Standard and Poor's acknowledges that in recent years, the Government has consolidated government finances, reduced general government debt relative to GDP, and undertaken several structural reforms, notably those that have increased female participation in the labour market and reduced the country's energy bill. Indeed, the report states that the positive rating reflects Malta's strong growth performance, the recurring current account surpluses driven by Malta's large services exports, and the improving general government budgetary position and fiscal management.
Standard and Poor's notes that significant investments in energy and logistics were important contributors to growth in 2014 to 2016, while growth in the exports of services such as tourism, logistics, and i-gaming are expected to continue fuel growth in the coming years. In 2019, it expects growth to moderate but to exceed that of peers at similar income levels and stages of development.
The report notes that the implementation of recommendations from spending reviews, the fast pace of growth of new economic sectors, and increases in government revenues have allowed the consolidation of public finances. It further projects that, with recurrent fiscal surpluses, the debt-to-GDP ratio will decline to under 40 per cent in 2021 from a projected 47 per cent in 2018.
"I am pleased to note that Standard is attributing Malta's exceptional economic performance to the Government's economic, fiscal, and social policies and the undertaking of reforms. The Government intends to continue along this successful path as promised in its electoral programme".
Edward Scicluna, Minister for Finance
On the banking sector, the report notes that the domestic banks are highly liquid and possess a low loan-to-deposit ratio. Standard and Poor's acknowledges that macroeconomic policymaking will remain geared toward further fiscal consolidation. Indeed, it notes that efforts to further reform state-owned enterprises, reduce skill mismatches, and improve the long-term sustainability of public finances will be implemented gradually, alongside increased public investment to plug infrastructure gaps.
Source: Press Release
Photo Credits: Viewing Malta
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