Moody's Upgrades Cyprus to Investment Grade After 13 Years, Reflecting Strong Economic Improvement

After 13 years, Cyprus has regained investment grade status, with Moody's upgrading its credit rating to A3 from Baa2, accompanied by a stable outlook. The rating agency's announcement on Friday marked the first time since July 2011 that Cyprus was rated in the A category, reflecting substantial improvements in the country’s fiscal and debt metrics. Moody’s highlighted that Cyprus had significantly reduced its public debt ratio since it peaked in 2020, ranking among the global leaders in debt ratio reductions.

According to Moody's, the upgrade to A3 is driven by a sustained improvement in the country's fiscal and debt metrics, which are expected to continue. The agency noted, “Cyprus has significantly reduced its public debt ratio since its peak in 2020, and is ranked among the countries with the largest debt ratio reductions worldwide.” Moody's further emphasized that it expects Cyprus's debt ratio to continue declining in the medium term, with favorable debt affordability metrics.

The stable outlook for Cyprus reflects a balanced assessment of the risks associated with the country's economic, fiscal, and debt outlook. Moody's also pointed out that the risks stemming from Cyprus’s banking sector, a critical component in assessing risk sensitivity, are expected to remain subdued. This is due to the significant strengthening of Cypriot banks' credit profiles in recent years, along with the ongoing deleveraging of the banking sector.

In response to the upgrade, Cyprus's President of the Republic, Nicos Christodoulides, issued a written statement praising the upgrade as a significant vote of confidence in the government’s policies and the country's economic performance. He expressed pride in Cyprus's steady upward trajectory, noting that the country's growth rates are now among the highest in the EU. "For the first time, after 13 years, our country is rated at grade A by the specific Rating House," Christodoulides said.

He attributed the success to responsible fiscal policy, the stability of the financial sector, and ongoing reforms that have been central to the government's approach. “Today's great success is the result of a collective effort and primarily of the Cypriot people,” he added.

Christodoulides also highlighted that this upgrade opens the door to more dynamic economic development, enhances Cyprus’s competitiveness, and strengthens its appeal as an investment destination. He emphasized that the upgrade would encourage quality investments, contributing to job creation and the government’s efforts to position Cyprus as a reliable and attractive place for investments.

The president concluded by stating that the country's new rating further supports the continuation and reinforcement of targeted social measures aimed at improving the daily lives of Cypriot citizens.

By fLEXI tEAM