RTTNews - Tuesday, Fitch Ratings affirmed Cyprus's long-term foreign currency Issuer Default Rating (IDR) at 'AA minus', with a stable outlook. The firm also affirmed the short-term foreign currency rating at 'F1+', the local currency IDR at 'AA minus' and the Country Ceiling at 'AAA'.
Euro area membership has brought many benefits, including the elimination of transfer and convertibility risk. Nonetheless, a large and growing current account deficit which reflects deteriorating international competitiveness and rising commodity prices, remains a cause for concern, Chris Pryce, Director in Fitch's Sovereign team said.
Fitch said the country's public finances broadly supported the credit ratings, however, the two-year period of fiscal surplus was likely to end in 2009. The firm forecast the balance to turn to a deficit this year, although the government expects the deficit to be relatively small, in line with a fall in the debt ratio this year.
Meanwhile, Fitch said Cyprus's economy grew by an average 4% per annum in the past decade, well above the 'AA' median. The firm said a slowdown could take place in the economy due to the global recession, but growth was still possible in the country in contrast to most other EU members.
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