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President Nikos Christodoulides said in a statement that the
rating agency’s action reflects his government’s efforts at
cementing Cyprus’ reputation as a credible investment
destination through disciplined fiscal policy, banking sector
stability and financial reform.
Finance Minister Makis Keravnos said the upgrade marks the first
time that Moody’s has elevated Cyprus back into the upper medium
grade investment category since 2011, when a brewing financial
crisis brought the country to the brink of bankruptcy that
required a bailout from the European Union and the International
Monetary Fund two years later.
Moody’s said its rationale for the ratings upgrade and stable
outlook was grounded in Cyprus’ “prudent fiscal policy” that
combined spending cuts with strong public revenue growth,
resulting in fiscal surpluses over the last two years.
The agency said smaller fiscal surpluses are expected to
continue until 2028, while a drop in public debt “has been one
of the most substantial globally,” dropping from 113.6% of gross
domestic product in 2020 to 73% in 2023.
According to Moody’s, debt is forecast to continue dropping to
50% in 2027, while the economy will grow by an average of 3.2%
between 2024 and 2028, thanks to continued growth in sectors
including information and communication technology, finance and
insurance.
Companies are opting to set up their headquarters in Cyprus,
particularly from Ukraine, Israel and the Middle East. Foreign
investment in energy, education, construction, health care and
tourism will also buoy economic growth over the medium term.
Moody’s said downside risks include cancellation of large
investment project, a burgeoning public sector wage bill and
spending pressures in health care.
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