IMPORTANT - NEW POSITIVE ASSESSMENT OF THE CYPRIOT ECONOMY BY STANDARD & POOR'S IN THE MIDST OF WAR - Filenews 21/3
The Ministry of Finance informed in an announcement on Saturday morning that the rating agency S&P issued an announcement on the evening of Friday 20/3/26, through which it maintained the rating of the Republic of Cyprus at level A- with a positive outlook.
For the ministry, this move, in an environment of general instability and volatility, shows that this agency believes that the fundamentals of the Cypriot economy are still healthy and, despite any effects of the war in the Middle East, the positive course of previous years is expected to continue with the normalization of the situation.
The main points of the S&P announcement are:
a) It is expected that the growth of the economy will continue, unless there is a significant deterioration in the situation in the Middle East. Economic growth is expected to be limited to close to 3%, a number lower than in recent years but which will continue to be high compared to other European countries, while the recording of budget surpluses is also expected to continue.
b) The large reduction in public debt, as well as the general reduction of external debt due to the increase in exports of services, has increased the resilience of the Cypriot economy in the face of events such as the war in the Middle East.
c) The satisfactory level of governance of the economy, which led to a strengthening of the financial sector, a reduction in non-performing loans and credit growth
The main factor that will determine the course of the Cypriot economy in the near future is the war in the Middle East. A protracted war will lead to significant global consequences, but the Republic of Cyprus, according to S&P, has the guarantees to manage this crisis.
Apart from the war, the main factors that will affect the course of the evaluation of the Republic, either positively or negatively, are the following:
a) The course of public finances,
b) Macroeconomic data, and
c) The continued inflow of foreign direct investment into the economy
S&P maintains the Republic of Cyprus at a high rating point with the possibility of further upgrades, despite the great challenges that have been created in the international geopolitical and economic field, thus showing its confidence in the ability of the Cypriot state to manage crises and the strong image of the economy.
For the Ministry of Finance, this trust stems from the commitment to fiscal discipline and the rational economic policies followed as well as the successful management of crises such as the coronavirus period and the period at the beginning of the Russian-Ukrainian war. The course of the evaluations of the Republic in the future will depend not only on the external environment but also on the continuation of these policies so that the economy remains on a path of growth and reduction of public debt.
Statement by Makis Keravnos
Regarding last night's development, Finance Minister Makis Keravnos states in a written statement that "the assessment of S&P in conditions of instability of the economic and geopolitical environment, which is caused by the ongoing wars, with potential risks for our economy, is a separate and independent confirmation of the Government's rational economic policy".
Economic policy, notes Mr. Keravnos, "is based on fiscal discipline, the reduction of public debt, a balanced development policy that supports businesses and households, creating a favourable climate for investment."
And he concludes as follows: "I express my satisfaction and send the message that Cyprus is a pillar of security and stability and we expect to welcome our tourists and visitors to a safe European Cyprus."
