Filenews 27 October 2024
The government will continue to intervene in the economy with responsible and coherent policies to improve confidence in the Cypriot economy, continuous growth and uninterrupted reduction of public debt, Finance Minister Makis Keravnos said on Saturday in a written statement on the report on the Cypriot economy by the European credit rating agency Scope Ratings GmbH (Scope).
As explained, the European Credit Rating Agency Scope Ratings GmbH (Scope), with a relevant decision published on Friday, October 25, 2024, decided to upgrade the Republic of Cyprus to grade "A-", also attributing "Stable Outlook".
"This is the first time since 2011 that the RoC has been placed on the 'A' scale of credit ratings," Keravnos said, noting that "the Government will continue to intervene in the economy with responsible and coherent policies to improve confidence in the Cypriot economy, continuous growth and uninterrupted reduction of public debt."
The Stable Outlook reflects Scope's view that credit ratings already reflect a favourable fiscal outlook, declining public debt and a strong economic outlook.
In his written statement, the Minister of Finance notes that the upgrade of Cyprus' long-term ratings is due, firstly, to the strong fiscal prospects characterized by sustainable primary surpluses and the reduction of public debt.
The improvement in public finances is expected to continue, supported by further revenue growth and stabilised net interest payments.
Strengthening fiscal buffers enhances fiscal flexibility to address demographic and climate-related challenges and increases resilience to external shocks.
According to Keravnos, the upgrade of Cyprus' long-term ratings is secondarily due to strong economic growth that is expected to remain above the euro area average and the corresponding credit ratings.
"The strong performance is driven by solid growth prospects in key sectors, including financial and business services, tourism and construction, as well as increased economic diversification through the expansion of the information and communication technology sector," it said.
Third, the upgrade of Cyprus' long-term ratings is also due to the reduction of risks in the financial system.
Despite persistent vulnerabilities, banks' balance sheets are supported by improvements in profitability, asset quality, capital levels and liquidity metrics, signalling steady progress in addressing the legacy of the 2012-13 financial crisis. As Mr. Keravnos explains, this continues to enhance the sector's shock-absorbing capacity and mitigates the risks of a contingent liability on the public balance sheet.
CNA