Fitch commends Malta’s strong rule of law and government effectiveness

Following Moody’s and DBRS’ credit rating upgrades last week, Fitch has now affirmed Malta’s sovereign credit rating at A+ resulting from its upgrade last year, while commending Malta’s high governance indicators. These results, it remarks, reflect a strong rule of law and governmental effectiveness.

Minister for Finance Prof. Edward Scicluna stated: “I am pleased to see a rating agency stating that house prices still appear to be in line with fundamentals and that it still believes there are strong mitigating factors against potential instability stemming from the housing sector.”

The independent rating agency forecasts Malta’s economic growth to outperform that of similarly related peers in 2018. Real GDP grew by 7.2% in the first three quarters, boosted by buoyant service exports and sharp contraction in imports.

Malta’s vibrant service exports and a moderation in import-intensive investments will support a robust external fiscal position. The shift to a more service-oriented and a less investmentintensive economy will lead to a sustained surplus on the current account at an average of 9.7% of GDP in 2018-2019.

Fitch also forecasts that Malta’s general gov- ernment balance is to remain in a surplus of 1.5% of GDP in 2018. In addition, the report outlines that Malta’s debt ratio is decreasing, supported by high nominal GDP growth and expected fiscal surpluses. Indeed, Fitch expects Malta’s debt-to-GDP ratio to keep falling to 45.1% of GDP by end-2019.

Fitch also highlights Malta’s sound banking sector with robust capitalisation and liquidity ratios.

The credit rating report acknowledged Malta’s low unemployment rate, which is among the lowest rates in the eurozone. It also underlines that the rate of inflation has been lower than the ‘A’ median while national income per head is higher than the ‘A’ median.