Standard & Poor's cuts Malta's credit rating

Credit ratings agency Standard & Poor's has cut Malta's credit rating by one notch to A-.

Earlier this week, the international credit rating agencies Fitch and Standard & Poor's had placed Malta among the eurozone's downgrading creditwatch list. Before today, Malta's credit rating stood at A. Standard & Poor's cut Austria, France, Malta, Slovakia and Slovenia by one notch, and Cyprus, Italy, Portugal and Spain by two notches.

Standard & Poor's said the decision has been taken in light of “deepening political, financial, and monetary problems within the eurozone, into which Malta is closely integrated”.

The Finance Ministry said “Today’s decision by Standard and Poor’s highlights the worsening of the international crisis. Government has repeatedly warned over the past few weeks that Malta’s interdependence with the performance of the European economy will create important challenges for Malta in 2012. The lack of stability and the bleak outlook of the international markets and in our major trading partners threaten investment and job creation.

“Today’s decision also confirms government’s responsible and prudent approach in taking further cost cutting measures in view of the ongoing deterioration of the international economic and financial situation, which took place in the past two months following the announcement of Budget 2012. Unfortunately, the Opposition showed complete shallowness and detachment from the economic reality surrounding us when questioning the timing of government’s decision to implement further administrative cost-cutting initiatives," the ministry said. 

The Finance Ministry added that "the hallmark of the PN government has been its success in creating jobs and in safeguarding them. It will continue to do so." 

Standard and Poor's cut the credit ratings of nine European countries on Friday in a widely-anticipated move. Rumours that the downgrades were imminent had been circulating in various reports throughout the day.

The credit rating agency affirmed the current long-term ratings for Belgium, Estonia, Finland, Germany, Ireland, Luxembourg and the Netherlands.

Standard and Poor's downgraded France by one notch to AA . The outlook for the driving force behind the eurozone reforms together with Germany is negative, which means the country could face further downgrades. 

Germany maintained its AAA rating and Italy's credit rating was cut to BBB . Austria also lost its AAA crown, down one notch to AA . Spain has been downgraded two notches to A, from "AA-.