NICOSIA, April 21 (Xinhua) -- Fitch agency has upgraded Cyprus's borrowing rating from last October's BB to BB+, just one notch below investment grade, Finance Minister Harris Georgiades said in a statement on Saturday.
Expressing his satisfaction for the upgrade, Georgiades tweeted that despite difficulties which have to be addressed, most notably non-performing loans, Cyprus will shed off shackles to the economy which are the residues of the 2013 crisis.
"The progress of our country is being recognized. And we can raise Cyprus even higher...with consistency and responsibility," Georgiades said.
Cyprus received a 10-billion-euro economic assistance package from the Eurogroup and the International Monetary Fund under a three-year bailout program which ended in March 2016.
Assigning a positive outlook to Cyprus's rating, Fitch hinted at an upgrade in its next evaluation of the eastern Mediterranean island's economy.
"Future developments that may, individually or collectively, lead to an upgrade include the reduction in banking sector non-performing loans, track record of declining sovereign debt to Gross Domestic Product ratio and continued deleveraging of the private sector," Fitch said.
It noted that it does not currently anticipate developments with a high likelihood of leading to a downgrade, but warned that measures are needed to bring down non-performing loans that mar the asset quality of the banking sector.
Banks are burdened with about 16 billion euros of non-performing loans which represented 42.5 percent of the loan portfolios of the banks at the end of last year, having been brought down from 46.5 percent at the end of 2016.
Fitch said that despite having to increase their provisioning for non-performing loans and some losses, the capitalization of Cypriot banks remains at 14.9 percent, which is above the regulatory level required by the European Central Bank.
