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Fitch Ratings Believes Cyprus Won’t Consume Total Global Bailout

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Fitch Ratings has announced that it doesn't necessarily expect Cyprus to consume its complete global bailout package, totalling €10 billion euros.

The international credit rating agency confirmed that the nation's Issuer Default Ratings currently stands at a B-, with a positive outlook. Its Country Ceiling has been improved from a B to a BB, while its short-term foreign currency IDR holds a B.

The international credit rating agency stated, "The general government debt to GDP ratio is expected to peak at just over 110% in 2015 and 2016 and will ease to around 90.7% by 2022. Fitch no longer assumes the full EUR10bn financial envelope of the EU-IMF programme will be used. The strong budget performance implies the buffers in the programme have grown close to EUR3bn (17% of GDP). The underlying trend for public finances has been positive," as reported by Parikiaki.  

The credit ranking agency added, "The fiscal deficit in 2014 was 0.2% of GDP (8.8% of GDP including the one-off capital injections to the co-operative sector) compared with Fitch's forecast of 3.3% in October. The over-performance reflects a combination of higher tax revenues and lower than expected expenditure across most items. Fitch expects the fiscal deficits to average 0.8% from 2015 to 2018."

Fitch Ratings further commented on Cyprus, "The passing of the insolvency law through parliament on 18 April should trigger the activation of the foreclosure law and pave the way for further official funding. [...]The law should strengthen the foreclosure framework and address the high banking NPL problem."