The German ratings agency, Scope, has concluded its periodic review of the Cypriot economy. Notably, it did not issue a new credit rating, indicating that there were no significant changes impacting the Republic of Cyprus's creditworthiness.

Scope had previously marked May 10 as one of the potential dates for a ratings review this year. The agency upgraded Cyprus's credit rating to BBB+ with a stable outlook last November. According to Scope, this long-term rating of BBB+ is supported by solid economic fundamentals and strong growth potential. Cyprus is among the top performers in the eurozone, with a robust fiscal trajectory, a commitment to structural reforms, and ongoing improvements in the financial sector.

For this year, Scope projects that the growth rate will accelerate to 2.8% from 2.5% in 2023, and stabilize at 3% in 2025, aligning with the country’s potential GDP. Scope anticipates that fiscal performance will remain robust, with primary surpluses (excluding debt service expenses) averaging over 3% during 2024-2029, among the highest in the EU. Furthermore, it is expected that public debt will continue its steady decline, falling from 77.3% of GDP last year to below 50% by 2029—a reduction of more than 40 percentage points over a decade.

However, Scope also highlights challenges associated with Cyprus being a small, open economy reliant on external factors. Persistent yet improved vulnerabilities in the banking sector are evident from the still high levels of non-performing loans and sensitivity to shocks due to significant macroeconomic imbalances, reflected in high levels of private and public debt in combination with the external position.

The next scheduled date for a potential ratings review is October 25.