Moody’s has restored Cyprus to investment grade after 13 years, upgrading the country’s credit rating to A3 from Baa2, with a stable outlook. This milestone reflects Cyprus's substantial progress in reducing its public debt and improving its fiscal health.

According to Moody’s, Cyprus has significantly lowered its public debt ratio from its 2020 peak and is now ranked among the countries with the most substantial debt reductions globally.

The credit rating agency announced on Friday a double upgrade of Cyprus’s sovereign credit rating, marking the country’s first return to the A rating category since July 2011.

Moody’s stated that the A3 rating upgrade “reflects a significant improvement in fiscal metrics and debt levels, which we expect to be sustained.” It added that Cyprus has achieved a notable reduction in its public debt ratio and remains a global leader in debt reduction.

“We expect the debt ratio to continue declining over the medium term, with debt affordability metrics remaining favorable,” the agency noted. Additionally, Cyprus’s medium-term economic prospects are stable.

Moody’s emphasized that the stable outlook balances risks related to economic, fiscal, and debt sustainability.

The agency also highlighted that risks in the banking sector, a key factor in its risk assessment, are expected to remain contained. This is attributed to the significant strengthening of Cypriot banks’ credit profiles in recent years and the continued deleveraging of the sector.