NICOSIA – Almost all the way back five years after getting a 10-billion euro ($12.29 billion) international bailout, Cyprus’ economy has recovered enough for the Fitch agency to lift its rating from BB to BB+, just a notch belong investment grade.
Citing what it called a prudent fiscal policy – which to investors means applause for bank confiscations that saw the raid of 47.5 percent of accounts holding more than 100,000 euros ($122,884) – Fitch’s said the outlook is now positive but noted there is still some weakness in the bank sector that’s a risk to public finances, the Cyprus Mail said.
President Nicos Anastasiades was easily re-elected this year despite reneging on promises not to allow the bank raids and his vow to hold the bank managers accountable for nearly toppling the economy with big holdings in devalued Greek bonds and bad loans to greek businesses.
“We forecast the government will continue recording fiscal surpluses of 1.1% of GDP in 2018 and 2019, after over-achieving is fiscal target in 2017 with an estimated surplus of 1.9% of GDP, compared with a ‘BB’ median fiscal deficit of 3.2%,” Fitch said.
Finance Minister Harris Georgiades said progress is being made but acknowledged more needs to be done. We still have difficulties that we must face. But our country’s progress is being recognized. And we can lift Cyprus even higher, as long as we continue the effort with confidence, consistency, and collective responsibility,” Georgiades tweeted.
Fitch’s projections did not take into account privatization plans nor hopes for potentially lucrative finds of oil and gas off the island although Turkish warships are trying to block foreign companies from looking where they have licenses for research.