Malta keeps A+ credit rating in agency report

German credit rating agency Creditreform has confirmed Malta’s A+ credit rating in a report issued today, noting room for improvement in the country’s institutional framework.

Malta’s outlook also remained stable, said the agency.

Creditreform said that Malta’s low public debt levels put it in a good position to stage an economic recovery from the fallout of the COVID-19 pandemic.

It said there was “room for improvement” in Malta’s institutional framework, but that however that the government appeared committed to deliver on rule of law and anti money laundering reforms.

Malta had a track record of “vivid economic growth well above that of the euro area over recent years” with a resilient economy thanks to its diversification. Despite the pandemic a number of sectors in the digital economy had increased their income.

Creditreform noted that the pandemic had caused a lot of damage to the local economy, pulling GDP down by 11.6 per cent between March and May when compared to the previous quarter.

Malta’s economy was particularly vulnerable due to its strong reliance on tourism, said the agency, citing OECD statistics which point to 12.8% of Malta’s GDP and 14.9% of employment coming from the tourism sector.

The report forecasts a strong economic rebound in 2021 and notes that “thanks to wage subsidies to safeguard employment, the fallout from the corona crisis on the labour market has been limited.”

Creditreform said that examining the latest set of the World Bank’s World Governance Indicators (WGI), “we note a partly deteriorating picture. With a view to perceived freedom of speech and free media (WGI voice and accountability), Malta improved by one notch to rank 33 out of 209 sovereigns, somewhat lagging the euro area average (rank 26). At the same time, we observe a substantial weakening pertaining to the perception of the extent to which public power is exercised for private gain.”

On the other hand, it said that “we favourably assess Maltese authorities’ strong and intensified reform efforts to combat money laundering and financing of terrorism and enhance its justice system, in a bid to align the institutional set-up with European and international standards.”

 “Government seems committed to deliver on continued effort required to satisfyingly deal with rule of law and anti money laundering” added the agency.

In a statement issued by the government, it said the German experts had noted how the economic handling of the COVID-19 pandemic had been “better than that of the rest of the EU, especially in the first quarter.”