Nicosia, Cyprus – The recent upgrade of Cyprus’ credit rating by Moody’s from Baa2 to A3 signifies an opportunity for quality foreign investments that could lead to job creation, according to the president’s remarks on Saturday.

President Nikos Christodoulides described the rating upgrade as a testament to his administration’s commitment to enhancing Cyprus’ status as a reliable investment hub. He emphasized the importance of prudent fiscal management, stability within the banking sector, and ongoing financial reforms in achieving this recognition.

Finance Minister Makis Keravnos noted that this upgrade represents a significant milestone, marking the first time since 2011 that Moody’s has placed Cyprus back into the upper medium investment grade category. That previous year was marked by a severe financial crisis that pushed the nation toward bankruptcy, ultimately leading to a bailout by the European Union and the International Monetary Fund two years later.

Moody’s rationale for elevating Cyprus’ ratings, along with its stable outlook, is based on the nation’s “prudent fiscal policy.” This policy, which includes spending reductions paired with strong growth in public revenues, has resulted in fiscal surpluses over the past two years.

The agency forecasts that smaller fiscal surpluses will persist through 2028 and highlights a significant reduction in public debt, characterized as one of the most substantial decreases globally. Public debt fell from 113.6% of GDP in 2020 to 73% in 2023. Moody’s anticipates that debt levels will continue to decline, projecting a drop to 50% by 2027. The economy is also expected to grow at an average rate of 3.2% from 2024 to 2028, driven by ongoing expansion in key sectors such as information technology, finance, and insurance.

There is a noticeable trend of companies establishing headquarters in Cyprus, especially those from Ukraine, Israel, and the Middle East. Sectors such as energy, education, construction, healthcare, and tourism are expected to receive a boost from foreign investments, contributing positively to economic growth in the medium term.

However, Moody’s has noted potential risks that could hinder progress, including the possible cancellation of large investment projects, mounting public sector wage expenditures, and rising healthcare costs.