cyprus ratings — cyprus ratings — The recent ratings upgrades for Cyprus by two leading agencies have been met with enthusiasm, highlighting the country’s economic resilience. Finance Minister Makis Keravnos expressed his satisfaction on Saturday, noting that both Moody’s and Fitch appear to recognise the rational policies implemented by the Cyprus government, which are propelling the economy forward.
On Friday night, Fitch upgraded its outlook for Cyprus from stable to positive while confirming the island’s A- rating. This change reflects a marked decrease in public debt, projected to fall below 60% of GDP by 2025, a reduction of nearly 70 percentage points since its peak in 2020. The agency noted that such a swift decline in debt levels is among the fastest observed for Fitch-rated sovereigns.
Moody’s, on the other hand, maintained its A3 rating for Cyprus in its latest periodic review. While this decision does not indicate an impending rating change, it affirms the country’s strong institutional capacity and effective policymaking. Moody’s highlighted that Cyprus has sustained large fiscal surpluses, contributing to its economic growth, which is bolstered by a diversified economy.
Keravnos remarked, “Fitch’s move is considered a precursor to a future upgrade, provided the forecasts in the relevant report materialise.” He pointed out that the positive trajectory of public finances and macroeconomic indicators could see Cyprus elevated further on Fitch’s investment-grade scale.
According to Fitch, the positive outlook is driven by multiple factors, including ongoing fiscal surpluses projected through 2027 and a robust labour market with unemployment rates returning to pre-2009 levels. The agency also noted that wage pressures have stabilised, helping maintain competitiveness, while inflation rates remain among the lowest in Europe.
Moody’s echoed this sentiment, stating the country’s strong growth performance is expected to continue. The tourism sector has rebounded to pre-pandemic levels, with revenues reaching historic highs. Additionally, the banking sector remains stable, supported by significant capital buffers and ample liquidity.
Despite these positive indicators, both agencies acknowledged that Cyprus still faces credit challenges, including the small size of its economy and ongoing spending pressures related to public sector wages and ageing costs. Keravnos, however, remains optimistic, stating that the government is committed to addressing these challenges amid a complex international landscape marked by geopolitical tensions.
In a statement on social media, President Nikos Christodoulides expressed a continued commitment to responsible governance. He emphasised the importance of building a resilient economy and a fairer society, stating that the government is working methodically to ensure sustainable growth for all citizens.
