International rating agency Fitch Ratings has recently affirmed the long-term credit rating of Cyprus to B+, with a positive outlook, but warned that banks still remain weak and pose some risk to the economy and public finances.
According to the information presented by “Cyprus Property News”, Fitch Ratings said that “Cyprus is undergoing a major financial sector, fiscal, and economic adjustment following the 2013 banking sector crisis and the ensuing EU/IMF bail-out program. The country’s early exit from the macroeconomic adjustment program in March 2016 reflects a track record of fiscal consolidation, progress in financial sector restructuring and economic recovery”.
The rating agency pointed out that economic recovery is underway, following three years of contraction resulting in a cumulative 11% loss of output until end of 2014 and projects GDP growth of around 2% per year for 2016-2017, supported by household consumption benefiting from a decline in unemployment and a pickup in tourism and investment. Moreover, major steps have been taken to restructure the banking sector. The gross general government debt is projected by Fitch to decline to below 100% by 2017.
Fitch Ratings sees progress with structural reforms, including selling the Limassol port and Casino. Nevertheless it mentioned that a number of bills are currently awaiting discussion in parliament following the May elections. Experts believe that “the improved economy and exit from the adjustment program could reduce the urgency for reforms”. Besides, it has been noted that the solution of the Cyprus problem “would benefit both sides of the island”.
Sources: www.goldnews.com.cy, www.news.cyprus-property-buyers.com.
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