Upgrade of the economy by DBRS constitutes a vote of confidence, President says

The upgrade of Cyprus' economy by Morningstar DBRS rating agency constitutes a vote of confidence in the government's responsible fiscal policy, President of the Republic, Nikos Christodoulides, said on Saturday, expressing his satisfaction.

Speaking to the press, President Christodoulides stated that the upgrade of the economy by yet another rating agency is, among other things, a vote of confidence in responsible fiscal policy. He underlined that such a policy allows for the implementation of targeted social measures. "This is precisely why social spending for 2025 has increased by more than 5%", he added.

Finance Minister Makis Keravnos also welcomed the upgrade of Cyprus’ credit rating to the investment grade "A" by Morningstar DBRS, describing it as significant. In a written statement, he noted that this upgrade confirms the rational economic policy pursued by the government, which is based on fiscal discipline and developmental practices, as well as the resilience of the Cypriot economy in a challenging global environment.

The Finance Ministry stressed that the government remains committed to supporting the economy responsibly and flexibly, promoting economic policies that ensure sustainable growth while reducing public debt.

On Friday, 21 March, Morningstar DBRS upgraded Cyprus' credit rating from BBB(High) to A(Low), maintaining a positive outlook. According to the agency, the decision reflects the sharp decline in public debt in recent years and expectations of further significant improvements. The general government debt-to-GDP ratio fell from 96.5% in December 2021 to 69.7% in September 2024, driven by large fiscal surpluses and strong nominal GDP growth. The European Commission forecasts a further decline to 56.7% by 2026, given continued favorable economic and fiscal trends.

Despite potential risks from geopolitical tensions and global trade uncertainties, Cyprus is less vulnerable to direct impacts from rising U.S. tariffs on EU imports due to its relatively small manufacturing sector. The agency expects economic growth to benefit from strong private consumption, increasing exports of services, and robust construction investments in the coming years.

The upgrade also acknowledges improvements in the financial stability of domestic banks, as well as structural enhancements in revenue collection. These factors will help offset potential future expenditures, including large-scale energy projects and increased defense spending. The agency also highlighted that Cyprus’ credit profile benefits from a stable political environment, sound economic policies, and its EU membership, which supports institutional quality.

(Source: CNA)