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Cyprus has received another credit rating upgrade, with Fitch Ratings raising the country’s long-term rating from ‘A-’ to ‘A’, citing strong public finances, falling debt levels and continued economic growth.
The agency assigned Cyprus a stable outlook, pointing to the Government’s ability to maintain substantial budget surpluses while reducing public debt at a rapid pace. It also praised the economy’s performance and increasing diversification, which have helped the country withstand an uncertain international environment.
According to Fitch, public debt fell by 77% between 2020 and 2026 and is projected to decline further to 36.6% of gross domestic product by 2028. Lower debt has also reduced the Government’s interest payments, leaving more room in the budget for other spending priorities.
The agency expects Cyprus to maintain a positive fiscal position through 2026 and the 2027-2028 period. Borrowing costs are forecast to remain manageable, while economic growth is expected to continue.
Investment activity and a low unemployment rate are among the factors supporting the country's medium-term prospects. Unemployment is projected to remain close to 4%, while the banking sector has made substantial progress in addressing problems that affected it over the previous decade. Non-performing loans have fallen below 2%, according to the assessment.
Fitch also expects inflationary pressures to ease over the coming years, although the current account deficit is forecast to remain relatively high, albeit at a manageable level.
President Nikos Christodoulides welcomed the decision, describing it as recognition of the resilience of the Cypriot economy and the Government’s fiscal management.
In a post on X, he said the improved rating could help support investment, create better-paid employment and provide additional opportunities for social spending, including healthcare, education, housing and welfare services.
Finance Minister Makis Keravnos also welcomed the upgrade, saying it reflected the results of the Government’s economic policies and the confidence placed in Cyprus by international rating agencies.
He said the Government would maintain its prudent approach to public finances, while ensuring that sufficient resources remained available to support households, businesses and the wider economy, as well as respond to unexpected events.
The Finance Ministry’s Public Debt Management Office described the decision as the latest in a series of rating improvements over the past 18 months. It said the upgrades had taken place despite significant international economic and geopolitical uncertainty.
Fitch identified public finances, economic performance, developments in the balance of payments and structural changes as the main factors that could influence Cyprus’ future rating.
The latest decision strengthens Cyprus’ standing in international financial markets and reflects the improvement in its fiscal position following years of debt reduction and economic recovery.
