Ratings agency points to resilient growth, falling debt and fiscal surpluses even as Middle East instability clouds outlook
Cyprus has been handed a credit rating upgrade by Standard & Poor’s, with the agency lifting the island’s sovereign rating from A- to A and keeping its outlook positive, in a move that officials in Nicosia have hailed as a vote of confidence in the country’s economic management.
The upgrade reflects what S&P described as strong confidence in the fundamentals of the Cypriot economy and its ability to withstand a difficult global environment. The agency said growth was likely to continue, barring a serious deterioration in the situation in the Middle East.
S&P forecast that economic growth would ease somewhat to 2.7%, but stressed that this would remain high by European standards. The agency also expects Cyprus to continue posting fiscal surpluses, while public debt is projected to fall to just above 30% of GDP by 2029, extending a run of steady deleveraging.
Analysts at the agency pointed to a satisfactory standard of economic governance, the government’s commitment to prudent fiscal policy, a healthy labour market and sustained private investment as key supports for the rating. S&P also flagged a number of factors, both positive and negative, that could shape the trajectory of Cyprus’s creditworthiness in the years ahead.
The agency described the upgrade as a particularly significant signal to international markets, noting that in such an unfavourable global climate, expectations of further upgrades over the next 12 months remained strong. Cyprus has now returned to the “A” tier for the first time since 2010, marking what S&P called a near-complete recovery from the fallout of the financial crisis that forced the island into an international bailout more than a decade ago.
The finance minister, Makis Keravnos, welcomed the decision, saying Cyprus had climbed a further rung up the investment-grade ladder and that its standing in international markets had been reinforced. He said the upgrade carried particular weight given the current period of instability and uncertainty, and argued it underscored the strength of the country’s economic prospects.
Keravnos added that the balanced, growth-oriented economic strategy pursued by the government had now been given concrete recognition by one of the world’s leading ratings agencies.
