Moody’s upgrades Cyprus

Moody’s Investors Service upgraded the foreign and local currency government bond ratings of Cyprus to Aa3 from A1. The outlook on these ratings was changed to stable from positive. Following Cyprus’ entry in the Eurozone on 1 January 2008, the country ceilings for debt and bank deposits were withdrawn and replaced with the Eurozone’s regional Aaa ceilings, which have a stable outlook.

According to Moody’s, the adoption of the euro is a significant credit positive as it eliminates currency risk, thereby insulating the economy from external financial shocks.

In recent years, Cyprus has successfully implemented fiscal consolidation programmes narrowing the country’s fiscal deficit and reversing the previous upward trend in its public debt.