Giant debt and future pensions: where did the money from the ΕΦΚΑ fund go?

Greece reports surplus and reducing the debt-to-GDP ratio, but the nominal debt remains huge, and the pension system risks running into deficit again in the coming years.

The Greek economy today lives in a strange dual reality. One government is talking about surpluses, economic growth, improving credit ratings and a gradual decline in the debt-to-GDP ratio. In the other, we are left with a huge nominal debt, a budget dependent on constant growth, and a troubling question: who will pay for future pensions if the current structure begins to fail?

Publications that Greece has allegedly already approached a “trillion-dollar national deficit” mix up different indicators and create a picture of the financial end of the world, where the calculator apparently quit before the first paragraph. But this does not mean that there are no problems. They exist, and they are quite real.

According to Greek Public Debt Management Organizationspublic debt according to the Maastricht methodology at the end of 2025 was about 360.5 billion euros, or 146.1% of GDP. As of March 31, 2026, the figure remained at approximately the same level, while the government retained a significant cash reserve.

At the same time, the central government debt ratio was higher and reached approximately 406 billion euros. This does not mean that a new “hole” worth tens of billions has suddenly appeared in the country. It’s just a different way of counting: Maastricht debt reflects consolidated general government debt, while central government debt includes a broader set of liabilities.

Why debt decreases on the chart, but does not disappear in life

Authorities like to show the debt-to-GDP ratio. This indicator is indeed declining because the economy is growing, inflation is raising nominal GDP, and the budget is showing primary surpluses. But the nominal debt itself remains colossal.

This is where the main contradiction begins. Greece may look better in the Brussels table, but that doesn’t change the fact that the country still has hundreds of billions of euros of liabilities to service. As long as interest rates on old European loans are relatively low and the economy is growing, the system holds up. But it remains sensitive to any major slowdown, a new energy crisis, rising rates or falling budget revenues.

A surplus in itself is not proof of financial security. A surplus shows that the government collected more money in a particular period than it spent, excluding debt service. But it does not cancel old obligations, does not solve the demographic problem and does not automatically create a sustainable pension system.

Repos: not a secret conspiracy, but a very convenient internal loan

Particularly irritating is the repos mechanism, through which the state uses the free funds of public sector organizations, including social funds, hospitals, municipalities and other government agencies.

This is not a “secret scheme” that Brussels supposedly knows nothing about. Such transactions are reflected in government financial documents and taken into account in the liquidity management system. However, for an ordinary citizen, this does not make the meaning any less alarming: the money of foundations and organizations temporarily works for the needs of the state, and does not lie as a dead weight in separate cash registers.

The Treasury Department’s annual bulletins detail the use of short-term repo transactions between government and general government entities. In the annual bulletin of the Ministry of Finance these operations are explicitly considered as part of the government’s liquidity management.

The problem is not the very existence of repos. Many states use similar tools. The question is: how safe is it to keep a significant part of the liquidity of social funds within the general financial machine of the state, if this machine simultaneously services a huge debt and depends on constant surpluses.

ΕΦΚΑ: not a deficit of 52 billion, but the problem does not disappear from this

The figure of 52 billion euros, which some publications call the “ΕΦΚΑ deficit,” is incorrect. We are not talking about the financial hole of the fund, but approximately the amount of debt of employers and insured persons to the social insurance system.

In other words, this is money that ΕΦΚΑ owes, and not money that ΕΦΚΑ supposedly no longer has. But there is also nothing to be particularly happy about here: the multibillion-dollar debt to the fund means that a significant part of future pension obligations is based on contributions that so far exist only on paper.

At the same time, even official forecasts do not look cloudless. Publications on medium-term budget estimates indicated that e-ΕΦΚΑ could again face deficits after 2029. I wrote about this Kathimeriniciting budget projections and demographic trends.

That is, the current situation does not look like an immediate collapse of the pension system. But it does not provide grounds for soothing speeches. An aging population, a declining number of workers, a growing number of pensioners and an unstable base of insurance premiums are gradually eroding the structure, which is already supported by constant budgetary support.

Bank of Greece warnings

The head of the Bank of Greece, Yiannis Stournaras, has repeatedly spoken about demographic riskwhich threatens the pension system and the economy as a whole. We are not talking about tomorrow’s collapse, but about long-term mathematics: fewer workers, more retirees, more spending on health care and social protection.

This problem is especially dangerous because it cannot be solved by privatization alone, a one-time sale of an asset, or another increase in contributions. Demographics do not respond to press releases. It just slowly makes the system more expensive and weaker.

Greece is not on the verge of bankruptcy, but its margin of safety is limited

To say that Greece today is in a worse situation than in 2010 would be wrong. The country has a different repayment schedule, longer repayment periods for European loans, higher cash reserves, better access to markets and a more resilient banking sector.

But repeating that “the crisis is over” is also too convenient. He just changed his form. Instead of the immediate threat of default, there was a quieter dependence on economic growth, tourism income, European funds, budget surpluses and the state’s ability to collect taxes without completely strangling working people and small businesses.

The future sustainability of the pension system will depend not on fancy numbers in presentations, but on more boring things: how many people actually work, how much they pay contributions, how many debts can be collected from employers and how much the state is able to avoid turning social funds into an eternal source of domestic lending.

The problem with Greece today is not that the country has already collapsed under debt. The problem is that it still lives with debt, which requires an almost perfect combination of growth, discipline, cheap financing and political stability. History shows that such combinations rarely last forever. However, the whole calculation was based on this…

The material was prepared based on data from PDMA, the Greek Ministry of Finance, the Bank of Greece and Kathimerini publications.

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