On November 21, 2025, the international ratings agency Fitch confirmed Cyprus’ A‐rating while upgrading the economic outlook from stable to positive. This move, welcomed by the Ministry of Finance, signals potential for further upgrades should the projections in the accompanying report materialize.
Key Drivers Behind The Positive Outlook
Fitch’s decision rests on several critical factors:
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- Declining Public Debt: A dramatic reduction in public debt from 2022 to 2025 is expected to persist into 2026–2027, with debt falling below the 60% of GDP threshold (projected at 55.4% in 2025) and even below the EU median.
- Sustained Fiscal Surpluses: Ongoing fiscal surpluses are forecast to continue during 2025–2027, estimated at approximately 3.2%, reinforcing fiscal discipline.
- Robust Economic Growth: Economic expansion is projected to reach 3.4% in 2025, with growth stabilizing around 3% in the subsequent years, outpacing the eurozone’s expected 1% growth rate.
- Strength In The Labor Market: A marked improvement in labor market conditions, with unemployment rates regressing to pre-2009 levels, further supports the positive outlook.
Fitch underscores that the future rating trajectory will depend on the evolution of public finances, macroeconomic trends, and balance-of-payments developments.
Moody’s Periodic Review
The Ministry of Finance also noted that international agency Moody’s recently completed its periodic review without adjusting Cyprus’ credit rating, which remains at A3. Moody’s assessment reflects:
- Strong institutional capacity and effective policymaking.
- A continued downward trajectory in public debt levels.
- Substantial fiscal surpluses maintained by the government.
- Diversified economic growth bolstered by varied sectors.
- A tourism industry rebounding to pre-pandemic levels with record revenues.
- A stable banking sector underpinned by robust capital reserves and liquidity.
However, challenges remain for Cyprus, including its small size, enduring expenditure pressures, and potential banking sector risks should conditions unexpectedly change.
Government Commitment And Strategic Leadership
Cyprus Finance Minister Makis Keravnos applauded the recent ratings updates. In his statement, he attributed the robust performance to the government’s consistent and rational economic policies. He emphasized that Cyprus’ sustained creditworthiness and fiscal discipline have paved the way for further upgrades, reflecting both domestic resilience and international confidence.
Broader Impact And Future Prospects
President Nikos Christodoulides also weighed in, stressing that these favorable credit ratings do more than bolster investor confidence; they translate into tangible societal benefits. Enhanced credit profiles allow Cyprus to secure financing on more attractive terms, promoting developmental projects that stimulate job creation and support higher wage growth. Lower borrowing costs for both households and businesses further contribute to the long-term economic well-being of the country.
In summary, the dual reassurances from Fitch and Moody’s underscore a compelling narrative of disciplined public finances, robust growth, and a commitment to sustainable development. As Cyprus navigates a challenging global landscape, its steadfast governance remains a cornerstone for future prosperity.
