The rating agency Fitch announced yesterday Friday the upgrade of the rating of the Republic of Cyprus from BBB- with a stable outlook to BBB with a stable outlook.

A related announcement today by the Cyprus Ministry of Finance states that this decision according to Fitch is based on the following main factors in 2022:

a) The very good fiscal performance of the state and the larger expected surplus.

b) The ongoing process of reducing the public debt.

c) The resistance of the economy to external macroeconomic shocks.

d) Improving the quality of banks’ assets.

Fitch defines the following as the main factors that will affect the future course of the Republic’s rating:

a) The state of the banking sector.

b) The resistance of the economy to external shocks.

c) Public finance performance.

In general, Fitch has positively assessed not only the fiscal performance in the period 2021-2022 but also the continued resilience of the Cypriot economy to the various international crises that have occurred in recent years. The ongoing effort to reduce non-performing loans that continued during the pandemic, and the effort to strengthen the banking sector as well, has begun to bear fruit.

In summary, concludes the statement of the Ministry of Finance of Cyprus, Fitch’s statement contains many positive points for the Cypriot economy despite the problems created by the wider geopolitical conditions and recognizes its resilience and the ability of the Cypriot economy to cope with the challenges presented. The continued improvement of the state’s fiscal position and the continued consolidation of the banking sector are the two areas which are critical to securing further upgrades.