S&P upgrades Cyprus’s credit rating to A/A-1 with a positive outlook

International rating agency S&P Global Ratings has upgraded Cyprus’s long-term and short-term foreign- and local-currency credit ratings from A-/A-2 to A/A-1. The outlook on the long-term rating is “positive”.

The agency attributed the decision to sustained economic growth, stable tax revenues and spending controls, which have made it possible to reduce public debt both as a percentage of GDP and in absolute terms. It also highlighted growth in exports of information technology and intellectual property services, as well as inflows of foreign direct investment.

According to S&P’s forecast, Cyprus’s economy will grow by around 3% annually through 2029, inflation will reach 3.8% in 2026, and the budget will post a surplus of just under 3% of GDP. Net public debt is expected to fall to slightly above 30% of GDP by 2029. The agency estimates the current account deficit at around 7% in 2027–2029 and considers it manageable.

In the banking sector, the share of non-performing loans fell to 1.6% by December 2025, while domestic lending grew by 2.5% in 2025 after several years of decline. The agency identified the island’s dependence on energy imports, high energy prices by EU standards and the delay in commissioning the liquefied natural gas terminal beyond the planned 2027 deadline among the risks.

“Cyprus is moving one notch higher within the investment-grade category, further strengthening its standing in international markets,” Finance Minister Makis Keravnos said. According to him, the upgrade amid instability and ongoing geopolitical conflicts is particularly significant for the prospects of the Cypriot economy, while the government will continue its policy of surplus budgets and public debt reduction.

A positive outlook means that, if the agency’s projections are confirmed, Cyprus’s rating could be upgraded again within the next 12 months.