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S&P affirms credit ratings at BB-/B

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26-06-2016

S&P affirms credit ratings at BB-/B

Standard and Poor’s (S&P) rating agency affirmed Cyprus’ long and short-term sovereign credit ratings at ‘BB-/B’, with a positive outlook, expecting the economy to grow at more than 2% over 2016-2019. S&P said this also strengthened its budgetary position and reduced government debt. “Last year’s budgetary outcome includes several deficit- increasing one-off items and as a result of this, as well as solid economic growth more than offsetting the removal of public wages and pension freezes, we expect Cyprus’ budgetary position will improve and post surpluses over the forecast period,” S&P said. Moreover, the rating agency said that ahead of parliamentary elections in May, it did not expect the government to continue with discretionary deficit-reducing measures, but that the government’s budgetary position will benefit from a gradual reduction in unemployment benefits and an increase in cyclical revenue items against the background of continuous economic recovery. S&P projected that net general government debt will decline below 80% of GDP by 2019 and that general government interest payments will average about 6.3% of general government revenues during 2016-2019. Meanwhile, Moody’s Investors Service said that the sovereign ratings of euro area members will likely remain stable in 2016 and 2017, citing weakening fiscal consolidation, a slowdown in reforms, and political uncertainty. Cyprus was among the euro zone sovereigns carrying a stable outlook, with only Ireland carrying a positive outlook, and Austria and Finland carrying a negative outlook. It added that it expects that the European single currency bloc’s economy to grow this year by around 1.5%.
 

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