Fitch Ratings has affirmed Cyprus’ Long-Term Foreign-Currency Issuer Default Rating at BBB- with a stable outlook, a Fitch press release made available on Saturday said.
Cypriot Finance Minister Constantinos Petrides said Cyprus’ affirmation was made possible despite strong economic challenges as a result of the impact of the coronavirus crisis, most notably on the all-important tourism and travel sectors, which provide 21% of the country’s gross domestic product.
Petrides added that this was made possible as a result of government measures, the resilience of some economic sectors and the small number of Covid-19 cases, which allowed minimal restrictive measures in the country.
Fitch said in its press release that “Cyprus had a strong track record of growth before the pandemic with average growth in the five years to 2019 of 4.4%, above the BBB median of 3.6%. Fitch maintains its assumption of 2% growth potential over the medium term, unchanged by the pandemic.”
The rating agency forecast a 6% GDP contraction in 2020 followed by a 4% rebound in 2021, and 2.7% growth in 2022. But it warned that the large banking sector remains a weakness, notably very high nonperforming loans ratios that are still weighing on capital and profitability.