Scope Ratings has highlighted Cyprus’s robust fiscal performance and sustained economic growth, while cautioning over lingering structural vulnerabilities and external risks, according to its report published today. 

The European rating agency pointed to Cyprus’s strong fiscal track record, noting repeated budget surpluses and a sharp decline in public debt, which is expected to continue on a downward path. This, combined with steady GDP growth and declining unemployment, has strengthened the island’s credit profile.

At the same time, Scope warned that Cyprus remains exposed to significant challenges. High levels of private sector debt, an economy heavily reliant on tourism and services, and vulnerabilities in the real estate sector pose medium- to long-term risks. The country’s small size and exposure to external shocks, including energy price volatility and geopolitical tensions, also weigh on the outlook.

The report emphasized that while fiscal buffers provide the government with resilience, long-term reforms remain necessary to boost productivity, address demographic pressures, and diversify the economy.