Greece is currently borrowing at an interest rate of 4.28 percent for its 10-year loans, which is lower than France's rate of 4.50 percent. This change in status comes after Greece needed interest rates close to 40 percent for borrowing in March 2012 and was effectively excluded from normal borrowing markets.
Economic Differences and Debts
Greece still has a higher debt relative to the size of its economy compared to most European countries, while France's economy is more than ten times larger and wealthier. By the end of the first quarter of 2023, Greece's public debt reached 143.5 percent of its annual output, while this figure for France is 117.6 percent. Meanwhile, Greece's debt-to-GDP ratio decreased by 9.4 percent last year, while this figure for France increased by approximately 4 percent.
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Budget Picture and Economic Growth
Greece ended last year with a budget deficit of 1.7 percent and is expected to remain in a positive position until 2027. In contrast, France is grappling with a deficit of 5.1 percent, one of the highest in the European Union. French Finance Minister, Bruno Le Maire, has lowered the growth forecast for his country for 2026 to 0.5 percent and has abandoned the 5 percent deficit target.
While Greece is experiencing economic growth of nearly 2 percent, France has been described as the only major advanced economy expected to slow down this year.
Why Does Greece's Debt Seem Less Risky?
Greece's debt is primarily a result of past financial bailouts that belong to European public institutions rather than investment fund managers. These loans are usually granted at favorable rates and for long periods. As a result, Greece manages its financial situation well with an average maturity of over 18 years and an annual debt servicing cost of 1.94 percent.
In contrast, France faces more challenges. Its debts, due to past near-zero rates, are frequently maturing and are gradually being replaced with higher costs. Interest expenses for France this year will reach 65 billion euros, which is 4.5 billion euros more than the projected budget. These concerns have particularly increased with negative forecasts regarding the country's economic growth.
Changes in Credit Ratings
Greece, which was rated below investment grade in previous years due to the financial crisis, is now recognized as an investment-grade country by all reputable agencies. While France still generally holds a higher rating, a downward trend in its ranking is observed. These changes clearly indicate fundamental shifts in financial markets and investors' attention to the financial status of European countries.
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