Rating agency Morningstar DBRS confirmed the Cyprus' Long-Term Foreign and Local Currency Issuer Ratings at "A". At the same time, Morningstar DBRS confirmed Cyprus' Short-Term Foreign and Local Currency Issuer Ratings at R-1 (low). The trend on all ratings remains stable.
President of the Republic, Nikos Christodoulides, noted that the confirmation of Cyprus’ rating at A with a stable outlook by the rating agency constitutes yet another strong vote of confidence in the country’s economy. Minister of Finance, Makis Keravnos, said that the “full confidence” of international credit rating agencies in the credibility of the Cypriot economy, at a time of instability for the global economy, is particularly encouraging.
According to a press release by Morningstar DBRS, the Cypriot economy's growth momentum remained strong over the past year. Real GDP expanded by 3.8% in 2025 on the back of strong domestic demand and rising service exports.
However, the Agency notes that the recent increase in hostilities in the Middle East has raised uncertainty over Cyprus' short-term economic outlook given the island's geographical proximity to the region. This applies particularly to the tourism industry, which has been an important driver of growth in recent years.
Furthermore, potential high-for-longer global energy prices might weaken households' purchasing power and, as a result, private consumption. The scale of potential negative repercussion of the conflict on the Cypriot economy depends in large part of the duration and the intensity of the conflict, the agency notes.
Nevertheless, Morningstar DBRS takes the view that Cyprus has large fiscal buffers to weather potential negative repercussions of the conflict. Fiscal accounts registered recurring surpluses in recent years with the general government's annual budgetary surplus averaging 2.8% of GDP between 2022 and 2025. This favourable fiscal performance resulted not only from cyclical tailwinds which bolstered public revenues but also from structural improvement on the revenue side, according to DBRS. Moreover, the agency notes that general government debt has decreased markedly in recent years, amounting to a moderate 60.6% of GDP in September 2025.
Cyprus' credit ratings are supported by the government's strong fiscal performance in recent years, the strong financial condition of the banking sector, and a stable domestic political environment, DBRS notes.
Furthermore, although governance indicators are weaker than those of most EU peers, Morningstar DBRS views the country's EU membership as an important anchor for institutional quality.
On the other hand, the credit ratings of Cyprus continue to be constrained by the small size of its service-driven economy, which renders it vulnerable to external shocks, the economy's still comparatively low level of labour productivity and the economy's large current account deficit.
The confirmation of the Republic of Cyprus’s rating at grade A with a stable outlook by DBRS Morningstar constitutes yet another strong vote of confidence in the country’s economy, the President of the Republic, Nikos Christodoulides, stated in a post on X, highlighting its importance especially in the current circumstances “with the multifaceted challenges in our region.”
As he noted, in an international environment of uncertainty, Cyprus confirms its resilience and credibility, maintaining its fiscal stability and steady growth trajectory. “We continue with the same responsibility,” he added.
The Minister of Finance described the “full confidence” of international rating agencies in the credibility of the Cypriot economy as particularly encouraging, especially during a period of instability for the global economy, expressing his satisfaction over the confirmation of the Republic of Cyprus’s credit rating at investment grade ‘A’ and the maintenance of its outlook at “Stable” by DBRS Morningstar.
“I consider it particularly encouraging that, amid a period of instability for the global economy due to the intensification of hostilities in the Middle East, which has unfortunately increased uncertainty regarding Cyprus’s short-term economic prospects, given its geographical position, international rating agencies such as DBRS Morningstar, taking into account the latest developments in their report, continue to express their full confidence in the credibility of the Cypriot economy, based on the strong growth it has demonstrated in recent years,” he noted in a statement.
Keravnos considers it particularly significant that the agency bases its very positive conclusions on the fact that the Republic of Cyprus possesses substantial fiscal reserves which will allow it to address potential negative impacts from the conflict in the wider Middle East region, thus confirming the confidence shown by international agencies in the prudent and preventive economic policy pursued by the Government.
“As Minister of Finance, I wish to assure that, in light of the challenges Cyprus is called upon to face due to developments in the international economic and political environment, the government will continue to support the economy in a responsible and flexible manner, both with regard to growth and employment as well as public finances, promoting the appropriate economic plans that will allow the maximum possible utilization of all available opportunities for the continued growth of the economy while simultaneously reducing public debt, aiming to successfully overcome the challenges created by the extremely serious destabilizing developments in the wider geographical region of Cyprus,” he stressed.
Meanwhile, in a statement, the Ministry of Finance points out that the confirmation of the Republic’s rating amid extremely serious destabilizing events in its nearby geographical region highlights the resilient foundations of the economy and the credibility that the Republic has built in addressing previous crises.
CNA/MCH/EPH/2026
ENDS, CYPRUS NEWS AGENCY
