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

The Malta Business Weekly - - NEWS -

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.”

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