Cyprus’ DBRS outlook turns into ‘Positive’
Morningstar DBRS announced last Friday it has affirmed the credit rating of the Republic of Cyprus at BBB (high) and raised its outlook from “Stable” to “Positive.”
The Canadian-based rating agency explained that the rating reflects the view that “public debt metrics are likely to continue to improve.”
“The general government debt-to-GDP ratio decreased from 99.3% in 2021 to 77.4% in 2023. Looking ahead, the European Commission forecasts general government debt to decline further to 65.4% of GDP in 2025 on the back of strong growth and fiscal surpluses. Growth is likely to continue to benefit from robust private consumption, rising service exports and strong construction investment,” it said.
It added that its rating is “supported by a stable political environment, the government’s sound fiscal and economic policies in recent years and a moderate interest burden. Furthermore, although governance indicators have weakened, Morningstar DBRS continues to view EU membership as an important anchor for institutional quality. On the other hand, the credit ratings of Cyprus remain constrained by the small size of its service-driven economy, rendering it vulnerable to external shocks.”
