(Source: CyprusBusinessNews 28/05/2024)

International ratings agency Moody’s has upgraded Cyprus’ credit rating to positive from stable, which Invest Cyprus has welcomed as “exciting news” for the island.

“Moody's, the renowned international credit rating agency, has upgraded the credit rating of Cyprus from stable to positive, affirming our country’s long-term credit rating of Baa2,” Invest Cyprus announced. “This development showcases the significant strides Cyprus has taken towards ensuring financial stability, enhancing investor confidence, and achieving economic growth.”

It said Invest Cyprus will continue its collaborative efforts with the government and private stakeholders to further advance on this path, promoting Cyprus as a leading business hub in Europe and the broader region, and establishing it as one of the world’s best countries to live, work, and do business in.

Moody’s decision to improve Cyprus’ outlook reflects its confidence in the potential for strong fiscal and debt outcomes in Cyprus over the next few years. According to Moody’s, this optimistic scenario is anticipated to result from the continuation of prudent fiscal policies and strong medium-term economic growth prospects.

Moreover, the upward rating pressure could be further supported by increased confidence in the strengthening and deleveraging of Cyprus’ banking sector, which has reduced the country’s vulnerability to banking sector risks and is expected to foster robust growth and solid fiscal results.

Moody’s anticipates that Cyprus will continue to achieve significant fiscal surpluses, projected at around 2.3-2.4 percent of GDP for 2024-25, although slightly lower than the government’s forecast of 2.8-2.9 percent of GDP.

These surpluses are expected to further reduce the debt burden to under 65 percent of GDP by 2025. Moody’s assesses that the risks to these fiscal and debt projections are skewed towards more favourable outcomes.