‘Malta continues to outperform EU average growth rates with strong external position’ − DBRS

The Ministry for Finance has welcomed the latest credit rating report published by DBRS affirming Malta’s rating at A (high) with a stable trend on its ratings.

Indeed, 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 notes 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 2013-2017 period.

DBRS notes 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 commends government’s prudent fiscal targets to continue registering a surplus net of IIP in the coming years.

DBRS also notes that Malta’s debt-to-GDP ratio now stands as one of the lowest in the EU. Indeed, after peaking at 70.1% of GDP in 2011, the debt ratio declined to 50.8% in 2017.

The credit rating agency acknowledges that Malta’s external position continues to strengthen led by a fast-growing services sector exports and a record-high current account surplus.

DBRS positively states that the banks’ reliance on retail deposits for funding and their healthy Tier 1 capital ratio, high levels of liq- uidity and good levels of profitability, support the banks’ ability to weather adversity.

DBRS also notes that 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 Prof. Edward Scicluna comments that: “Another well-deserved high rating for our country confirming the success of 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 AntiMoney Laundering strategy and plan.”