DBRS - CONFIRMATION OF THE RATING OF CYPRUS AT A- - Filenews 14/3
DBRS Morningstar has confirmed the rating of the Republic of Cyprus at grade A with a stable outlook.
DBRS Morningstar has confirmed the credit rating of the Republic of Cyprus at "A", while keeping the relevant outlook stable, according to an announcement by the international credit rating agency.
The agency attributes its decision to the dynamic course of the Cypriot economy, which has remained strong over the last year. As reported, real GDP grew by 3.8% in 2025, driven by strong domestic demand and an increase in services exports.
At the same time, DBRS Morningstar points out that the most important factor of uncertainty for the economy of the Republic is the recent escalation of hostilities in the Middle East. The agency notes that the geographical proximity of Cyprus to the region intensifies the uncertainty regarding the short-term economic prospects, with particular reference to tourism, which has been a key driver of growth in recent years.
At the same time, it warns that if global energy prices remain high for a longer period of time, it could limit the purchasing power of households and, by extension, private consumption. According to the agency, the magnitude of the potential negative impact on the Cypriot economy will largely depend on the duration and intensity of the conflict.
However, DBRS Morningstar estimates that Cyprus has strong fiscal buffers, which allow it to absorb potential negative consequences from developments in the region. As noted, fiscal balances have recorded repeated surpluses in recent years, while the annual general government budget surplus averaged 2.8% of GDP in the period 2022-2025.
The agency also points out that this positive fiscal picture is not only due to cyclical factors that strengthened public revenues, but also to a structural improvement on the revenue side. At the same time, general government debt has declined markedly in recent years, falling below 60% of GDP by 2025.
Among the positives for Cyprus' credit rating, DBRS Morningstar includes the government's strong fiscal performance, the good health of the banking sector and the stable domestic political environment. He also adds that, although the country's governance indicators remain weaker than those of most EU member states, Cyprus' participation in the Union is an important support for the quality of institutions.
On the other hand, the small size of the Cypriot economy and its dependence on services, elements that make it more vulnerable to external shocks, are considered negative for the rating. The agency also cites the comparatively low level of labour productivity and the large current account deficit as weaknesses.
The confirmation of the rating of the Republic of Cyprus, in the midst of serious destabilizing developments in the wider region, demonstrates, according to the agency, the resilience of the fundamentals of the economy and the credibility that the country has built in the management of previous crises.
Satisfaction of Christodoulidis and Makis Keravnos
The President of the Republic, Nikos Christodoulides, in a post on platform X, expressed his satisfaction with the fact that "the confirmation of the rating of the Republic of Cyprus at level A with a stable outlook by DBRS Morningstar is yet another strong vote of confidence in the economy of our country, especially at the current juncture with the multi-level challenges in our region".
In fact, "in an international environment of uncertainty, Cyprus confirms its resilience and credibility, maintaining its fiscal stability and stable growth trajectory," said the President of the Republic.
For his part, the Minister of Finance, Makis Keravnos, expressed his particular satisfaction with the confirmation of the credit rating of the Republic of Cyprus at investment grade "A" and for the maintenance of its outlook at "stable" by DBRS Morningstar.
He said that he finds it particularly encouraging that, at a time of instability for the global economy due to the intensification of hostilities in the Middle East, which has also increased uncertainty as to the short-term economic prospects of Cyprus due to its geographical location, international rating agencies, such as DBRS Morningstar, continue, taking into account the latest developments, express full confidence in the credibility of the Cypriot economy, building on the dynamic growth it has shown in recent years.
Mr. Keravnos also noted that it is of particular importance that the agency bases its very positive conclusions on the assessment that the Republic of Cyprus has large fiscal reserves, which will allow to deal with possible negative effects of the conflict in the wider region of the Middle East. As he said, this finding confirms the confidence shown by international agencies in the prudent and precautionary economic policy followed by the government.
At the same time, he assured that, in view of the challenges that Cyprus is called upon to face due to the developments in the international economic and political environment, the government will continue to support the economy in a responsible and flexible way. As he mentioned, this effort will concern both growth and employment as well as public finances, through the promotion of appropriate economic plans, which will allow the maximum possible utilization of all the opportunities offered, with the aim of the continuous growth of the economy along with the reduction of public debt and the successful handling of the challenges caused by the serious destabilizing developments in the wider geographical area of Cyprus.
