Fitch upgraded Cyprus’s long-term credit rating to ‘A’ from ‘A-’ on Friday and changed the outlook to stable from positive, the Finance Ministry said.
The agency based its decision mainly on Cyprus’s continued positive fiscal performance in 2026, which it expects to be maintained in 2027 and 2028, and on an exceptionally rapid fall in public debt, the ministry said. Debt has fallen by 77 percentage points since 2020 and is projected to drop to 36.6 per cent of GDP by 2028.
Lower interest costs as debt falls are widening the available fiscal space, while borrowing costs are expected to remain manageable.
Fitch also pointed to sustained growth and strong resilience, a positive medium-term outlook backed by ongoing investment and very low unemployment, forecast at close to 4 per cent, and the stability of the banking sector, which has largely dealt with the problems of the previous decade and has non-performing loans at an exceptionally low level of below 2 per cent. It expects the current account deficit to remain high but manageable and inflationary pressures to ease in the coming years.
Developments in public finances, the macroeconomy, the balance of payments and structural changes in the economy could affect the rating either way, Fitch said, according to the ministry.
Minister welcomes upgrade
Finance Minister Makis Keravnos said in a written statement: “I cannot but express my satisfaction at this new upgrade of Cyprus by Fitch, which maintains and strengthens the creditworthiness of the Cypriot economy in the A category.”
He said the upgrade continued a chain of successive upgrades based on the economy’s results and prospects, which clearly showed international rating agencies’ confidence in the government’s economic policy, and that the economy continued to prove its resilience amid intense geopolitical uncertainty and armed conflicts.
“This resilience is the result of the prudent, proactive and responsible economic policy implemented by the government, a policy that ensures fiscal stability and creates the conditions for sustainable growth,” he said.
“The government will continue to implement its prudent fiscal policy, which allows us to support society, businesses and households, to safeguard the future course of the economy and at the same time to have the necessary fiscal margins to deal with unforeseen situations,” he added.
The ministry said the upgrade was “the latest in a series of upgrades over the last 18 months”. The upgrades were all the more significant because they came in a particularly difficult and volatile international environment, it said.
Fiscal discipline and sound economic policies had strengthened Cyprus’s ability to respond effectively to developments while safeguarding its credibility with rating agencies and investors, the ministry added.
