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Cyprus received a major financial boost as credit rating agency Morningstar DBRS upgraded the country’s credit rating to A (low) from BBB (high), marking a key step in the country’s economic progress. The agency cited Cyprus’ strong fiscal performance, decreasing debt levels, and stable political environment as key reasons for the upgrade.
Key Takeaways from the Upgrade:
- Debt Levels Dropping Fast: Cyprus’ debt-to-GDP ratio fell from 96.5% in 2021 to 69.7% in 2024 and is expected to drop further to 56.7% by 2026, thanks to strong economic growth and budget surpluses.
- Growing Economy: Cyprus’ 3.4% GDP growth in 2024 outpaced the Eurozone’s 0.9% average, driven by strong domestic demand, rising wages, and a booming services sector.
- Stronger Banking Sector: Local banks have boosted capital reserves, improving financial stability and reducing economic risks.
- Political Stability: The country’s EU membership and sound fiscal policies continue to enhance investor confidence.
What’s Next for Cyprus?
The rating agency hinted at further upgrades if Cyprus maintains strong growth and continues reducing its debt. However, risks remain, including global trade tensions and potential fiscal pressures.
With its economy on a steady upward path, this credit rating boost reinforces Cyprus' position as a resilient and attractive destination for investment.
