Cyprus has received a credit rating upgrade from international agency DBRS Morningstar, moving from “A (low)” to “A” with a stable outlook. Saturday’s upgrade reflects the country’s improving public finances, falling debt levels, and strong economic performance, according to the finance ministry.

The government said the move was based on a sharp reduction in public debt and expectations that this trend will continue.

General government debt fell from 96.5 per cent of GDP in December 2021 to 64.3 per cent in March 2025, supported by large budget surpluses and strong growth in domestic demand and service sector exports.

The ministry added that ongoing structural improvements, such as increased income tax revenues from company relocations to Cyprus, also contributed.

DBRS forecasts that government debt will continue to decline, with the general government deficit expected to produce a surplus of 3.5 per cent of GDP in 2025 and 3.7 per cent between 2026 and 2028.

By 2028, debt is projected to fall to 43.3 per cent of GDP. The agency cited a stable political environment, a resilient banking sector and prudent government policies as key supporting factors.

At the same time, the ministry noted that Cyprus’ small, service-based economy remains vulnerable to external shocks. Labour productivity is relatively low, and the country has a significant current account deficit, excluding special-purpose entities. Governance indicators have also weakened in recent years, although EU membership continues to provide institutional support.

The announcement coincided with President Christodoulides’ visit to Toronto, part of a strategy to strengthen Cyprus’ international image as a reliable and attractive investment destination.

According to government spokesperson Konstantinos Letymbiotis, the president met Fairfax founder and CEO Prem Watsa, a major international investor with interests in Cyprus. He also took part in roundtable discussions with top business leaders and attended an event co-hosted by PwC Canada and the French-Canadian Chamber of Commerce.

During his meetings, the president highlighted Cyprus’ strategic location, stable tax and investment framework, resilient economy, access to skilled labour, and strong growth prospects in key sectors.

The government said the timing of the credit upgrade and the president’s visit underscores a dual objective: boosting investor confidence and reinforcing Cyprus as a stable hub for regional partnerships with a dynamic economy that offers high-paying jobs.

Finance Minister Makis Keravnos said in a statement that the DBRS upgrade confirms the rational economic policies followed by Cyprus, based on fiscal discipline and sustainable growth practices.

He added that successive upgrades by international rating agencies demonstrate ongoing confidence in the government’s economic strategy.

“The upgrades create the necessary climate of trust and stability to attract foreign investment,” Keravnos said.

“They support growth, enhance competitiveness, and help create new jobs. The government will continue to apply sound fiscal policies to maintain economic security and provide social support to vulnerable groups and the middle class.”