President Nikos Christodoulides spoke on Saturday of a strong vote of confidence in the Cypriot economy’s resilience and prospects, in a recorded message marking the upgrade of the Republic of Cyprus’s credit rating from ‘A-’ to ‘A’ by Standard & Poor’s, whilst maintaining a positive outlook.
Cyprus has reached yet another significant economic milestone, as it returns to the ‘A’ rating for the first time since 2011, the President said in his statement.
“This is undoubtedly a strong vote of confidence in our economy, its resilience and its prospects. A strong vote of confidence in our fiscal responsibility, our high growth rates, historically low levels of unemployment and the significant reduction in public debt,” he continued.
“And all these are not merely indicators. They have real significance and tangible impact. In practice, a stronger economy means more and better-paid jobs. It means more investment and new opportunities. It means greater scope for targeted social policies. For investment in health, education, the welfare state and housing. It means greater job security and improved wages," President Christodoulides noted.
"In practice, it means boosting disposable income and improving people’s day-to-day lives. Above all, it means that we are building a more secure foundation for future generations," he further stressed.
“Through responsible management, steady progress and bold reforms, we are strengthening our country’s credibility and competitiveness. Consistently. Responsibly. With determination, we are transforming Cyprus by offering hope and prospects to citizens, families, households, businesses and the Cypriot people as a whole,” President Christodoulides concluded.
S&P’s upgrade has particular weight amidst great uncertainty, FinMin says
The upgrade of the Republic of Cyprus’s credit rating by S&P, at a time of great instability and uncertainty, whilst conflicts and negative geopolitical developments continue, takes on particular weight and significance for the prospects of the Cypriot economy, Finance Minister Makis Keravnos has also said in a statement.
Keravnos expressed his satisfaction at the decision by S&P Global Ratings to upgrade the Republic of Cyprus’s credit rating from ‘A-’ to ‘A’ and to maintain a positive outlook.
“Cyprus has moved up one notch in the investment grade category, and its credibility in international markets has been further strengthened," he said.
"The upgrade of the Republic of Cyprus’s credit rating by S&P, at a time of great instability and uncertainty, whilst conflicts and negative geopolitical developments continue, takes on particular weight and significance for the prospects of the Cypriot economy”, Keravnos stressed, adding that the balanced and growth-oriented economic policy pursued by the government, which ensures resilience and strengthens the fundamentals of the Cypriot economy, is effectively recognised by the agency’s upgrade of the country’s credit rating.
He added that the agency’s maintenance of a ‘positive outlook’ in its assessment of the Cypriot economy is particularly important and confirms forecasts for continued economic growth.
“The government will continue to consistently implement its prudent, growth-oriented and socially sensitive economic policy, which most effectively ensures the economy’s resilience and growth, whilst maintaining budget surpluses and continuing to reduce public debt, thereby strengthening the state’s ability to challenges," the Finance Minister added.
"The government’s priority is to ensure that the benefits of the economy’s positive performance reach our households and businesses, and that our most vulnerable fellow citizens are effectively supported through a targeted social policy,” Keravnos concluded.
The key points of S&P’s statement concern the expected continuation of economic growth
S&P’s decision to upgrade the Republic of Cyprus’ rating from ‘A-’ with a positive outlook to ‘A’, also with a positive outlook, reflects its confidence in the strong fundamentals of the Cypriot economy, as well as its resilience to the effects of the adverse international environment, the Ministry of Finance also says in a press release issued today.
According to the Ministry, this upgrade comes at a time when the international environment is characterised by significant geopolitical uncertainties, which are exerting considerable pressure on economies worldwide and causing serious economic and social repercussions.
As stated, the key points of S&P’s statement concern the expected continuation of economic growth – which is forecast to be 2.7%– unless there is a significant deterioration in the situation in the Middle East, whilst budget surpluses are also forecast to continue.
It is added that the sharp reduction in public debt is forecast to continue, with public debt projected to fall to just over 30% by 2029, whilst it is expected that the very positive situation in the labour market, as well as continued private investment (both foreign and domestic), will boost domestic demand, with positive effects on the economy.
According to the Ministry, the agency stated that the current account deficit is forecast to fluctuate around 7% for the period 2027–2029, which it considers manageable.
Among the key factors that could influence, positively or negatively, the future trajectory of the Republic of Cyprus’s credit rating, S&P lists a potential significant external shock (such as the spread of war in the Middle East), the trajectory of public finances, a further reduction in public debt, and the continued inflow of foreign direct investment into the economy.
“In such a negative environment, not only has Cyprus been upgraded, but expectations of further upgrades remain strong as the positive outlook is maintained; this means that, should the agency’s forecasts materialise, there may well be an upgrade within the next 12 months, whilst the Republic of Cyprus has returned to the ‘A’ rating for the first time since 2010, having thus practically fully recovered from the consequences of the 2011– –2013, whilst it is now just one notch below its all-time highest rating (A+) from S&P”, it is noted.
Continued commitment to fiscal discipline and sound economic choices has already borne fruit and is expected to yield further benefits in the future, the Finance Ministry concludes.
(Source: CNA)
