Fitch upgrades Sovereign Ratings in Portugal, Cyprus & Greece that outperform Eurozone countries
- Portugal Business News - Valerie Charoux
- 1 hour ago
- 2 min read
News Economy Europe - Fitch upgraded the Sovereign Ratings of Portugal, Cyprus and Greece that outperform other Eurozone countries, driven by rapid debt reduction, according to a report dated August 25, 2026. Here is the lesson to be learnt from the economic success of Portugal, Cyprus and Greece by other Eurozone countries:
How Cyprus, Greece and Portugal outperformed other Eurozone countries:
Fitch Ratings steadily upgraded the credit ratings of Cyprus, Greece and Portugal: Cyprus, Greece and Portugal have each been upgraded three times by Fitch Ratings since 2022, driven primarily by rapid government debt reduction that outpaced the eurozone average, according to the latest report by Fitch Ratings.
Debt/GDP ratios fell sharply from their 2020 peaks in Cyprus, Greece and Portugal, leaving them well below pre-pandemic levels, in contrast to only a modest decline across the euro area. This deleveraging improved Fitch's Sovereign Rating Model output, while stronger banking-sector health in Cyprus and Greece, and Portugal’s external position, allowed Fitch to remove negative Qualitative Overlay adjustments that had constrained the ratings, enabling multi-notch upgrades.
What are the Fitch ratings of Cyprus, Greece and Portugal in 2026?
1 - The Fitch rating of Cyprus in 2026
Fitch affirmed Cyprus´s credit rating at ‘A-’/Positive in May 2026.
2 - The Fitch rating of Greece in 2026
Fitch affirmed Greece´s credit rating at ‘BBB’/Stable in May 2026.
3 - The Fitch rating of Portugal in 2026
Fitch revised Portugal’s credit rating to Positive while affirming its rating at ‘A’ in March 2026.
Why did the credit ratings of Cyprus, Greece and Portugal improve in 2026?
Strong growth was the largest contributor to deleveraging in Cyprus, Greece and Portugal, but it was not what set the three countries apart from the other eurozone countries: Spain and Italy enjoyed similar tailwinds, yet each recorded only a single-notch net gain from pre-pandemic levels, against three notches for Cyprus, Greece and Portugal. The difference was fiscal: the three countries moved to sustained, policy-driven primary surpluses, whereas Italy has run only small surpluses since 2024 and Spain none at all. Growth alone did not deliver these surpluses.
The EU´s supportive measures are fading: the tourism rebound is complete, the EU Recovery and Resolution Facility funding will peak in 2026 and negative real funding costs are unwinding. As these support measures fade, primary surpluses will bear more of the deleveraging burden, just as maintaining them becomes more demanding amid ageing populations, rising Defence commitments and eroding political consensus.
What is the lesson to be learnt from the economic success of Portugal, Cyprus and Greece by other Eurozone countries?
The lesson to be learnt from the economic success of Portugal, Cyprus and Greece by Europe’s other high-debt sovereign countries, which include Austria, Belgium, France, Finland and the UK, is that durable rating upgrades are built on primary surpluses sustained across years and successive governments, instead of depending on favorable macroeconomic conditions alone.
