Fitch ratings agency maintained its long term ratings for Cyprus at "B+" with a positive outlook despite acknowledging "a track record of fiscal consolidation, progress in financial sector restructuring and economic recovery".

According to a statement made available in Nicosia on Saturday, the agency cited as factors weighing heavily on Cyprus's credit profile its large sovereign debt currently standing at 109 percent of its GDP and the "exceptionally weak asset quality" of the banks.

Cyprus exited a three-year economic adjustment program at the end of March, under a 10-billion-euro (about 11.3 billion U.S. dollars) bailout of its economy by the Eurogroup and the International Monetary Fund in March 2013.

Fitch said that at the end of the program Cyprus' economy grew 1.6 percent in 2015 after a cumulative 11 percent contraction and projected a growth of around 2 percent this year.

But it warned that the restructured banking system is a factor of uncertainty.

"Banks remain fundamentally weak and pose an ongoing risk to the economy and public finances," Fitch said.

It added that the ratio of non-performing loans stood at 45 percent, down by 5 percentage points from its peak, and some 30 percent of restructured loans were still in arrears at the end of 2015.

On the positive side, Fitch cited a strong management policy which led to over-achieving fiscal target and economic recovery resulting in an increased employment, which continues to fuel growth through consumption.

Fitch said that the likelihood of an agreement reunifying Cyprus remains uncertain, but notes that despite the short-term cost and uncertainties entailed in a solution, it will help boost the Cypriot economy in the long term.

The agency said its projections to not include the impact on GDP growth of potential gas reserves off the southern shores of Cyprus, now in the stage of being developed.

Source: XINHUA