Ratings agency Moody’s has raised Cyprus’ credit rating by two notches, from Baa2 to A3, a move that has opened up new opportunities for foreign investment and job creation, President Nikos Christodoulides said in a speech on Saturday.
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The Importance of Rating Increase
The President stressed that the rating upgrade reflects his administration’s commitment to disciplined fiscal policy, banking sector stability and financial reforms. This strengthens Cyprus’ reputation as a reliable investment destination.
Finance Minister Makis Keravnos said the move marked Cyprus’s return to the upper-middle investment category for the first time since 2011, thanks to the country’s successful economic recovery from the financial crisis that brought the country to the brink of bankruptcy in 2013 and required EU and IMF intervention.
Factors that influenced the rating increase
Moody’s attributed its decision to Cyprus’s “prudent fiscal policy,” which combines spending restraint with robust revenue growth. This strategy has led to fiscal surpluses over the past two years.
Other key factors include:
- Reduction of public debt : from 113.6% of GDP in 2020 to 73% in 2023. Further reduction is projected to 50% by 2027.
- Economic growth : The country is expected to grow at an average annual rate of 3.2% from 2024 to 2028, driven by sectors such as information and communications technology, finance and insurance.
Attracting foreign investment
Cyprus has become an important hub for companies relocating their headquarters, especially from Ukraine, Israel and the Middle East. Foreign investment in energy, education, construction, healthcare and tourism will support economic growth in the medium term.
Potential risks
Despite the positive outlook, Moody’s warns of potential risks:
- Cancellation of major investment projects.
- Rising wage costs in the public sector.
- Increased spending in the healthcare sector.
