According to the latest report by the rating company Fitch of the 1 February 2002, it has assigned an 'A+' Long-term foreign currency rating to Cyprus and a Short-term foreign currency rating of 'F1'. Fitch also assigned a Long-term local currency rating of 'AA'. The Rating Outlook is Stable. The report includes the following:
The report highlights the fact that Cyprus benefits from a dynamic market economy that supports full employment and steady growth in per capita income to 86% of the EU average, exceeding that of Greece (rated 'A' by Fitch), Portugal ('AA') and Spain ('AA+') and double the average of all the EU Accession countries of Central and Eastern Europe. Moreover, relative to other EU Accession countries, Cyprus benefits from long-standing institutional and legal infrastructure necessary for the effective enforcement of private property rights, essential to the functioning of a market economy, as well as a track record of low inflation and exchange rate stability.
Fitch note that a crucial development in recent years was the decision by the European Union that resolution of the so-called 'Cyprus problem' - the continuing occupation of the north by the self-declared Turkish Republic of Northern Cyprus, which is not recognised by the international community - is not a precondition for Cyprus joining the European Union in the next wave of enlargement. Consequently Fitch anticipates that Cyprus will be a full member of the EU in 2004/2005. Resolution of the 'Cyprus problem' would be a positive credit development, removing a source of potential risk and enhancing medium-term economic prospects, though it would impose short-term fiscal and external costs that would require careful management.
Further, the report highlights that Cyprus’ EU Accession process has motivated the authorities to speed the pace of financial liberalisation, strengthen the macroeconomic policy framework and pursue a medium-term programme of fiscal consolidation. The government's budget deficit has been cut from 5 1/2% of GDP in 1998 to under 3% of GDP last year. After rising in the latter half of the last decade, public debt stabilised at 60% of GDP. Proposals currently before parliament will shift the burden of taxation from direct to indirect taxes, reducing the cyclical sensitivity of government revenues and will be supportive of further fiscal consolidation.
The report highlights the fact that Cyprus benefits from a dynamic market economy that supports full employment and steady growth in per capita income to 86% of the EU average, exceeding that of Greece (rated 'A' by Fitch), Portugal ('AA') and Spain ('AA+') and double the average of all the EU Accession countries of Central and Eastern Europe. Moreover, relative to other EU Accession countries, Cyprus benefits from long-standing institutional and legal infrastructure necessary for the effective enforcement of private property rights, essential to the functioning of a market economy, as well as a track record of low inflation and exchange rate stability.
Fitch note that a crucial development in recent years was the decision by the European Union that resolution of the so-called 'Cyprus problem' - the continuing occupation of the north by the self-declared Turkish Republic of Northern Cyprus, which is not recognised by the international community - is not a precondition for Cyprus joining the European Union in the next wave of enlargement. Consequently Fitch anticipates that Cyprus will be a full member of the EU in 2004/2005. Resolution of the 'Cyprus problem' would be a positive credit development, removing a source of potential risk and enhancing medium-term economic prospects, though it would impose short-term fiscal and external costs that would require careful management.
Further, the report highlights that Cyprus’ EU Accession process has motivated the authorities to speed the pace of financial liberalisation, strengthen the macroeconomic policy framework and pursue a medium-term programme of fiscal consolidation. The government's budget deficit has been cut from 5 1/2% of GDP in 1998 to under 3% of GDP last year. After rising in the latter half of the last decade, public debt stabilised at 60% of GDP. Proposals currently before parliament will shift the burden of taxation from direct to indirect taxes, reducing the cyclical sensitivity of government revenues and will be supportive of further fiscal consolidation.
3287.99
1275.09
