DBRS confirms Malta's 'A' rating, with a stable outlook

The Dominion Bond Rating Service (DBRS), the Toronto global credit rating agency, has confirmed Malta’s ‘A’ rating with a stable outlook.

In a statement, DBRS said that the stable trend reflects its view that risks to Malta’s ratings are balanced, following the “strong” post-pandemic recovery.

It said that the impact from Russia’s invasion of Ukraine on the Maltese economy has so far remained limited, “in part because of Malta’s low economic and energy ties with both countries, its energy stabilisation measures, and a stronger-than-expected foreign tourism rebound this year.”

DBRS stated that growth is set to slow down in 2023, due to “weaker” external demand, high inflation, and tighter financial conditions.

“However, Malta should significantly outperform most of its European peers in terms of economic growth,” DBRS said.

It added that Malta’s “sizeable” energy price stabilisation package will be slowing down the reduction in public deficit, which it said will remain among the highest in the EU.

“While the size of the package will depend on the evolution and the duration of the energy crisis, DBRS Morningstar considers that Malta’s still-moderate public debt levels and positive growth dynamics mitigate the risks.”

DBRS also noted the Financial Action Task Force’s (FATF) decision to remove Malta from its grey list, which it said: “reflects the country’s significant progress in improving its Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) framework and effectiveness.”

According to the Canadian credit rating agency, Malta’s rapid removal from the grey list should limit any long-lasting damage to the country’s reputation and attractiveness to foreign investment.

“Despite Malta’s sound public finances, medium- to long-term challenges could stem from its contingent liabilities, changes in international taxation affecting its attractive tax system to foreign companies, or increases in age-related spending.”