S&P upgrades Cyprus’ long-term credit rating to A with positive outlook

Nicosia, Cyprus. S&P Global Ratings has upgraded Cyprus’ long-term credit rating to A and maintained a positive outlook for the country’s sovereign debt.

The upgrade was welcomed by President Nikos Christodoulides, Finance Minister Makis Keravnos and Bank of Cyprus chief executive Panicos Nicolaou, who said it reflected confidence in the Cypriot economy’s resilience and prospects.

Fiscal outlook

S&P said Cyprus was expected to continue generating strong fiscal revenues, allowing the government to further reduce its debt burden in the coming years.

The agency forecast fiscal surpluses averaging slightly below 3 per cent of gross domestic product through 2029. It expects net public debt to fall to slightly above 30 per cent of GDP over the same period.

Public debt is expected to continue declining both as a share of GDP and in absolute terms, supported by economic growth, tax revenues and spending controls.

Economic growth and investment

S&P highlighted significant growth in services exports, particularly in information technology and intellectual property, which it said had strengthened Cyprus’ export base.

The agency said strong foreign direct investment inflows had helped moderate private-sector external debt, while fiscal surpluses had supported a substantial reduction in public-sector debt.

Economic growth is forecast to average just below 3 per cent through 2029, supported by resilient domestic demand, a strong labour market, rising real incomes and significant public and private investment, including funding from the Next Generation EU programme.

External risks

S&P said the Cypriot economy had remained resilient despite regional conflicts involving Russia, Ukraine and developments in the Middle East.

It forecast higher oil prices in 2026 and 2027 but said the impact should remain manageable for Cyprus, despite the country’s heavy dependence on imported oil for electricity generation.