Fitch affirms Malta as ‘A+ with stable outlook’

“The structural reforms and prudent fiscal policies implemented by the government over recent years have contributed towards another positive credit rating for our country. Fitch has affirmed Malta’s rating at ‘A+’ with a stable outlook. This continues to put minds at rest that the country can optimistically keep on looking forward,” Finance Minister Edward Scicluna said yesterday.

Fitch highlights that Malta’s ratings are reflecting a high income per head, a robust eco- nomic growth, and a large net external creditor position.

Fitch explains that Malta’s real GDP growth is set to remain robust at 5.6 per cent in 2018, sustained by strong growth in consumption and a recovery in investment.

The credit rating agency expects Malta’s fiscal policy to remain prudent and forecasts a fiscal surplus of one per cent of GDP in 2018, net of the Individual Investor Programme.

It acknowledges the decline in contingent liabilities in 2017 and notes that public debt dynamics are favourable, with low interest payments, strong nominal growth, and recurrent primary surpluses leading to a sustained downward trend in the debt-toGDP ratio. It expects this ratio to continue declining to 40.9 per cent by 2020, comparing favourably with that of similarly rated peers.

The report indicates that, in May 2018, unemployment declined further to 3.9 per cent, which is among the lowest rates in the eurozone. Nevertheless, inflation is expected to remain contained as a result of the strong inflow of foreign workers and rising labour participation, through which sharp increases in wages are prevented.

Exports are expected to continue to be robust, supported by the strong performances of the gaming, tourism and financial services sectors.

Fitch notes that Malta’s banking sector remains sound, while asset quality is improving as non-performing loans have been declining in recent years.

“The report noted that banks in Malta have a good rate of capital, while loans are being handled prudently,” the government said in an earlier statement. “In contrast to certain discourse by the Opposition, Fitch Ratings experts say that property prices are not of considerable risk.

“Fitch experts also said that governance indicators for the country, according to World Bank scales, are better than those countries with an A rating and compare well with countries who received AA ratings.”