S&P upgrades Cyprus’ credit rating

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The upgrade of the credit rating of the Republic of Cyprus by one notch, from “BBB-” to “BBB” was announced by the relevant decision published last night, Friday, September 2, 2022, by the international credit rating agency Standard & Poor’s, which determined the outlook of the Cypriot Economy as stable.

Standard & Poor’s justifies its decision to upgrade the Republic’s credit rating on the basis of the strong performance of the Cypriot economy over the last decade, the diversified economy, which proved to be relatively resistant to external shocks, including the Covid-19 pandemic, as well as and the expectation that strong performance will continue despite the fallout from the war in Ukraine.

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Additionally, the House notes that the stable outlook reflects its view that the risks inherent in the credit rating are generally balanced, coupled with the expectation that Cyprus’s fiscal position will continue to improve.

In the same context, Standard & Poor’s emphasizes as the most important factors for the future upgrading of the Republic’s creditworthiness, the improvement of the stability of the financial system, the further reduction of non-performing loans which could lead to the reduction of potential liabilities for the State, strengthening the effectiveness of monetary policy transmission and improving banks’ access to the capital market.

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As mentioned by the Minister of Finance of Cyprus Constantinos Petridis, the House emphasizes that the Cypriot economy will register a strong rate of economic growth in 2022, approaching 4.5%. Furthermore, he expects the Cypriot economy to record a strong rate of economic growth and remain resilient to increased risks, supported by the disbursements of the Cyprus Development and Resilience Plan 2021-2026.

The Government, Mr. Petridis points out, will continue to support economic activity in view of the challenges it has to face (pandemic, continuation of the war in Ukraine, inflationary pressures) in a responsible manner both in terms of growth and employment (retention of unemployment) as well as public finances. In order to achieve this goal, the Government supports the Cypriot economy and society in a targeted and flexible manner and, at the same time, promotes the appropriate economic plans which will allow the maximum possible utilization of the offered European programs and funds and especially the financial support through the Recovery and Resilience Plan.

Source: AMPE

Source: Capital

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