Fitch upgrades Malta’s credit rating to A+ with a stable outlook

Fitch has now upgraded Malta’s credit rating from A to A+ with a stable outlook. The independent credit rating institution said one of the main factors was the “fast declining gross general government debt”, which is expected to “decrease to 50 per cent of GDP in 2019…supported by strong nominal GDP growth and recurrent primary surpluses.” Fitch added that it also expects government-guaranteed liabilities to decline in the coming years.

Another factor was the positive turnaround in Malta’s fiscal balance. Fitch said it expected Malta to continue achieving a fiscal surplus in the coming years, which, it added, reflects the government’s efforts to improve tax collection and tax revenue; reduce unnecessary expenditure on social benefits and ease pension pressures; and support higher robust economic growth.

Fitch said it expected the Maltese economy to continue growing at a faster pace than that of similarly rated countries, fuelled by the solid performance of Maltese exports, notably in the services sector, a dynamic labour market and investment. The latter is expected to pick up in 2019, boosted by the gradual absorption of new EU funds and the launching of large transport, health, and education projects.

This rating upgrade, which followed Standard and Poor’s similar move last October, also reflects the fact that Malta has successfully built a large net external creditor position. Fitch expects Malta’s external position to remain strong, where the current account surplus is expected to increase to well over 7 per cent in the 2017-2019 period.

The credit rating report acknowledged Malta’s improvement in the World Bank’s ‘Ease of Doing Business’ index, where Malta’s ranking improved by seven places in just one year. Fitch expects the Maltese banking sector to remain sound with improved profitability, non-performing loans on a downward trend, improved capitalisation and conservative lending.

Maltese Minister for Finance Edward Scicluna said: “Government’s vision for Malta is turning into reality, in that Malta is becoming a solid top performer in economic growth, employment growth and sound public finances. All this is being confirmed by the rating agencies.”

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