GREECE
CYPRUS
Macro Political:
• Fitch affirmed Cyprus’s credit rating at A-, with a stable outlook. The rating reflects income per capita levels that exceed the A-rated median, as well as strong policy credibility supported by Cyprus’s membership in the European Union and the eurozone. Furthermore, the agency highlighted strong fiscal outturns, with the headline fiscal surplus reaching 4.3% of GDP in 2024 and the primary surplus at 5.6%. Budget surpluses are projected to decline to 3.4% in 2025 and 3.0% in 2026. Meanwhile, the debt to GDP ratio fell to 65.3% at the end of 2024 and is expected to continue declining to 52.6% in 2026. Finally, the agency projects GDP growth to average 3.0% in 2025–2026, following an expansion of 3.4% in 2024. These strengths are balanced by weaker governance indicators compared to peer countries, vulnerabilities in external finances, and ongoing regional political tensions related to the division of the island.
Source: Fitch
• Moody’s announced the completion of a periodic review of Cyprus’s ratings (this publication was not a credit rating action). In its commentary, Moody’s stated that the A3 rating reflects Cyprus’s high wealth levels and strong economic growth, which is expected to remain robust over the medium term. However, the agency also highlighted several credit challenges, including the small size of the economy, ongoing spending pressures related to the public sector wage bill, and the financial impact of an aging population—factors that pose continued risks to the long-term trajectory of public finances. Additionally, while risks in the banking sector have been declining due to structural improvements, this sector remains a key source of potential event risk.
Source: Moody’s
