Cyprus on Saturday welcomed an upgrade to the economy by ratings agency Standard & Poor’s, who updated long-term ratings to ‘BBB+’ from ‘BBB’.
The agency also assigned a positive outlook and affirmed the short-term rating at ‘A-2’.
Following the upgrade, President Nikos Christodoulides said: “It is the 5th in a row since taking over the governance of the country, and this time concerns Standard and Poor’s, which confirms the positive outlooks of the Cypriot economy.”
He added that “the government will continue with the same determination to implement the economic policy which allows it to effectively support the vulnerable groups of the population, strengthening, at the same time, both the middle class and businesses”.
In a written statement, the president said that it is significant that S&P’s have predicted one of the highest growth rates in the EU during the period 2024-2027, “despite the serious challenges arising at the European and global level from the ongoing wars in Ukraine and in the Middle East”.
The fact, he stressed, that the agency upgraded the credit rating of the Cyprus from BBB to BBB+ while maintaining the outlook to positive, proves the correctness of the government’s economic policy based on three aspects, fiscal responsibility, financial stability and continuous reforms.
He added that access to international markets and the attraction of foreign investment are, among other things, necessary components for maintaining the Cypriot economy on a growth track.
Also commenting, the finance ministry said the upgrade of Cyprus by S&P Global Ratings reflects the progress Cyprus has made in recent years to address fiscal imbalances, amid resilient growth.
Noting in a post on platform X that on June 14, 2024, S&P Global Ratings raised its long-term foreign and local currency sovereign credit ratings on Cyprus to ‘BBB+’ from ‘BBB’ and that the outlook is positive, the ministry said that the upgrade reflects the progress Cyprus has made in recent years to address fiscal imbalances, amid resilient growth.
The ministry added that “they project gross general government debt will fall below the Maastricht treaty threshold of 60% by 2027. Their improved assessment of Cyprus’ creditworthiness also reflects the strengthening financial position of Cypriot banks”.
“The positive outlook reflects upward pressure on the sovereign ratings, as fiscal and economic outcomes outperform peers. In their view, the strengthening financial position of Cyprus’ banking system should lead to greater convergence of domestic financing conditions to that of the broader euro area, with potential positive ratings implications” the finance ministry said.
In a press release the credit rating agency said that Cyprus posted the highest consolidated fiscal surplus in the eurozone last year and by 2027 the government debt stock will fall below 60% of GDP, in line with solid growth and fiscal prospects and our expectation that the government will largely meet its budgetary surplus targets.
“Despite lingering legacy nonperforming loans in the financial system, Cyprus’ predominantly foreign-owned banks have turned a corner in terms of profitability and capitalization, reducing their contingent liability risk to the government,” it noted.
The positive outlook, the credit rating agency said reflects upward pressure on the sovereign ratings, as fiscal and economic outcomes outperform peers. “In our view, the strengthening financial position of Cyprus’ banking system should lead to greater convergence of domestic financing conditions to that of the broader euro area, with potential positive ratings implications,” it added.
“The upgrade reflects the progress Cyprus has made in recent years to address fiscal imbalances, amid resilient growth. We project gross general government debt will fall below the Maastricht treaty threshold of 60% by 2027,” it noted.
