The European Credit Rating Agency Scope Ratings GmbH (Scope), in a decision published on Friday, October 25, 2024, has decided to upgrade the Republic of Cyprus to A- Credit Rating, also assigning a “Stable Outlook.”
This is the first time since 2011 that Cyprus has been rated in the “A” category of credit ratings.
The upgrade of Cyprus’s long-term ratings is attributed to:
- The strong fiscal outlook characterized by sustainable primary surpluses and a reduction in public debt. The improvement in public finances is expected to continue, supported by further revenue increases and stabilized net interest payments. The strengthening of fiscal safety reserves enhances fiscal flexibility to address demographic challenges and climate-related issues, increasing resilience to external shocks.
- Strong economic growth expected to remain above the eurozone average and the corresponding credit ratings. Strong performance is driven by stable growth prospects in key sectors, including financial and business services, tourism, and construction, as well as increased economic diversification through the expansion of the information and communications technology sector.
- The reduction of risks in the financial system. Despite persistent vulnerabilities, banks’ balance sheets are supported by improved profitability, asset quality, capital levels, and liquidity measures, signaling steady progress in addressing the legacy of the 2012-13 financial crisis. This continues to enhance the sector’s shock absorption capacity and mitigates the risks of potential liability on the public balance sheet.
The Stable Outlook reflects Scope’s view that the credit ratings already capture a favorable fiscal outlook, declining public debt, and strong economic prospects.
The Government will continue to intervene in the economy with responsible and structured policies aimed at improving confidence in the Cypriot economy, fostering continuous growth, and ensuring ongoing reduction of public debt.
