Moody’s affirms Malta’s ‘A3 Positive’ rating

The Ministry for Finance has welcomed the latest credit opinion issued by Moody’s Investor Service, in which it affirmed an A3 Rating with a positive outlook for Malta.

“Moody’s highlighted Malta’s sustained progress on public sector debt reduction and the prospects for further fiscal consolidation on the back of a buoyant economic performance,” the ministry said.

It said Moody’s pointed out that it will be upgrading Malta’s rating to A2 if its improvement in fiscal strength is sustained.

It said Moody’s had also noted Malta’s recent track record of strong economic growth, an elevated per-capita income and very high scores in terms of global competitiveness. 

The ministry said that the report highlighted that while Malta’s small size and openness make it susceptible to external shocks, it is able to weather such storms due to the high level of competitiveness as well as elevated wealth levels.

“Malta’s institutional strength is deemed ‘High’ by Moody’s, reflecting the country’s robust policy framework, enhancements to institutions and policymaking framework of public-sector entities,” the ministry added. 

Furthermore, it said Moody’s had acknowledged that Malta's fiscal consolidation efforts were bearing fruit, with its fiscal surplus expected to hover around 2.5% in 2018 and 2019. This, coupled with strong economic growth, will continue to contribute towards a rapid reduction of Malta’s debt-to-GDP ratio according to Moody’s.

“The rating agency considers Malta’s susceptibility to event risk, stemming from the banking sector primarily, as ‘low’, based on the relative size of the sector in the economy and the financial soundness of the domestically oriented institutions, amongst others.”

“Moody’s notes that despite the tightening labour market, increased foreign workers and higher female participation in the labour market contained the wage growth.”

Finally the ministry said that the report explains that while growth is expected to moderate from recent highs, it is still expected to remain strong in both 2018 and 2019.