Standard and Poor’s attributes Malta’s positive rating to its strong growth performance, recurring current account surpluses driven by its large services exports, and the improving Government budgetary and debt positions, and fiscal management.
Minister for Finance Edward Scicluna comments, “We are committed to continue safeguarding our success in economic growth and public finances and to continue strengthening the supervisory standards of the financial sector. Indeed, the credit rating report acknowledges the Maltese authorities’ efforts to strengthen supervisory standards and their cooperation with the EBA to reach this goal. As regards the external risks to growth pointed out by the credit rating agency, we are actively monitoring such risks by promoting further diversification and registering broad-based economic growth.”
Standard and Poor’s expect Malta’s headline GDP growth performance to, likely, exceed that of peers at similar income levels and stages of development. This, it adds, reflects the authorities’ commitment to growth-enhancing policies.
The credit rating report notes that Malta’s real GDP growth accelerated to 7.6 per cent on average in the 2014 to 2018 period. It also acknowledges that the structural shifts in the economy created new employment opportunities causing the unemployment rate to decline further to 3.8 per cent in 2018, the lowest in two decades.
Standard and Poor’s acknowledge that the Government has consolidated public finances and reduced general Government debt relative to GDP. They anticipate macroeconomic policymaking to remain geared toward further fiscal consolidation. Indeed, they expect the general government balance to remain in surplus over their forecast period from 2019 to 2022 while the debt-to-GDP ratio is expected to fall to 35.0 per cent.
The credit rating agency positively note that several structural reforms were undertaken, notably those that have reduced the country’s energy bill and increased female participation in the labour market. They expect efforts to further reduce skill mismatches and improve the long-term sustainability of public finances in the context of an ageing population to be implemented gradually, alongside public investment to plug infrastructure gaps.
Source: Press Release by Ministry for Finance Edward Scicluna
Photo Credits - DOI: Mario Mintoff