Greece warns climate-driven wildfires and heatwaves threaten fiscal stability

Greece’s senior economic adviser, Michael Arghyrou, told one outlet that the surge in wildfires and heatwaves represents an escalating medium- and long-term fiscal risk for the nation and the broader Mediterranean region. To mitigate these threats, Athens is rolling out an investment programme focused on bolstering water and energy infrastructure across tourism hotspots from Mykonos to Santorini, as well as in Epirus, the North Aegean islands, Thessaloniki, Crete, Rhodes and the Peloponnese.

The plan seeks private-sector participation and will be financed largely by increased tax revenues derived from a crackdown on the informal economy, though exact public spending levels were not disclosed. While Greece has no immediate plans for catastrophe bonds, the concept is under review, and authorities are exploring incentives to expand affordable insurance coverage for households and businesses. Prime Minister Kyriakos Mitsotakis is expected to announce tax breaks for firms, workers and the self-employed next month, ahead of next year’s election, with assurances that fiscal discipline will be maintained.