Cyprus has received an upgrade in its credit rating from Standard & Poor’s, moving from BBB to BBB+. The Cypriot President, Nikos Christodoulides, stated that this upgrade validates the government’s economic policies of fiscal discipline, banking sector stability, and continuous reforms. The country plans to continue implementing strict fiscal policies while also supporting vulnerable groups and the middle class. The agency also maintained a positive outlook for Cyprus, suggesting that further upgrades could be possible if the country continues to reduce bad loans in the banking sector and shrink its current account deficit.
Standard & Poor’s outlined its rationale for the upgrade, predicting that the Cypriot economy will grow by an average of 3% of GDP over the next three years. The agency also forecasts a decrease in the country’s debt to below 60% by 2027, attributing this to strong fiscal surpluses. S&P noted that Cyprus has the strongest forecast for fiscal surpluses across all 20 eurozone members. The agency also praised Cypriot banks for their efforts to strengthen their financial positions through cost-cutting initiatives and reducing reliance on non-resident depositors.
The upgrade by Standard & Poor’s is also credited to Cyprus’ increasingly diversified economy, which includes a growing information and communications technology sector. This diversification has helped the country overcome challenges such as the global pandemic, EU sanctions against Russia, and the Israel-Hamas conflict. Tourism, a crucial economic driver for Cyprus, has remained robust with arrivals close to record levels. However, S&P warned that the outlook could change if Cyprus does not stick to its commitment to reducing public debt or if structural reform progress stalls, potentially delaying European Union funding.
The recent credit rating upgrade by S&P follows a similar move by Fitch, which also raised Cyprus’ rating to BBB+. Fitch highlighted the country’s ability to withstand financial shocks, commitment to fiscal discipline, and a more resilient banking sector as reasons for the upgrade. The Cypriot government sees access to international markets and attracting foreign investments as crucial elements for sustaining economic growth in the country. President Christodoulides emphasized the importance of responsible economic policies and continuous reforms to ensure Cyprus remains on a growth trajectory.
In conclusion, Cyprus has seen positive developments in its credit ratings, with both Standard & Poor’s and Fitch upgrading the country’s rating to BBB+. These upgrades reflect the government’s commitment to fiscal discipline, banking sector stability, and economic reforms. Cyprus remains focused on reducing bad loans in the banking sector, shrinking the current account deficit, and attracting foreign investments to sustain economic growth. The country’s diversified economy, including a growing technology sector, has helped it overcome various challenges, including the global pandemic and geopolitical conflicts. Cyprus is determined to continue on its path of responsible economic policies to maintain its positive trajectory.
