DBRS confirms Malta’s ‘A’ rating
In its latest report on Malta, DBRS Ratings Limited confirmed the country’s stable outlook and its ‘A’ rating, referring to the country’s economic resilience, thanks to its low reliance on external financing and its successful efforts at restructuring state owned enterprises which had run into financial difficulties.
The stable outlook reflected DBRS assessment of risks which it expects to be broadly balanced with upside risks counter-acting downside risks.
In its assessment, DBRS also made reference to the rise in national income, which it attributed to the rise in employment generated by trade and tourism as well as the country’s success at strengthening fiscal, monetary and financial policy institutions in line with the EU and Eurozone rules. Moreover, reference was made to the resilient private consumption growth and overall strong economic performance.
DBRS acknowledged the Government’s efforts to reform public finances with the aim of attaining good fiscal governance. Indeed, it remarks: “Important improvements in fiscal management have been undertaken after weak fiscal performances in the past.”
DBRS also commented positively on the recent budget measures which were aimed at strengthening the fiscal framework, such as the Fiscal Responsibility Act, stating: “Nevertheless, after being under the Excessive Deficit Procedure three times since joining the EU in 2004, Malta has strengthened its fiscal framework.”
It further acknowledges the reduction in the deficit and debt ratios noting that the deficit fell to 1.5 per cent in 2015 from 4.2 per cent in 2008 while the debt-to-GDP ratio fell to 63.8 per cent after peaking to 69.9 per cent in 2011.
On external trade, the report remarked that Malta enjoys a solid external position reflecting the current account surplus and the relatively large positive net international investment position.
The report mentions Malta’s exposure to external shocks particularly those emanating from the EU and its exposure to a moderately high level of public debt as its main credit challenges. Further challenges included the long-term sustainability of the pensions system, which it notes is being addressed through policies favouring the participation of women and older workers in the labour market and the recent pension reform measures.
Minister for Finance Edward Scicluna said, ‘‘This is the third rating in a row which while coming out from three respective independent international rating agencies are marked by similarities in their description of Malta’s positive future economic and financial outlook.’’
Source: Press Release by the Ministry of Finance