S&P upgrades Cyprus’s sovereign rating to A — Cyprus Mail
International rating agency S&P Global Ratings has upgraded Cyprus’s long-term sovereign credit rating to A and maintained a positive outlook. Cyprus Mail reports that the country has returned to the A rating category for the first time since the 2011 crisis.
S&P expects Cyprus to continue generating significant budget revenues, enabling the government to reduce its debt burden. The agency forecasts an average budget surplus of slightly under 3% of GDP through 2029 and net public debt at just over 30% of GDP at the end of that period.
Economic forecasts
According to the agency’s assessment, Cyprus’s average economic growth through 2029 will be slightly below 3%. It is expected to be supported by domestic demand, a strong labour market, rising real incomes, as well as public and private investment, including funding from the Next Generation EU programme.
S&P also noted growth in services exports, primarily in information technology and intellectual property. In the agency’s assessment, inflows of foreign direct investment helped contain private-sector external debt, while budget surpluses contributed to a substantial reduction in public debt.
The agency forecasts that inflation will average 3.8% in 2026. It pointed to Cyprus’s dependence on imported oil for electricity generation, although it considers a possible rise in oil prices in 2026–2027 manageable for the country’s economy.
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Energy and banks
S&P described the completion of the liquefied natural gas terminal in Vasiliko as an important medium-term step towards reducing energy risks. At the same time, the agency noted that, due to repeated construction delays, the planned launch of the facility at the end of 2027 remains uncertain.
S&P also drew attention to the Great Sea Interconnector project, which is intended to connect the electricity grids of Cyprus, Greece and Israel. According to the agency, the project remains blocked because of disagreements with Turkey, despite EU funding having been secured for most of the project.
S&P also gave a positive assessment of the banking sector: the average level of non-performing loans fell to 1.6% in December 2025, below the European average. Domestic lending grew by 2.5% in 2025, for the first time after several years of decline.
President Nikos Christodoulides called S&P’s decision a strong vote of confidence in the resilience and prospects of the Cypriot economy. Finance Minister Makis Keravnos said that maintaining the positive outlook confirms expectations of further economic growth.
