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Cypriot Investment Scheme
Repossession Property Yield Properties

Latest news

  • 3 October 2018 Newzoe Developers in cooperation with Palourtis Estates at Cyprus- Lebanon Business conference " Invest in Cyprus"

    read more

  • 26 September 2018 Citizenship by Investment Property Fair in Cairo, Egypt

    read more

  • 20 September 2018 Newzoe Developers in cooperation with Palourtis Estates will be present at this year's Invest in Cyprus Exhibition.

    read more

  • 17 September 2018 Standard and Poor raises Cyprus credit rating to BBB

    Cyprus got its investment credit worthiness back on Friday as Standard &... read more

  • 12 September 2018 Larnaca to get its first Mall

    Larnaca is set to see the construction of its first Mall within the next 18... read more

Upgrading and positive prospects for Cyprus

Moody's: Upgrading and positive prospects for Cyprus

   

By one step, in Ba3, B1 has upgraded Moody's Investors Service rating agency on Friday night to assess the long-term credit rating of Cyprus.

The international firm kept the prospects of the Cypriot economy on a positive horizon, which means that it will proceed to a new credit rating upgrade in the next Cyprus evaluation next November. Now, Cyprus needs three upgrades from the US house to enter investment grade. 
 
Moreover, the firm confirmed in NP the short-term evaluation of Cyprus.

According to the US House, the main reasons for the upgrading of Cyprus are the improvement in the resilience of the Cypriot economy over the last two years, which seems to continue in the medium term as well as the steady overstatement of public finances and the continuation of the favorable fiscal outlook For Cyprus. 

The decision to maintain positive prospects in Cyprus reflects the firm's view that it is likely to maintain the improvement in the resilience of the Cypriot economy and the continued outperformance of public finances by reducing the debt to GDP ratio and reducing non-performing loans Banks hold their portfolios.

Nicosia: Another step in restoring confidence

Asked by CNA to comment on the upgrading of Moody's, government spokesman Nikos Christodoulides said that the upgrading of Cyprus from the house Moody`s «is another step restoration of confidence in our economy and another confirmation that we are now A road that creates a positive outlook. " 

"We continue with the same seriousness," he underlined.

Constant improvement in the resilience of the economy

In addition, the agency upgraded to 'A3' from 'Baa1' upper assessment (country ceilings) that can receive long Cypriot bonds and deposits in foreign and domestic currency, to reflect the continuous improvement of the economy's resilience And over-performance of public finances.

Moody's maintain a six-tiered difference between the current rating and the highest rating that Cypriot bonds and deposits can take.

According to the House, the positive outlook reflects its view that it is possible to maintain the improvement in the resilience of the Cypriot economy and the strengthening of public finances.

It notes that the very high level of public and private debt and the fragile state of the banking system, which remains very large in relation to the size of the economy, restrict Cyprus's assessment to the lowest level of the Ba rating (this category Has six steps).


However, the International House says that the political commitment to fiscal reform in recent years, the growing health of the economy and the measures taken to encourage larger banks to restructure and deal with problematic loans will lead, if they continue, to a reduction Of this restriction and notes that the next 12 to 18 months will give an idea of ​​whether this will happen.

What can lead to a new upgrade

According to Moody's, evaluation will change if it comes to the conclusion that a combination of government policy and optimism among investors and consumers is likely to lead, over time, to a steady and sharp decline in the debt ratio The GDP of Cyprus and non-performing loans.

Positive will also be the expectation that growth will remain at current levels in the coming years.

What can lead to degradation

According to the House, a deterioration of the Cypriot economy can be achieved if it comes to the conclusion that the government's commitment to restoring macroeconomic stability has weakened, particularly in the context of a lower growth environment, and evidence that the banking sector needs further recapitalization.

Regarding the resilience of the Cypriot economy, the US expects that growth will be sustained in the medium term, mainly due to private consumption supported by favorable developments in the tourism and labor markets.

Tourism industry

It states that the tourism industry, which represents about 13.2% of gross value added, has still reached a record high in 2016, reaching almost 3.2 million arrivals, from about 2.7 million in 2015, with about 50% Of arrivals from Russia and Israel.

He adds that revenue from tourism has also reached new levels of 2.4 billion euros in 2016, from 2.1 billion in 2015.

Speaking that tourist activity started dynamically in 2017, the company expects that tourism will remain one of the main factors in the development of the Cypriot economy.

"While the sector has benefited from continued geopolitical tensions in competitive destinations such as North Africa and Turkey, the tourism industry retains many comparative advantages, including significant geographical diversification in arrivals of tourists, which provide stocks against negative external macroeconomic shocks to other parties .

Labor market

The International House emphasizes that improving the economic outlook is also reflected in the labor market, which has shown flexibility in adjusting wages during the recession, which has helped to accelerate employment recovery and strengthen external competitiveness .

Although unemployment remained elevated to 11% as of May 2017, it had fallen since its peak in January 2015, 16.8%, according to Eurostat seasonally adjusted data, states and notes that the employment rate has increased 63.3% in the first quarter of 2017, one of the highest since 2012, with jobs being strengthened in the housing, catering and wholesale and retail sectors.

Investments

The company expects that investment in the wider economy will gradually increase, despite restrictions on domestic credit expansion due to the large number of non-performing loans in the banking system and high corporate debt.

It believes that investment will be supported by access to the European Structural and Investment Funds and stresses that investment will grow with growth-enhancing reforms aimed at improving the competitiveness of the economy in order to attract foreign private investment.

The government also plans to promote large enough investment projects that are expected to attract significant foreign direct investment, he notes.

With regard to future developments, Moody's expect a slowdown in private consumption and thus in real GDP growth, to 2.7% in 2017 and 2.5% in 2018, as a result of the increase in household loan repayments, Oil prices and rising inflation.

However, it underlines that private consumption and investment will remain the main drivers of growth rather than a reduction in the further decline in the unemployment rate.

Public finance

The US House said Cyprus continued to exceed its fiscal targets, noting that the primary surplus rose to 3.0% of GDP in 2016 and the budget surplus stood at 0.4% of GDP, resulting in a structural fiscal adjustment of 5 , 2 percentage points of GDP between 2012 and 2016.

As for the future, the firm says the government's medium-term budgetary framework 2017-2019 adopts a neutral fiscal policy.

While the budget for 2017 targets a slightly reduced surplus of 0.2% of GDP, medium-term projections bring the surplus again to increase to 0.4% of GDP in 2018 and remain at that level in 2019, he adds.

The Cypriot Authorities estimate that the primary balance remains in surplus in the medium term, at 2.9% in 2018 and 3.0% in 2019.

Moody`s estimates a deficit of just 0.4% of GDP this year and a primary surplus of about 2.1% of GDP in 2018, which is lower than the Cypriot government forecast, but still expects further debt reduction.

Government debt, although high, according to the firm, is expected to fall from 108 percent of GDP in 2016 to around 95 percent of GDP by 2020.

In addition, the International House says debt interest absorbed only 6.6% of general government revenues in 2016, up from a peak of 9.2% in 2013.

"This can be further reduced over the next two years. The improvement reflects both the favorable environment of interest rates and the very large share of creditors in the official sector in total Cypriot debt (63% in the third quarter of 2016), "he said.

 

http://www.philenews.com/oikonomia/kypros/article/419190/moody-s-anabathmisi-kai-thetikes-prooptikes-ga-tin-kypro