S&P Global Ratings confirmed Cyprus’s sovereign rating at A- with a positive outlook on March 20, 2026, according to the Ministry of Finance. This decision reflects stable economic performance despite ongoing external pressures, including geopolitical tensions in the Middle East.
Steady Economic Growth Amid Geopolitical Pressures
S&P expects economic growth to continue at around 3%, slightly lower than in previous years but still above the pace seen in many European economies. Fiscal surpluses are also expected to continue, supporting overall stability.
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Robust Debt Management And Fiscal Discipline
Public debt has declined in recent years, supported by strong fiscal performance and higher service exports. Improvements in the banking sector, including lower non-performing loans and stable credit growth, have also contributed to a stronger economic position.
Impact Of The Middle East Conflict
Conflict in the Middle East remains the main external risk. However, the positive outlook indicates that Cyprus is considered capable of managing potential shocks. Future rating changes will depend on public finances, economic performance and foreign investment flows.
Government Policy And Economic Management
According to the Ministry of Finance, the rating reflects continued fiscal discipline and economic management. Recent performance has been supported by the handling of earlier shocks, including the pandemic and the impact of the war in Ukraine.
Industry And Sectoral Insights
S&P noted that key sectors remain stable, despite potential pressure from tourism and energy costs. In particular, the banking sector continues to show strong profitability, capital levels and liquidity.
Energy Security And Future Prospects
Energy remains a key challenge, with costs among the highest in the EU. Plans to develop LNG infrastructure and explore natural gas resources are expected to support supply in the medium term. Regional energy projects continue to face geopolitical constraints.
Outlook
S&P expects GDP growth to average around 2.8% between 2026 and 2029, while public debt is projected to decline further. Finance Minister Makis Keravnos said the rating confirms the government’s economic policy and supports Cyprus’s position as a stable European economy.
