncertainty caused by the Middle East crisis and strong fluctuations in financial markets. The plan drafted by the Public Debt Management Agency provides for a new early repayment of bilateral loan (GLF) installments worth €7 billion on June 15, 2026, instead of December as originally scheduled.
The repayment will be made using funds from the cash reserves “cushion,” which currently stands at around €40 billion and is expected to reduce the outstanding bilateral loans to eurozone countries to €19 billion. The economic team’s goal is for these specific obligations to be settled earlier than 2031, instead of their normal maturity in 2041. It should be noted that a similar early repayment of €5.3 billion had previously taken place on December 15, 2025, which was also financed almost entirely from the cash cushion.
After the bilateral loans (GLF), the strategy focuses on the “expensive” obligations to the European Financial Stability Facility (EFSF), totaling €141.8 billion, which mature in 2070. The economic team and the Public Debt Management Agency are examining scenarios that would allow further relief of the budget from the burden of bailout loans, as from 2034 the debts of €61.9 billion to the European Stability Mechanism (ESM) will come into the picture, which must be repaid by 2060.
Regarding this year’s borrowing program, the Public Debt Management Agency has already covered approximately 55% of financing needs, estimated at €8 billion, through the issuance of a 10-year bond in January, which raised €4 billion with a yield of 3.47%, and the subsequent February reopening of €300 million, but with a lower yield of 3.34%. However, the international crisis is changing the pace of debt management and, according to relevant sources, no new moves are expected in the near term until there is greater visibility in the geopolitical landscape. The Public Debt Management Agency had intended to access markets by March 9, 2026, but the Gulf war led to the postponement of the issuance.
Nevertheless, any decisions regarding syndicated issuances made by the end of the year are more connected to the strategy of maintaining “contact” with markets and strengthening credibility with rating agencies, rather than liquidity needs. At the same time, short-term borrowing is also being reduced, with treasury bill issuances decreasing by €1 billion.
The 2026 plan provides for further de-escalation of public debt, which in absolute numbers will decrease by €5.461 billion to €359.3 billion. At the same time, it will also fall as a percentage of GDP, from the estimated 145.9% of GDP for 2025 to 138.2% in 2026, with the goal of falling below 120% of GDP by 2029, approaching France’s public debt levels.
