Moody’s has upgraded Cyprus’ credit rating by two notches, from Baa2 to A3, a move hailed as a gateway to increased foreign investment and job creation, President Nikos Christodoulides announced on Saturday.
The president emphasized that the upgrade reflects his administration’s commitment to disciplined fiscal policies, banking sector stability, and financial reforms, solidifying Cyprus’ reputation as a reliable investment destination.
Finance Minister Makis Keravnos highlighted the significance of this milestone, noting it marks the first time since 2011 that Moody’s has returned Cyprus to the upper medium-grade investment category. This comeback follows a financial crisis that nearly bankrupted the country and required a bailout from the EU and IMF in 2013.
Moody’s credited the upgrade and stable outlook to Cyprus’ “prudent fiscal policy,” which combined spending restraint with robust revenue growth. This strategy has resulted in fiscal surpluses over the past two years.
The agency projected smaller fiscal surpluses through 2028, citing a significant reduction in public debt – from 113.6% of GDP in 2020 to 73% in 2023. It forecasted further declines, expecting debt to drop to 50% by 2027. Additionally, the economy is predicted to grow at an average rate of 3.2% annually from 2024 to 2028, driven by key sectors like information and communication technology, finance, and insurance.
Cyprus has become a hub for companies relocating their headquarters, particularly from Ukraine, Israel, and the Middle East. Foreign investment in energy, education, construction, healthcare, and tourism is also set to support medium-term economic growth.
However, Moody’s warned of potential risks, including the cancellation of major investment projects, rising public sector wage costs, and spending pressures in healthcare.
