Moody’s confirms Malta’s credit rating at 'A3 with positive outlook'

Moody's has affirmed Malta’s credit rating at A3 with a positive outlook, confirming a previous rating from last August.

The credit rating agency attributed the A3 rating to the Maltese economy’s robust growth dynamics, relatively elevated wealth levels that support the country’s shock-absorption capacity, and a stable and conservative domestically-oriented banking sector.

In a statement, the government welcomed the credit opinion report, underlining that Moody’s noted that the positive outlook reflected Malta’s sustained progress in reducing national debt as well as its robust medium-term growth prospects, which support further public finances improvements.

Moody’s added that if public finances improvements are sustained, the could lead to a credit rating upgrade. In this regard, Malta’s fiscal strength is rated as High (+).

In terms of Malta’s economic strength, this was rated as High (-), reflecting recent strong economic growth, elevated per-capita income levels and very high scores on global competitiveness rankings.

“The report notes that the high level of competitiveness means that Malta is relatively well equipped to adapt to changing circumstances. Indeed, the score for Malta’s susceptibility to event risk is assessed as Low (+),” the government highlighted.

“Moody’s expects growth to remain strong in 2019 driven by growth in investment and private consumption. It also expects the government to record a surplus of 1.2 per cent of GDP in 2018. It further notes that the Government is targeting a surplus net of revenues from the Individual Investor Programme (IIP) in 2019.”

The government said that the credit opinion acknowledges the International Monetary Fund’s fiscal transparency evaluation report, published last September, which concluded that Malta is meeting the standard for good or advanced practice for 21 out of 35 principles of the organisation’s Fiscal Transparency Code.

Regarding anti-money laundering and countering of financing of terrorism (AML/CFT) regulations, the government underscored Moody’s recognition of the Financial Intelligence Analysis Unit's presentation of an action plan in response to a recommendations by the European Banking Authorities. It also acknowledged that the Maltese authorities launched an AML/CFT strategy in April 2018. The strategy, it notes, seeks to increase the resources of the relevant supervisory and investigative authorities and strengthen and clarify the supervisory framework, among other things.

Moody’s rates Malta’s institutional strength as High, reflecting Malta’s robust policy framework and the important enhancement to the country’s institutions and to the policymaking framework of public-sector entities, the government added.