Greece will have multiple benefits from an expected extension of a PEPP program as the European Central Bank plans to purchase bonds worth 10-15 billion euros next year, added to the 16.3 billion euros already held in its portfolio.
Capital markets expected the ECB to announce the extension of the PEPP program by six months and to raise the budget to around 2.0 trillion euros from 1.350 billion currently. In this framework, ECB has purchased Greek state bonds worth 16.3 billion euros, according to the latest figures released by the European Central Bank on Monday. The ECB plans to purchase Greek state bonds worth around 27 billion euros (in market prices) according to the Eurosystem key of 2.4715 pct for Greece. In case that the total budget of the PEPP program would be raised by around 650 billion euros to 2.0 trillion, the ECB could purchase additional bonds worth 15 billion euros in 2021, raising its portfolio of Greek bonds to 29-30 billion euros.
These purchases are offering significant help to the Greek Finance ministry in implementing smoothly its borrowing program for next year in order to meet increased budget spending necessary to deal with the pandemic crisis. In 2020, the Greek state raised 12 billion euros through bond issuance, less than the 14 billion euros purchased by the ECB from the secondary market during the same period. The country’s borrowing program is estimated to be around this year’s levels in 2021. The country’s public debt totals 364.8 billion euros, of which around 64.5 billion were traded in the secondary market, a figure expected to reach 74 billion euros in 2021.