04/11/2003 10:38
The international credit rating agency, Fitch Ratings, revised on Tuesday the outlook on the long term foreign currency rating of Cyprus from stable to positive. The other countries affected are Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.
According to the relevant announcement, Fitch anticipates “the incoming members of the EU to have sovereign credit ratings two to three notches above their current level when they eventually adopt the euro, given that full membership of the euro area reduces the risks to sovereign creditworthiness emanating from balance of payments imbalances and external shocks”.
FINMIN: Economic benefits from the accession
“Fitch’s report indicates the practical economic benefit for Cyprus from its accession in the EU. Cyprus will be able to borrow cheaper and attract more foreign and domestic investments. These reports contribute to the strengthening of the investment activity on the island”, Manager of the Economic Study and EU of the Finance Ministry, Andreas Charalambous told StockWatch on Tuesday.
Fitch: ERM
According to Fitch’s report, the participation in the European Exchange Rate Mechanism will be a critical step towards the accession in the EMU. “The participation in the European Exchange Rate Mechanism ERM II will enhance a country's creditworthiness and strengthen the likelihood that it will meet the Maastricht criteria and hence join the euro area within three or four years”. The participation of the seven acceding countries in the ERM is expected in May or June 2004 or January 2005. So far, only the Czech Republic has announced that it will not join the ERM until later.
Fiscal policy is the ‘weakest link'.
Despite the positive revision of the acceding countries, Fitch anticipates that the fiscal policy will be the “weakest link” in terms of meeting the Maastricht criteria.
In August, credit rating agency S&P 500 had downgraded the local currency sovereign credit rating of Cyprus due to weaker fiscal discipline in the past few years.
The long-term foreign currency rating for Cyprus is A+ and together with Slovenia rank first among the 10 acceding countries, while Estonia’s rating was placed on positive outlook two weeks ago. The negative outlook of Hungary and the positive of the Czech Republic have not been revised.
According to the relevant announcement, Fitch anticipates “the incoming members of the EU to have sovereign credit ratings two to three notches above their current level when they eventually adopt the euro, given that full membership of the euro area reduces the risks to sovereign creditworthiness emanating from balance of payments imbalances and external shocks”.
FINMIN: Economic benefits from the accession
“Fitch’s report indicates the practical economic benefit for Cyprus from its accession in the EU. Cyprus will be able to borrow cheaper and attract more foreign and domestic investments. These reports contribute to the strengthening of the investment activity on the island”, Manager of the Economic Study and EU of the Finance Ministry, Andreas Charalambous told StockWatch on Tuesday.
Fitch: ERM
According to Fitch’s report, the participation in the European Exchange Rate Mechanism will be a critical step towards the accession in the EMU. “The participation in the European Exchange Rate Mechanism ERM II will enhance a country's creditworthiness and strengthen the likelihood that it will meet the Maastricht criteria and hence join the euro area within three or four years”. The participation of the seven acceding countries in the ERM is expected in May or June 2004 or January 2005. So far, only the Czech Republic has announced that it will not join the ERM until later.
Fiscal policy is the ‘weakest link'.
Despite the positive revision of the acceding countries, Fitch anticipates that the fiscal policy will be the “weakest link” in terms of meeting the Maastricht criteria.
In August, credit rating agency S&P 500 had downgraded the local currency sovereign credit rating of Cyprus due to weaker fiscal discipline in the past few years.
The long-term foreign currency rating for Cyprus is A+ and together with Slovenia rank first among the 10 acceding countries, while Estonia’s rating was placed on positive outlook two weeks ago. The negative outlook of Hungary and the positive of the Czech Republic have not been revised.
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