S&P Upgrades Cyprus' Economic Outlook to Positive Amid Strong Fiscal Performance

S&P Global Ratings Elevates Cyprus' Outlook

S&P Global Ratings announced on November 14, 2025, its decision to revise Cyprus' economic outlook to 'Positive' from 'Stable'. The agency simultaneously affirmed the country's long-term and short-term local and foreign currency credit ratings at 'A-/A-2'. This move by S&P underscores the faster-than-anticipated improvement in Cyprus' external debt ratios and its resilient economic trajectory.

The upgrade reflects expectations that Cyprus' external position will outperform current forecasts over the next two years, driven by a quicker decline in external leverage. S&P indicated that a further upgrade could be possible if the external debt position continues to strengthen at an accelerated pace.

Key Drivers Behind the Positive Assessment

S&P cited several factors contributing to its optimistic assessment of the Cypriot economy:

• Fiscal Overperformance: Cyprus recorded a significant budget surplus of 4.1% of GDP in 2024, marking its strongest performance on record. Preliminary data for the first nine months of 2025 also indicated a robust fiscal surplus. This was fueled by strong economic expansion and a robust labor market, which boosted corporate and personal tax revenues, as well as social security contributions.
• Debt Reduction: The government's ability to generate surpluses and control expenditure has led to a substantial reduction in public debt. S&P projects fiscal surpluses to average 3.3% of GDP between 2025 and 2028, anticipating a reduction in net government debt to approximately 35% of GDP by 2028, down from 56% in 2024 and nearly 90% in 2019.
• Resilient Economic Growth: Cyprus' strong economic momentum continued into early 2025. S&P forecasts real GDP growth of 3.3% for the full year 2025, driven by robust services exports, domestic consumption, and significant public and private investments, including those supported by Next Generation EU funds.
• Strengthening Banking Sector: The banking sector has shown continued improvement, with non-performing loan (NPL) ratios declining and banks remaining profitable, liquid, and well-capitalized.

Broader Recognition from Other Agencies

The positive outlook from S&P follows similar acknowledgments from other major credit rating agencies:

• Moody's Ratings: On November 22, 2024, Moody's upgraded Cyprus' long-term issuer and senior unsecured ratings to A3 from Baa2, assigning a 'Stable' outlook. This upgrade reflected a 'material improvement in fiscal and debt metrics' and a robust medium-term economic outlook. Earlier, on May 27, 2024, Moody's had upgraded the outlook to 'Positive' from 'Stable'.
• Fitch Ratings: Fitch upgraded Cyprus' Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'A-' from 'BBB+' on December 9, 2024. The agency cited significant progress in debt reduction, strong fiscal performance, and robust economic growth. Fitch later affirmed its 'A-' rating with a 'Stable' outlook on May 24, 2025.
• DBRS Morningstar: DBRS Morningstar upgraded Cyprus to a full 'A' in September 2025, shifting its outlook back to 'Stable'.

Official Statements and Future Prospects

Cypriot officials have welcomed the upgrades. President Nikos Christodoulides hailed S&P's outlook upgrade as a 'milestone' that signifies the nation's entry into a phase of 'enhanced economic momentum', reflecting 'consistent and responsible fiscal decisions'. He emphasized Cyprus' emergence as a 'reliable center for quality investments', leading to reduced borrowing costs, vibrant entrepreneurship, and well-paid job opportunities.

Finance Minister Makis Keravnos echoed this sentiment, attributing the improved outlook to 'fiscal discipline', the 'resilience of the Cypriot economy', and the 'continued reduction of public debt'. These collective upgrades reinforce Cyprus' position as a stable and attractive hub for investment within the Eurozone, with strong economic growth projected to continue in the coming years.