Rating agency Standard & Poor’s has upgraded its assessment of Cyprus to BB-, citing removal of capital controls and strong budgetary performance.
“In April 2015, Cyprus further strengthened its financial stability by removing capital controls without disruption in deposit flows. While we continue to view the banking sector’s asset quality as a key concern, the country’s economic and budgetary performance exceeds our expectations.
The agency, on Friday, also gave Cyprus a positive outlook, meaning it could raise its rating again in the next year if the economy continues to perform well and banks’ assets continue to improve.
Cyprus imposed controls on money flows in March 2013 when a 10 billion euro ($11.15 billion) rescue deal forced a seizure of uninsured deposits in the two largest banks.
S&P said Cyprus’ economy will grow 1.5 percent this year, but banks may need to take tougher action on their high number of bad loans, which amount to over half of all loans.
(Source: CNA, AP)