Opinion
By Yiannos Stavrinides
After 15 years, the Republic of Cyprus has once again secured an A rating from S&P. This achievement closes a major chapter and gives us reason to look back at the recent history of our economy.
In 2009 and 2010, Cyprus held an A rating. Then, in 2011, a cycle of downgrades began. By 2012, the Cypriot economy had fallen out of investment grade, and by 2013 it had reached levels associated with a high risk of default. In just three years, Cyprus was downgraded eight times as the banking crisis took hold and doubts grew over the state's ability to continue financing its needs.
The A rating from S&P carries particular significance. The agency downgraded Cyprus in August 2012 and assigned it a negative outlook. Two months later, it issued another downgrade because of difficulties in completing the bailout package. The next downgrade came in March 2013, as the banking crisis intensified and discussions over a bailout continued. In June 2013, Cyprus was placed in selective default (SD), following the restructuring of government debt, which resulted in bondholders receiving terms that were less favorable than the original ones.
What followed was an extremely difficult period. The banking sector was restructured, Laiki Bank ceased operations, and uninsured depositors at the two largest banks suffered losses. Capital controls were introduced to protect the banking system. The economy fell into a deep recession, unemployment surged and public debt increased sharply.
The recovery took five years, with key economic indicators improving gradually. Fiscal discipline helped turn deficits into surpluses, the recession gave way to a strong recovery, banks made progress in managing non-performing loans, and the Republic returned to international markets at reasonable interest rates.
As the risk of default fell sharply and the Republic strengthened its ability to service its debt, S&P restored Cyprus to investment grade, with a BBB- rating, in September 2018. The decision reflected the country's growth prospects, available fiscal space and the cleanup of the banking system.
The September 18, 2026 upgrade marks an important milestone because it signals the return of the Cypriot economy to its pre-crisis levels. Public debt has been reduced, fiscal surpluses have become firmly established, and economic growth ranks among the strongest in the eurozone. Cyprus has also improved its international investment position and increased exports in high-value sectors such as information technology, helped by the arrival of foreign companies.
When one cycle ends successfully, another begins, bringing its own challenges and uncertainties. The A rating from S&P is not the end of the road. It is the beginning. We should not forget that the successes we celebrate today have come without solving our energy, environmental and traffic problems.
To achieve these results, we have pushed key indicators to levels that are putting enormous pressure on the local population, particularly young people. We have left the problem of inadequate pension provision largely unresolved, leaving private-sector retirees without the prospect of a decent pension.
And we have committed so much public money to fixed and inflexible spending that when international conditions eventually slow economic growth and reduce our surpluses, the consequences of years of inaction will become impossible to ignore.
