The US credit rating agency kept the rating at A-, but upgraded the economy prospects from stable to positive, which according to a Finance Ministry statement is a sign of a future rating rise, if predictions in the Fitch report materialise.
‘Public debt has dropped dramatically during 2022-2025’, Fitch noted in its reasoning, adding that this positive development will continue through the next year, with public debt falling under the landmark 60% of GDP (55.4%) in 2025, below the EU median.
A running surplus for Cyprus will continue during the 2025-2027, the agency predicts, at an average of 3.2%, while the strong economic growth is expected to rise to 3.4% in 2025 and maintain a percentage of around 3 over the next two years and in the medium term. The Eurozone growth is predicted to be around 1%.
Fitch also notes ‘very good employment conditions’, with unemployment dropping to pre-2009 levels.
The main factors that will affect the Fitch assessment are the course of public finances over the next two years, macroeconomic data and and developments in the balance of payments.
In Nicosia, the finance ministry stressed the fact that Fitch have kept Cyprus at a high level of assessment with the possibility of further upgrades and recognised the positive standard of the past few years as well as ‘the good prospects for the near future in spite of the major challenges in the international financial and political setting’.
It further adds that the credibility now earned by the Republic through public finance discipline and rational fiscal policies are essential factors that must be maintained in order ‘to realise additional future upgrades’.
Finance minister Makis Keravnos referred to the Fitch upgrade as well as a similar Moody’s assessment last week as tangible evidence of excellent economic performance and relevant government policies supported by credit rating agencies.
‘We will work to make the economy even more resilient and competitive’, he said.