The latest credit rating report published by DBRS affirms Malta’s rating at A (high) with a stable trend on its ratings.
The rating reflects Malta’s remarkable broad-based economic growth, its strong external position and low reliance on external financing, as well as its favourable public debt structure and households’ strong financial position.
DBRS note that the Maltese economy remains one of the euro area’s top growth performers with outward-facing sectors such as tourism, gaming, financial and business services being key contributors to Malta’s outperformance.
The credit rating report acknowledges that the steady increase in the labour supply, led by net migration flows and increased participation, as well as productivity gains, underpinned the significant increase in potential GDP growth during the 2013 to 2017 period.
DBRS note that Malta has experienced a significant improvement in its fiscal performance since 2013 mainly as a result of government fiscal consolidation efforts, which included lower spending while supporting a tax-rich economic expansion. DBRS also commend the government’s prudent fiscal targets to continue registering a surplus net of IIP in the coming years.
DBRS also note that Malta’s debt-to-GDP ratio now stands as one of the lowest in the EU. Indeed, after peaking at 70.1 per cent of GDP in 2011, the debt ratio declined to 50.8 per cent in 2017.
The credit rating agency acknowledges that Malta’s external position continues to strengthen, led by fast-growing services sector exports and a record-high current account surplus.
DBRS positively state that the banks’ reliance on retail deposits for funding and their healthy Tier 1 capital ratio, high levels of liquidity, and good levels of profitability, support the banks’ ability to weather adversity.
DBRS also note that the government presented a series of strategic initiatives to be completed by 2020 to enhance the AML/CFT framework, establish national coordinating mechanisms, and increase resources in the regulatory institutions.
Minister for Finance Edward Scicluna comments that: ‘Another well-deserved high rating for our country confirming the success of the government’s policies aimed to diversify Malta’s economic growth, restore fiscal sustainability, and secure a positive net external position. It is pleasing to note that DBRS has also taken note of our Anti-Money Laundering strategy and plan.’