S&P upgrades outlook on Cyprus debt to positive
Accelerating economic growth and prospects for a continued budget surplus prompted a key credit rating agency on Friday to upgrade the outlook for Cyprus to positive. Standard and Poor’s said the improved outlook indicates it could raise the grade on the country’s debt in the next 12 months if the positive developments “continue unabated.”
S&P currently rates Cyprus’s foreign debt BB+. The agency increased the forecast for economic growth to an average of three percent a year through 2020, up from 2.5 percent previously, and said it expects the budget “to remain in surplus over the forecast horizon.”
Those improvements will help banks deal with bad loans, S&P said in a statement. Eurozone member Cyprus plunged into a financial crisis in 2013, leaving a number of its top banks insolvent and forcing it to negotiate a painful bailout with international creditors.
It has since recovered, after the government imposed harsh austerity measures in exchange for a loan of 10 billion euros (then $13 billion) from the IMF and European Union.
Portugal’s improved economic performance and falling budget deficit prompted a key credit rating agency to raise the grade on the country’s debt on Friday. Standard and Poor’s said it was raising the debt rating on the country’s foreign debt one notch to BBB- on the receding risks.
“The upgrade reflects our improved forecast for Portugal’s GDP growth during 2017-2020, as well as the solid progress it has made in reducing its budget deficit,” S&P said in a statement.
The agency forecast the Portuguese economy will grow by more than two percent on average through 2020, up from the previous forecast of 1.5 percent. Meanwhile, Lisbon is expected to meet its budget deficit target of 1.5 percent of GDP this year “putting the government debt to GDP ratio on a more firmly declining path,” the statement said.
Portugal is posting its fourth consecutive year of growth since 2010, and the country in June made an early payment to the International Monetary Fund on the 29.6 billion euro loan it was granted in 2011 as part of a bailout plan. The IMF projects the country’s economy will expand by 2.5 percent this year and two percent in 2018.—AP