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- Ελληνικά
Credit Rating Agency Moody's yesterday revised the outlook for the Cypriot economy from stable to positive, while reaffirming its credit rating at two notches above investment grade, at "Baa2".
The House's decision to change the outlook to positive is based on the prospect of maintaining fiscal soundness and a downward path of public debt in the coming years. According to the House, such a scenario can be realised through the maintenance of prudent fiscal policy coupled with the prospect of strong economic growth rates. In addition, further confidence-building from the strengthening and deleveraging of the banking sector, which has helped to reduce the risks stemming from this sector, would further support growth and fiscal outcomes, strengthening the prospects for a rating upgrade.
The confirmation of the investment grade balances relatively high levels of prosperity and strong economic growth rates coupled with a strong institutional framework and effective policymaking Adverse demographic trends indicate that GHS spending may grow faster than the government's expectations, making it difficult to control the prospect of controlling the growth rate of such spending. In contrast, a reduction in public debt could help to strengthen the sustainability of public debt relative to Moody's expectations. Combined, these could lead to an improvement in Moody's assessment of Cyprus' fiscal soundness.
The Government will continue to support economic activity in a responsible manner in view of the challenges it faces due to geopolitical and energy sector developments, ensuring growth and employment while maintaining sound public finances.
(GG/NYAN)
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