Credit rating agency S&P has elevated Cyprus’s economic outlook from stable to positive, underscoring a faster-than-anticipated improvement in external debt ratios. The upgrade reflects expectations for the island’s external position to outperform current projections over the next two years as a result of accelerated debt de-escalation.
Steady Ratings And Fiscal Discipline
Cyprus maintains its long-term and short-term credit ratings at A-/A-2. The firm noted that continued reductions in net external leverage could potentially warrant a further upgrade. Despite a persistent current account deficit, robust foreign direct investment inflows have facilitated a gradual decline in external debt. This fiscal discipline has fostered impressive performance, as strong economic activity and high employment levels have boosted tax revenues and social security contributions, thereby supporting sustainable public finance surpluses and reducing overall public debt.
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Projected Growth And Resilient Economic Policies
Looking ahead, forecasts indicate an average surplus of 3.3% of GDP between 2025 and 2028, with net debt anticipated to decline to 35% of GDP by 2028, in contrast to 56% last year and 90% in 2019. The economic momentum, bolstered by a surge in tourism and the relocation of technology companies, is expected to be driven by domestic demand, rising real incomes, and increased public and private investments. The resilience of Cyprus’s economy is further highlighted by its limited exposure to international trade tensions and its ability to withstand geopolitical instabilities in regions such as Ukraine and the Middle East.
Leadership Endorsement And Forward-Looking Strategies
Cyprus President Nikos Christodoulides hailed the outlook upgrade as a milestone that signifies the nation’s entry into a phase of enhanced economic momentum, reflecting consistent and responsible fiscal decisions. He underscored Cyprus’s emerging reputation as a reliable center for quality investment, characterized by lower borrowing costs, vibrant entrepreneurship, and well-paid job opportunities. Finance Minister Makis Keravnos echoed this sentiment, emphasizing that the upgrade reinforces international confidence in the government’s economic policies. He affirmed that continued fiscal discipline and targeted initiatives will sustain stable and sustainable growth even amidst increased geopolitical risks.
