Moody’s attributes the A3 rating to the Maltese economy’s robust growth dynamics, relatively elevated wealth levels that support the country's shock-absorption capacity, and a stable and conservative domestically oriented banking sector.
Moody’s notes that the positive outlook reflects Malta’s sustained progress in reducing national debt as well as its robust medium-term growth prospects that are supportive of further improvements in public finances. Moody’s adds that if the improvement in public finances is sustained, then this would support a credit rating upgrade. In this regard, Malta’s fiscal strength is rated as High (+).
Moody’s rates Malta’s economic strength as High (-) reflecting a recent track record of strong economic growth, elevated per-capita income levels and very high scores on global competitiveness rankings. The report notes that the high level of competitiveness means that Malta is relatively well equipped to adapt to changing circumstances. Indeed, the score for Malta’s susceptibility to event risk is assessed as Low (+).
Moody’s expects growth to remain strong in 2019 driven by growth in investment and private consumption. It also expects the Government to record a surplus of 1.2 per cent of GDP in 2018. It further notes that the Government is targeting a surplus net of revenues from the Individual Investor Programme (IIP) in 2019.
The report acknowledges the IMF fiscal transparency evaluation report published in September 2018 in which the IMF concluded that Malta meets the standard for good or advanced practice for 21 out of the 35 principles of the IMF’s Fiscal Transparency Code.
On anti-money laundering and countering the financing of terrorism (AML/CFT) regulations, Moody’s acknowledges that the FIAU have presented an action plan in response to the original recommendations by the EBA, with the Maltese authorities having also launched an AML/CFT strategy in April 2018. The strategy, it notes, seeks to increase the resources of the relevant supervisory and investigative authorities and strengthen and clarify the supervisory framework, among other things.
Moody’s rates Malta’s institutional strength as High reflecting Malta’s robust policy framework and the important enhancement to the country’s institutions and to the policymaking framework of public-sector entities.
Minister for Finance Edward Scicluna comments: “I am pleased to note that Moody’s is acknowledging our efforts to strengthen the regulatory institutions while sustaining macroeconomic and fiscal stability.”
Source: Press Release by the Ministry for Finance