Nicosia: The upgrade of the Republic of Cyprus's credit rating by S and P Global Ratings, amidst ongoing global instability and geopolitical tensions, is of significant importance for the country's economic prospects, Finance Minister Makis Keravnos stated in a recent announcement.
According to Cyprus News Agency, Finance Minister Keravnos expressed satisfaction with the decision by S and P to elevate Cyprus's credit rating from 'A-' to 'A' and to maintain a positive outlook. He noted that this upgrade enhances Cyprus's credibility in international markets and underscores the effective implementation of a balanced and growth-oriented economic policy by the government, which aims to ensure resilience and strengthen the fundamentals of the nation's economy.
Keravnos emphasized the importance of maintaining a 'positive outlook' in the assessment of Cyprus's economy, which aligns with forecasts for continued economic growth. He stated that the government's commitment to a prudent, growth-oriented, and socially sensitive economic policy ensures the economy's resilience and growth while maintaining budget surpluses and reducing public debt. This approach, he asserted, strengthens the state's capacity to address challenges and prioritizes the distribution of economic benefits to households and businesses, with a focus on supporting vulnerable citizens through targeted social policies.
S and P's decision to upgrade Cyprus's rating reflects confidence in the strong fundamentals of the country's economy and its resilience to adverse international conditions, the Ministry of Finance conveyed in a press release. The upgrade occurs in a context of significant global geopolitical uncertainties exerting pressure on economies worldwide.
The Ministry highlighted key points from S and P's statement, including an expected continuation of economic growth at an estimated rate of 2.7%, assuming no significant deterioration in the Middle East situation. Continued budget surpluses are also anticipated, alongside a sharp reduction in public debt, projected to fall to just over 30% by 2029. Additionally, a positive labor market situation and ongoing private investment are expected to drive domestic demand and positively impact the economy.
The agency forecasts the current account deficit to remain manageable, fluctuating around 7% for 2027-2029. Key factors identified by S and P that could influence Cyprus's future credit rating trajectory include potential external shocks, the trajectory of public finances, further public debt reduction, and the continued inflow of foreign direct investment.
The Finance Ministry noted that Cyprus's upgrade, amidst a challenging global environment, signals strong expectations for further upgrades, contingent upon the realization of the agency's forecasts. This marks Cyprus's return to an 'A' rating for the first time since 2010, nearing its all-time highest rating of 'A+' from S and P, indicating a full recovery from the 2011-2013 financial crisis.
The Ministry concluded that Cyprus's steadfast commitment to fiscal discipline and sound economic decisions has already yielded positive outcomes and is expected to deliver further benefits in the future.