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DBRS Morningstar Elevates Cyprus’s Credit Rating, Bolstering Economic Confidence

by THEFUTURE.TEAM

September 22, 2025

Robust Fiscal Recovery Propels Cyprus’s Rating Upgrade

The internationally respected ratings firm DBRS Morningstar has raised Cyprus’s sovereign credit rating from ‘A(Low)’ to ‘A’, while adjusting its outlook from ‘positive’ to ‘stable’. The upgrade reflects the island’s rapid public debt reduction and strong economic indicators, with expectations that further improvements will continue in the coming years.

Fiscal Discipline and Debt Reduction

Recent fiscal data reveals a significant decline in the general government debt as a percentage of Gross Domestic Product (GDP), dropping from 96.5% in December 2021 to 64.3% by March 2025. This reduction is attributed to substantial fiscal surpluses and robust nominal GDP growth driven by strong domestic demand and expanding service exports. DBRS Morningstar anticipates that the debt-to-GDP ratio will maintain its downward trajectory as the government continues to deliver large surpluses and favorable economic conditions prevail.

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Structural Reforms and Revenue Growth

Beyond cyclic factors, structural improvements have bolstered Cyprus’s fiscal performance. An uptick in income tax revenues, largely due to the relocation of numerous companies to Cyprus, has significantly enhanced government income. The government’s Annual Progress Report outlines projected fiscal surpluses of 3.5% of GDP in 2025 and 3.7% for the period 2026-2028, with forecasts suggesting that government debt will drop to 43.3% of GDP by 2028.

Stable Political Environment and Strategic Governance

The stable political backdrop and resilient domestic banking sector underscore Cyprus’s robust economic framework. The country’s prudent fiscal and economic policies, combined with moderate interest burdens, have consistently received favorable evaluations by international rating agencies. While challenges remain—such as the limited size of an economy centered on services, relatively low labor productivity, and a significant current account deficit—the integration into the European Union continues to strengthen institutional quality and governance standards.

Enhanced Investor Confidence and Future Prospects

Cyprus’s recent rating upgrade has galvanized investor confidence by positioning the nation well within the high-investment grade spectrum. Finance Minister Makis Keravnos emphasized that the latest upgrade from DBRS Morningstar is a clear testament to Cyprus’s rational economic policies and fiscal discipline. He noted that this marks the second upgrade for the country in 2025, underscoring a sustained commitment to favorable economic policies that not only promote growth but also secure fiscal stability in the face of global uncertainties.

Outlook: Securing Growth and Attracting Investment

Looking ahead, the government remains committed to maintaining stringent financial policies while implementing a social strategy to support vulnerable groups and the small and medium-sized sector. With the momentum of continuous fiscal enhancements and a favorable policy environment, Cyprus is well-positioned to attract foreign investments, enhance competitiveness, and generate new employment opportunities.

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Central Bank Of Cyprus Balance Sheet Reflects Strong Eurosystem Position

by THEFUTURE.TEAM

February 17, 2026

Overview Of Financial Stability

The Central Bank of Cyprus (CBC) has released its latest balance sheet, reaffirming its steadfast role within the Eurosystem. The balance sheet, featuring total assets and liabilities of €29.545 billion, underscores the institution’s stable financial posture at the close of January 2026.

Asset Allocation And Strategic Holdings

Governor Christodoulos Patsalides issued the balance sheet, which details the CBC’s asset composition under the Eurosystem framework. Notably, the bank’s gold and gold receivables amounted to €1.635 billion, providing a significant hedge and stability to its balance sheet. Additional asset categories include claims on non-euro area residents denominated in foreign currency at €1.099 billion, while claims on euro area residents in both foreign and domestic currency add further depth to its portfolio.

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The most substantial asset category, intra-Eurosystem claims, reached €19.438 billion, an indication of the CBC’s deep integration with its European counterparts. Furthermore, euro-denominated securities held by euro area residents contributed €6.587 billion. Despite a marked emphasis on these areas, lending to euro area credit institutions in monetary policy operations recorded no activity during the period.

Liability Structure And Monetary Policy Implications

On the liabilities side, banknotes in circulation contributed €3.218 billion. Liabilities to euro area credit institutions associated with monetary policy operations were notably the largest single category, totaling €17.636 billion. Supplementary liabilities included those to other euro area residents, which aggregated to €4.989 billion, with government liabilities playing a predominant role at €4.754 billion.

Other liability items, such as claims related to special drawing rights allocated by the International Monetary Fund at €494.193 million, and provisions of €596.571 million, further articulate the CBC’s exposure. Revaluation accounts stood at €1.643 billion, and overall capital and reserves were confirmed at €333.822 million, completing the picture of a well-capitalized institution.

Conclusive Insights And Strategic Alignment

The detailed breakdown illustrates the CBC’s sizeable intra-Eurosystem exposures, reinforcing its central role within Europe’s monetary landscape. With an asset-liability balance maintained at €29.545 billion, the CBC’s financial position remains robust, indicating a commitment to structural stability and strategic risk management.

This fiscal disclosure not only provides transparency into the CBC’s operations but also serves as a benchmark for comparative analysis among other central banks within the Eurosystem, highlighting the intricate balance between asset liquidity, regulatory oversight, and monetary policy imperatives.