Morningstar DBRS changes Cyprus rating outlook to positive
In Cyprus, Morningstar DBRS changed the outlook on the Republic of Cyprus’ long-term credit rating from “stable” to “positive,” while affirming the rating at “A.” The country’s short-term ratings at R-1 (low) were also affirmed, and their outlook was changed to positive, Cyprus Mail reports.
Finance Minister Makis Keravnos welcomed the agency’s decision, calling it confirmation of the resilience of the Cypriot economy amid instability and risks to the global economy. According to him, Morningstar DBRS’ assessment also demonstrates the effect of the government’s prudent and proactive economic policy and the gradual reduction of public debt.
Outlook for debt and growth
Morningstar DBRS expects Cyprus to maintain strong fiscal positions and continue reducing its debt burden. The agency forecasts that public debt will decline from 49.9% of GDP in 2026 to less than 40% of GDP in 2029.
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Economic growth, according to the agency’s assessment, will be supported by private consumption, investment and significant exports of services, particularly in the tourism and non-tourism sectors. After GDP grew by 3.8% in 2025, the Central Bank of Cyprus forecasts real growth of around 3% annually throughout the forecast period.
Fiscal indicators and risks
In 2025, Cyprus’ budget surplus amounted to 3.4% of GDP, compared with 4.1% of GDP a year earlier. Morningstar DBRS noted that this figure was the highest in the European Union. Public debt declined from 96.5% of GDP in 2021 to 55% of GDP in 2025; it is expected to be below 50% of GDP by the end of 2026.
At the same time, the agency pointed to possible risks to the economy, including an external economic shock and potential liabilities related to the large domestic banking sector, whose total assets exceed 200% of GDP. Cyprus’ credit rating could be upgraded if public debt declines as expected and economic resilience and labor productivity improve.
