After the positive credit ratings awarded by Fitch Ratings, Standard and Poor’s and Moody’s, it was now the turn of the German Creditreform Rating agency to confirm that the outlook for our country’s credit rating is stable. By contrast, since the beginning of March there have been four countries in the European Union that have been given a negative outlook and two others that have had their ratings downgraded.
With regard to Malta, Creditreform Rating predicted that, “the economy should recover through the second half and beyond as restrictive measures are gradually eased.” German experts argued that, “policy efforts devoted to COVID-19 should mitigate the worst effects on the corporate and household sector “. Therefore, for 2021, the report projects economic growth of almost 5%, which will be due to the good performance in industries such as igaming, as well as large investment projects.
The German agency attaches importance to the economic package announced by the government, so much so that it calls it “a substantial policy package” which, according to the analysis of German experts, will limit “corporate bankruptcies and redundancies”. While this is a very expensive package, it does not worry the German agency as much that the report states that, “Malta’s favourable initial fiscal position, together with the fiscal prudence demonstrated in the recent past and the assumption of a short-lived shock, all support the stable outlook on Malta’s credit rating “.
In fact, foreign experts note the presence of “sizeable fiscal buffers”, while they are confident that the government will make prudent use of public funds. Another important factor, according to this agency, is that, “debt affordability appears to be no major issue.” This is because the interest rate that the government has to pay is low because there is a lot of liquidity and trust in the Maltese government.
The German agency believes that Malta will remain among the fastest growing European economies and one which will generate jobs. The report states that, “our credit assessment also factors in the quality of the sovereign’s institutional set-up, which we deem to be generally high.”
Therefore, even this agency is choosing to, despite the impact of Covid-19, confirm the credit rating of our country as A +.