Affirmation of Cyprus Credit Rating

Standard & Poor’s (S&P) rating agency on Friday 16 March 2018 affirmed Cyprus long-term and short-term foreign and local currency sovereign credit ratings at ‘BB+/B’, while noting the positive outlook.

According to their announcement – “Cyprus’ economic recovery continues unabated, allowing for a reduction in general government debt. The impaired banking system still remains an important vulnerability, however”.

S&P mentioned that it could consider raising the Cyprus ratings in 2018 if the economic recovery and direction of macroeconomic policy provides impetus for further meaningful general government and private sector debt reduction.

“We could also revise the outlook to stable if we saw risks emanating from greater economic concentration in certain sectors, for instance, construction or tourism, or if fresh concerns around financial stability emerge while the sector is still impaired”, – according to the announcement.

Furthermore, S&P notes that Cyprus’ economy expanded by 3.9% in real terms in 2017, outperforming their projection of 3.3% for the year.

Credit rating agency forecasts that real GDP will grow by 2.8% on average over 2018-2021, supported by investment activity and service exports, while private consumption decelerates as households increase debt servicing.