In 2015, with the debt crisis in Greece reaching its peak, Carmen Reinhart of Harvard and the NBER and Christoph Trebesch of the University of Munich and CESifo at that time, published an article about Greece in a scientific journal.In that article, which was titled “The Pitfalls of External Dependence: Greece, 1920-2015”, the authors examined two centuries of Greek debt crises from the country's independence until 2015. They therefore reported that the Greek state went bankrupt 4 times and was rescued from abroad an equal number of times.
The two economists showed that “cycles of external crises and dependence are enduring themes of modern Greek history - with recurring patterns: before bankruptcies, there is a period of heavy borrowing from foreign private creditors. As repayment difficulties emerge, foreign governments intervene to help repay private creditors, demanding budget cuts and adjustment programs as a condition for official rescue loans.”
Ms. Reinhart and Christoph Trebesch argued in that article, on the one hand, that Greece's external debt needed a “haircut” and, on the other hand, that a political priority should be, to the extent possible, financing the country's needs from domestic sources.
There is no doubt that Greece has taken significant steps to reduce public debt, especially in recent years, while conditions are being shaped for its further reduction this year and in the coming years. This is recognized by international organizations, banks, governments, etc., but public debt remains high.
Equally and perhaps an even more important issue for Greece is external debt. And this is because it shows the margins of flexibility, capital dependence on abroad, and its financial architecture. A related issue is who holds this debt, what the average maturity is, in what currency, etc.
An even more illuminating statistical figure would be net external debt, which results when we subtract the value of the assets of the Greek state and its citizens from total external debt. However, we do not have available data.
But we do have data on the external debt of the Greek state and the private sector from Focus Economics, which puts it at 247% of GDP in 2025 versus 234% in 2024 and 295% in 2021. Cyprus's corresponding figure amounts to 617.23% of GDP last year versus 674.18% in 2024.
Bulgaria has low external debt as a share of GDP equal to 50.5% in 2025 versus 48.1% in 2024.
The external debt of Turkey is quite low, as it amounted to just 32.7% of GDP. Germany appears to have external debt of 152% in 2025 and 147% in 2024, while that of Britain stands at 270% of GDP last year from 271% in 2024. That of the US was 95.7% in 2025. The external debt of Portugal was at 145% of GDP last year, unchanged from 2024.
In general terms, the larger economies have relatively high external debt relative to GDP, something that some attribute to their deep financial markets, global banking systems, and large cross-border flows.
In Greece's case, the goal should be to reduce external debt so that the pattern described in their article by Carmen Reinhart of Harvard and the NBER and Christoph Trebesch of the University of Munich and CESifo is not repeated.
Obviously, this reduction in external debt should be done gradually with a plan that could include tax and other incentives. On the other hand, the state may see its borrowing cost rise.