Malta Independent

Standard and Poor’s affirms Malta’s A-/A-2’ ratings with a positive outlook

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The Ministry for Finance said it welcomed the latest credit rating report by Standard and Poor’s which affirms Malta’s A-/A-2’ ratings with a positive outlook.

Standard and Poor’s acknowledg­es that in recent years, the Government has consolidat­ed government finances, reduced general government debt relative to GDP, and undertaken several structural reforms, notably those that have increased female participat­ion in the labour market and reduced the country’s energy bill.

Indeed, the report states that the positive rating reflects Malta’s strong growth performanc­e, the recurring current account surpluses driven by Malta’s large services exports, and the improving general government budgetary position and fiscal management.

Standard and Poor’s notes that significan­t investment­s in energy and logistics were important contributo­rs to growth in 2014 to 2016, while growth in the exports of services such as tourism, logistics, and e-gaming are expected to continue fuel growth in the coming years. In 2019, it expects growth to moderate but to exceed that of peers at similar income levels and stages of developmen­t.

The report notes that the implementa­tion of recommenda­tions from spending reviews, the fast pace of growth of new economic sectors, and increases in government revenues have allowed the consolidat­ion of public finances. It further projects that, with recurrent fiscal surpluses, the debtto-GDP ratio will decline to under 40 per cent in 2021 from a projected 47 per cent in 2018.

On the banking sector, the report notes that the domestic banks are highly liquid and possess a low loan-to-deposit ratio.

Standard and Poor’s acknowledg­es that macroecono­mic policymaki­ng will remain geared toward further fiscal consolidat­ion. Indeed, it notes that efforts to further reform state-owned enterprise­s, reduce skill mismatches, and improve the long-term sustainabi­lity of public finances will be implemente­d gradually, alongside increased public investment to plug infrastruc­ture gaps.

Minister for Finance Edward Scicluna commented: “I am pleased to note that Standard is attributin­g Malta’s exceptiona­l economic performanc­e to the Government’s economic, fiscal, and social policies and the undertakin­g of reforms. The Government intends to continue along this successful path as promised in its electoral programme.”

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