Greece, along with Ireland, Spain, Portugal and Cyprus, maintains the ability to repay its debt, according to post-memorandum surveillance reports published by the European Commission.
The Commission said Greece’s debt service capacity is supported by a lower public debt-to-GDP ratio, large cash reserves and low short- and long-term risks. It forecasts positive economic growth and expects Greece to maintain fiscal surpluses, noting improved asset quality in banks.
Greece’s draft budget, along with 11 other countries, aligns with EU fiscal rules, and the Commission said the country should proceed with 2026 fiscal policies as planned.
The report also accounted for flexibility in defense spending under the national escape clause, activated for 16 member states, including Greece. The clause allows temporary deviations from recommended net expenditure limits to cover defense spending of up to 1.5 percent of GDP over 2025–2028 without immediate offsetting cuts or revenue measures.
For 2026, the Commission urged member states to enhance productivity and economic security without jeopardizing public finances, maintain fiscal sustainability, strengthen labor markets, promote strategic investment and innovation and develop a European Savings and Investment Union while advancing the digital euro and monitoring macro-financial risks.