Credit rating agency DBRS Morningstar has acknowledged the Cyprus government’s announcement that it aims to achieve budget surpluses in the coming years, despite various risks. The country’s finance minister cited strong economic performance and prudent fiscal policies as key factors contributing to this goal.
The announcement was made as part of the Cyprus government’s plan to strengthen its fiscal position and reduce debt levels. The government has set a target of achieving a budget surplus of 2% of GDP by 2025, which would help to reduce the country’s debt-to-GDP ratio, which currently stands at around 100%.
DBRS Morningstar has acknowledged the government’s plan and stated that it is a positive step towards improving Cyprus’s fiscal position. The agency also noted that the country’s strong economic performance and prudent fiscal policies make it well-positioned to achieve this goal.
Cyprus’s economy has been growing steadily in recent years, with GDP expanding by 4.5% in 2019 and 3.5% in 2020, despite the impact of the Covid-19 pandemic. The country’s tourism, shipping, and financial services industries have been key drivers of this growth, and the government has been pursuing a number of economic and structural reforms to promote entrepreneurship, attract foreign investment, and improve the business environment.
The finance minister also highlighted that the government has been implementing measures to contain spending and increase revenue, which will help to support the goal of achieving budget surpluses. These measures include reducing public sector staff and increasing tax compliance.
Despite the positive outlook, DBRS Morningstar noted that there are still risks to Cyprus’s fiscal position, including high levels of public debt, external risks from the global economic environment, and domestic political and social risks. The agency also noted that the country’s banking sector remains vulnerable, despite recent reforms.
Overall, the Cyprus government’s plan to achieve budget surpluses is a positive step towards strengthening the country’s fiscal position and reducing debt levels. With strong economic performance and prudent fiscal policies, Cyprus is well-positioned to achieve this goal. However, risks remain, and continued reforms and measures will be necessary to mitigate these risks and ensure long-term fiscal sustainability.