NICOSIA: Ratings agency Standard & Poor’s (S&P) has upgraded Cyprus’ government debt rating by one notch to BB- after the country eliminated limits on money transfers and following improvements in the economy and budget.

The agency on Friday also gave Cyprus a positive outlook, meaning it could raise its rating again in the next year if the economy continues to perform well and banks’ assets continue to improve.

Cyprus imposed controls on money flows in March, 2013 when a 10 billion euro rescue deal forced a seizure of uninsured deposits in the two largest banks.

S&P said Cyprus’ economy will grow 1.5 per cent this year, but banks may need to take tougher action on their bad loans.