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Cyprus Nears First ‘A’ Fitch Rating In 13 Years: A Milestone In Economic Recovery

by THEFUTURE.TEAM

July 16, 2024

Cyprus is on the cusp of achieving its first ‘A’ rating from Fitch in over a decade, marking a significant milestone in the country’s economic recovery. The international rating agency Fitch recently upgraded Cyprus’s credit rating from BBB to BBB+, and Standard & Poor’s followed suit, both reflecting positive economic developments.

The Road to Recovery

In the aftermath of the financial crisis in 2013, Cyprus faced severe economic challenges, including a high ratio of non-performing loans (NPLs) and substantial public and private debt. Over the years, concerted efforts have been made to address these issues, leading to significant improvements. Fitch noted that the NPL ratio had dropped to 7.9% by the end of 2023, the lowest since the global financial crisis, a significant decrease from its peak near 50%.

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Policy and Legislative Reforms

The Cypriot government has implemented various policy and legislative reforms to strengthen the financial sector and promote economic resilience. A notable initiative is the revised divestment framework approved by Parliament, expected to further reduce NPLs and enhance the banking sector’s stability. Additionally, the government’s efforts in deleveraging have resulted in reduced household and corporate debt-to-GDP ratios, bringing them closer to the EU average.

Economic Indicators and Future Prospects

The upgrades by Fitch and Standard & Poor’s signal increased confidence in Cyprus’s economic prospects. These improvements, coupled with a positive outlook, pave the way for Cyprus to achieve an ‘A’ rating for the first time since 2011. The return to an ‘A’ rating would signify a restored confidence in Cyprus’s economic stability and growth potential, attracting further investment and boosting economic activity.

Challenges Ahead

Despite these advancements, challenges remain. The non-performing loans, though reduced, still represent a higher percentage of total loans compared to other EU countries. Additionally, ongoing social incentives complicate the resolution of mortgage-related NPLs. The Cypriot economy must continue to navigate these complexities to maintain its upward trajectory.

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Industry Uproar Over Reduction in Electric Vehicle Subsidies

by News Editor

April 26, 2025

The recent move by the government to curtail subsidies for electric vehicles has stirred significant discontent among car importers in Cyprus. The Department of Road Transport (DRT) has slashed available grants under the Electric Vehicle Promotion Scheme as of April 23, leading to a rapid depletion of the subsidy pool and leaving many potential applicants disappointed.

Importers’ Concerns

According to the Cyprus Motor Vehicle Importers Association (CMVIA), the lack of transparency and failure to engage stakeholders prior to the decision have eroded trust in the government’s commitments. Importers now find themselves facing a precarious situation, with substantial stocks of electric vehicles and mounting promotional expenditures.

Public Interest and EU Compliance

Although the scheme aimed to support the transition to zero-emission transport until 2025, the DRT states that the curtailing of funds was necessary to comply with European funding terms, which warned against delays in vehicle deliveries. This decision has fueled market uncertainty despite the application portal experiencing dynamic changes.

Industry’s Ongoing Demand

The CMVIA refutes any claims suggesting waning interest in electric vehicles, underscoring the rapid exhaustion of available grants as proof of substantial demand. They highlight the importance of meeting Cyprus’s green transition targets, including putting 80,000 electric vehicles on roads by 2030.

While the total budget for subsidies saw an increase to €36.5 million in 2023, thanks to additional funding, ongoing difficulties in timely vehicle distribution have led to premature closures of applications. In response, CMVIA has called for urgent dialogue with the Minister of Transport to reassess the decision, fearing that it could endanger the future of e-mobility in Cyprus.