Fitch raised credit rating of Cyprus to ‘ B+’, Outlook positive

MOSCOW, 24 Oct. International rating Agency Fitch upgraded the long term rating of Cyprus by two notches from “B-” to “B+” with positive Outlook, the message of the Agency.

Still experienced strong economic crisis Cyprus had the lowest credit rating among EU countries, except Greece. On Friday rating Agency Standard & Poors upgraded the credit ratings of Cyprus in foreign and local currency to ‘B+’ from ‘ B ‘ with a stable Outlook. S&P also affirmed the short-term ratings foreign and local currency with a stable Outlook.

In 2012, Cyprus was threatened banking crisis because of the involvement of Cypriot banks in the restructuring of the debt of Greece and the absence of financial reforms. As a result long-term rating of Cyprus by Fitch has been downgraded by three stages — to “B” from “BB”. S&P in 2013 downgraded the rating of Cyprus to CCC with a negative Outlook. Banking system of Cyprus at the time was under threat of collapse after the Parliament of Cyprus — despite the threat of default is rejected forced the cancellation of the deposits which was a condition of financial assistance of the European Union.

According to Fitch, in 2014, Cyprus has achieved a virtually balanced position in public spending, “compared with a deficit of 8.5% of GDP”, which the Agency predicted in June 2013. “Positive momentum is preserved in 2015, by the end of July 2015, the budget remained in a small surplus, now Fitch predicts for 2015 a deficit of 1% GDP growth at 0.2% and 1% in 2016 and 2017 respectively”, — stated in the message of Agency. It is noted that risks to the credit of the state remain.

Fitch also predicts that there will be “significant escalation between Russia and Ukraine, which could lead to significant external shocks to the Cypriot economy”. The Agency draws attention to the fact that Russians account for about 20% of the market of the Cyprus tourism and a large proportion of foreign deposits in Cypriot banks.