Moody’s upgraded the outlook on the country’s credit rating, “A3”, from “stable” to “positive”. It was Malta’s first positive rating action from Moody’s since October 2013. The agency added that if improvement of the country’s fiscal position is sustained, it would result in a future upgrade to an “A2” credit rating, EUBulletin reported.
DBRS also raised Malta’s rating to “A High” from “A” on February 23, which is the highest rating ever given to the country.
The catalyst for the double upgrade was the credible improvement of Malta’s public finances, on the back of strong economic growth. The country’s GDP is estimated to have increased by an impressive 6.9% in 2017.
According to the European Commission’s Winter 2018 Interim Economic Forecasts, the Maltese economy will grow by 5.6% this year and by 4.5% in 2019. While future rates point to a slowdown from 2017, they are still the highest projected rates in the entire EU and are more than double the projected EU average of 2.3% for 2018 and 2.0% in 2019.
DBRS referred to Malta’s gaming industry as one of the most important sectors in the Maltese economy, but insisted that several others were also crucial for growth.
The agency projects that Malta’s public debt ratio will drop to 41% of GDP by 2022 (from 59% in the first quarter of 2017), which is 7% lower than previous estimates. The rating agency also stated that the general government is expected to have exceeded its fiscal targets in 2017.
Moody’s estimates that Malta achieved a fiscal surplus of 1.5% in 2017, against a 3.5% fiscal deficit in 2012. Both agencies highlighted the efforts being made by the Maltese government to lower the scope of corruption and strengthen its institutions.