Fitch has upgraded its rating on Cyprus’ to ‘BB+’ from ‘BB’ because of the country’s strong cyclical economic recovery and prudent fiscal policy.
Fitch’s rating on Cyprus is now just one step below investment grade and the outlook is positive, although the agency said weakness in the banking sector is still a risk to public finances.
Fitch said that future developments that may, individually or collectively, lead to a further upgrade include the reduction of non-performing loans (NPLs) in the banking sector, which will reduce contingent liabilities.
The agency said there are not currently any developments anticipated that would lead to a downgrade.
Fitch said Cyprus’ external financing flexibility has improved since its exit from the macroeconomic adjustment programme in March 2016. (Cyprus Mail)