The reduction of public debt was the decisive factor behind Greece’s three credit rating upgrades since 2022, according to a new report by Fitch, which also examines the trajectories of Cyprus and Portugal. The international ratings agency notes that in all three economies, debt-to-GDP ratios declined sharply from their 2020 peaks, falling well below pre-pandemic levels. This stands in stark contrast to the broader Eurozone, where progress on debt reduction has been far more limited.
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Fitch on public debt: Greece’s ratio falls from 209% to 146% of GDP
Greece recorded the largest absolute debt reduction among the three countries, with public debt falling from approximately 209% of GDP in 2020 to 146% in 2025. Fitch projects that this downward trajectory will continue, bringing the ratio to 125% by 2029. Compared to pre-pandemic levels, Greek debt now sits roughly 37 percentage points lower — while across the Eurozone as a whole, debt remains approximately four percentage points higher than before the crisis.
Strong economic growth played a pivotal role in this achievement. The Greek economy expanded by 22% during the 2021–2025 period, compared to approximately 13.5% for the European Union as a whole. According to Fitch’s calculations, the growth effect alone contributed a 36-percentage-point reduction in Greece’s debt ratio.
Public debt reduction and primary surpluses: the key to Greece’s credit upgrades
Strong economic expansion alone, however, does not fully explain the performance of Greece, Cyprus, and Portugal. Fitch emphasizes that what set these three economies apart from other European peers was their fiscal policy — and specifically, their ability to generate and sustain primary budget surpluses.
This, according to the agency, is a crucial distinction from Italy and Spain. Although both countries also benefited from favorable growth conditions, each received only a single-notch upgrade. Italy has recorded modest primary surpluses since 2024, while Spain has yet to post a primary surplus at all.
In Greece’s case, the marked improvement of the banking sector also contributed to the upgrade, as it allowed Fitch to lift constraints that had previously weighed on the country’s credit rating.
Fitch warns: the tailwinds that boosted Greece are beginning to fade
The agency cautions, however, that several of the factors that powered Greece’s recovery are gradually losing momentum. The tourism rebound has now run its course, funding flows from the Recovery and Resilience Facility are set to peak in 2026, and the negative real cost of financing is disappearing.
“As these tailwinds fade, primary surpluses will need to carry more of the burden of debt reduction, at a time when maintaining them is becoming more challenging amid an ageing population, rising defence commitments, and waning political consensus,” Fitch notes.
The agency concludes that the experience of Greece, Cyprus, and Portugal offers valuable lessons for other highly indebted European nations. As Fitch states, “a lesson for other high-debt European sovereigns — including Austria, Belgium, France, Finland, and the United Kingdom — is that sustained credit rating upgrades are built on primary surpluses maintained over many years and across successive governments, not merely on favorable macroeconomic conditions.”
