Fitch Ratings said Greek public debt will fall to 125% of gross domestic product by 2029, extending a sharp decline that has already taken the debt ratio from 209% of GDP in 2020 to 146% in 2025. The credit rating agency set out the forecast in a report published on August 25, 2026, examining how debt reduction has driven a wave of credit upgrades across Greece, Cyprus and Portugal.
Fitch said the rapid fall in public debt was the critical factor behind three-notch upgrades for the three countries since 2022. Debt-to-GDP ratios in Greece, Cyprus and Portugal all fell sharply from their 2020 peaks to levels well below where they stood before the pandemic, in contrast with the far more limited decline recorded across the eurozone as a whole over the same period.
How the deleveraging changed Fitch's outlook
Fitch said this deleveraging improved the results of its Sovereign Rating Model for the three countries. At the same time, an improvement in the health of the banking sector in Cyprus and Greece, together with a stronger external position in Portugal, led the agency to lift constraints on its ratings, opening the way for upgrades of several notches at once.
Fitch said strong economic growth was the single most important factor behind the debt reduction. But it said the decisive element that set Greece, Cyprus and Portugal apart from other countries was fiscal policy that produced sustainable primary surpluses.
Why Italy and Spain were upgraded less
Fitch pointed to Italy and Spain as a contrast. Both countries also benefited from favorable growth conditions over the period but each received only a one-notch upgrade. The agency said Italy has posted only small primary surpluses since 2024, while Spain has recorded no primary surplus at all.
Greece's debt trajectory
Greek public debt fell from about 209% of GDP in 2020 to 146% in 2025, the largest absolute decline of the three countries, and Fitch forecasts it will drop further to 125% by 2029. That would leave Greek debt about 37 percentage points below its pre-pandemic level, at a time when eurozone debt as a whole remains roughly four percentage points above its pre-pandemic level.
Fitch calculated that growth of the Greek economy of 22% between 2021 and 2025, compared with growth of about 13.5% across the European Union over the same period, contributed 36 percentage points to the reduction in Greece's debt ratio.
Fading tailwinds
Fitch said the factors that supported the recovery are starting to fade. The rebound in tourism has run its course, funding from the European Union's Recovery and Resilience Facility is set to peak in 2026, and the negative real cost of financing that governments have benefited from is being eliminated.
The Recovery and Resilience Facility is the European Union's main post-pandemic funding programme, providing grants and loans to member states to finance reforms and investment.
Fitch's warning on future surpluses
Fitch said that as these supportive factors weaken, primary surpluses will have to carry a greater share of the burden of reducing debt, even as maintaining them becomes harder amid an aging population, growing defense spending commitments and declining political consensus.
The agency added that the lesson for other highly indebted European states, including Austria, Belgium, France, Finland and the United Kingdom, is that sustained credit rating upgrades depend on primary surpluses maintained over many years and across successive governments, and not simply on favorable macroeconomic conditions.
Background: Fitch and sovereign ratings
Fitch Ratings is one of the three largest global credit rating agencies, alongside Moody's and S&P Global. Its assessments of government creditworthiness influence the interest rates at which countries can borrow on international markets.
