**Nicosia, Cyprus** – In a significant endorsement of its economic recovery and robust fiscal management, Cyprus has seen its long-term credit rating upgraded to 'A' by the Berlin-based rating agency Scope. The announcement, made on Saturday, marks a pivotal moment for the island nation, reflecting a dramatic improvement in its financial standing since the economic turbulence of 2020.
The upgrade from 'A-' to 'A' underscores the substantial progress Cyprus has achieved in recalibrating its public finances. A key driver behind this positive assessment is the remarkable reduction in public debt, which has plummeted from a precarious 113.6% of the Gross Domestic Product (GDP) in 2020 to an estimated 55.4% by the close of 2023. This fiscal prudence has enabled the government to consistently register budget surpluses, achieving 3.3% last year and a projected 4.1% for 2024. Scope explicitly cited the "significant reduction of Cyprus’ public debt," "sustainable financial surpluses," and "improved banking sector resilience" as pivotal factors underpinning their decision.
Beyond the headline debt figures, the Cypriot economy has demonstrated impressive underlying strength. GDP maintained a healthy growth trajectory, reaching 3.5% last year, buoyed by robust private consumption, a tangible increase in real wages, and sustained investment. Concurrently, the nation's banking sector has undergone a significant transformation, with non-performing loans (NPLs) being systematically addressed. The NPL ratio, a critical indicator of financial health, stood at a manageable 4.2% as of October 2025, a far cry from earlier concerns. This improved resilience within the banking system, coupled with enhancements in capital adequacy and coverage ratios, has further bolstered investor confidence.
The agency also acknowledged the island's "strong fiscal performance and economic growth." This economic dynamism has been further amplified by an influx of corporate tax revenues, partly attributable to the relocation of technology companies to Cyprus, attracted by its favourable business environment and skilled workforce. Even in the face of unforeseen expenditures, such as those incurred due to significant wildfires in the Limassol district and contributions to a national solidarity fund, the government's fiscal discipline has ensured that budget surpluses were maintained.
The upward revision of Cyprus' creditworthiness carries considerable implications. A higher credit rating typically translates into lower borrowing costs for the government in international debt markets, easing the burden of financing public services and investments. It also serves as a powerful signal to international investors, indicating a more stable and attractive economic and financial environment for foreign direct investment. Furthermore, the government's strengthened fiscal position provides valuable headroom to navigate potential future economic pressures, including the escalating costs associated with climate adaptation, infrastructure development, defence needs, and the demographic challenge of an aging population.
While Scope revised the outlook to stable from positive, a move that acknowledges the inherent uncertainties of global economic shifts, the underlying assessment remains overwhelmingly positive. The agency anticipates that public debt will continue its downward trend, projected to fall below 40% of GDP by the end of the decade. Although certain tax system reforms introduce a degree of uncertainty regarding their medium-term fiscal impact, the prevailing expectation is that budget surpluses will persist through 2030, reinforcing the narrative of a resilient and progressively stronger Cypriot economy. The confirmation of short-term ratings at S-1 further solidifies the island's sound financial footing.