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Fitch Ratings Confirms Positive Outlook for Republic of Cyprus

In a significant development, Fitch Ratings has revised the economic outlook for the Republic of Cyprus from stable to positive, while maintaining its investment-grade credit rating at 'BBB'. This announcement, made on December 8, 2023, underscores Fitch's confidence in Cyprus's economic trajectory.

Fitch Ratings Confirms Positive Outlook for Republic of Cyprus

Fitch's positive outlook is grounded in its expectations for continued fiscal surpluses, a reduction in public debt, and notable improvements in the banking sector. Projections indicate a government budget surplus of 2.3% of GDP for the current year, surpassing previous estimates. The commitment to maintaining primary surpluses is seen as pivotal for substantial debt reduction relative to GDP.

Despite the reduction in public debt to 79.6% of GDP by year-end 2023, Fitch acknowledges that the 2025 debt ratio is anticipated to be higher than the median forecast for countries with a similar 'BBB' investment grade. However, the agency remains optimistic, suggesting that the Cypriot authorities will continue to maintain a significant cash reserve to navigate challenges.

This positive evaluation by Fitch reflects not only economic progress but also underscores Cyprus's growing appeal for international investment. The country's ability to sustain fiscal discipline and financial stability has contributed to this favorable outlook.


Minister of Finance Responds to Fitch Ratings Announcement

Following Fitch Ratings' confirmation of Cyprus's positive outlook, the Minister of Finance issued a statement emphasizing the government's commitment to responsible fiscal policies and economic sustainability.

Fitch's projections of a government budget surplus of 2.3% of GDP for the current year, exceeding earlier estimates, align with the government's dedication to maintaining robust primary surpluses. The Minister highlighted the importance of these surpluses in achieving a substantial reduction in public debt as a percentage of GDP.

Despite challenges such as high government bond yields, the Minister expressed confidence in the government's ability to navigate economic complexities, citing the maintenance of a substantial cash reserve. The positive assessment by Fitch is seen as an endorsement of the government's fiscal discipline and prudent financial management.

President Christodoulidis Welcomes Fitch Ratings' Positive Review

In response to Fitch Ratings' revised outlook for Cyprus, President Christodoulidis welcomed the positive assessment as a validation of the government's responsible economic policies and commitment to sustainable development.

The President highlighted the recent legislative measures passed by the House of Representatives, addressing non-performing exposures and protecting vulnerable borrowers. These initiatives, coupled with the positive economic outlook, contribute to a sense of optimism.

President Christodoulidis emphasized the government's dedication to fiscal responsibility, consistency, and vision, steering clear of populism and unnecessary risks. The positive evaluations by Fitch are seen as instrumental in enhancing Cyprus's global appeal, making it more attractive for targeted social policies and investments.

As the country moves forward with a clear vision and determination, the successive positive assessments by Fitch provide hope and perspective for the entire Cypriot population. The President underscored the collective interest in maintaining a course of progress and development, founded on responsible economic policies.


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