On Saturday evening, the government issued a press release announcing that Standard & Poor's had reaffirmed the BBB+ rating for Malta with a stable outlook.
The news dated from the previous day but had been unnoticed by a media mesmerised by the tragic events in Paris. Saturday evening is notoriously bad for news as most times news tends to be sandwiched between the big international events and whatever spin the political parties cook up for consumption at leisure on Sunday.
No one would thus expect the government announcement to include the entire S&P report, which we oblige by publishing it on pages 6 and 7 today.
But maybe one would expect a certain evenness in the handling of such a sensitive and serious report rather than to go for the immediate partisan angle. At the very least, one would have expe3cted the official government statement to include a link to the S&P release, although that is available elsewhere.
So roughly one third of the government release is used to attack the Opposition, and its previous stint in power while the reading of the S&P report is, to say the least, selective and biased.
No mention at all is made of the very important qualifications in the report, nor about some dangerous patches which may lie ahead.
It may thus be imperative that we balanced the facile enthusiasm of the government machine in highlighting the positive comments in the report by highlighting the qualifications in it.
The report states, right at the end, that the "rating factor debt burden had deteriorated". In the snapshot offered of the ratings score (Table 2) the report identifies the debt burden as a 'weakness' although this is the only one so identified compared to other neutral rating factors.
This conditions S&P's outlook on the Maltese economy:
"The stable outlook balances our view of Malta's economic prospects against its high, though declining, government debt burden and contingent liabilities.
"We could raise our ratings on Malta if the government's reform program boosts growth and reduces the government debt burden or contingent liabilities more quickly than we currently expect, without a return to significant current account deficits.
"We could lower the ratings if fiscal slippages increase the Maltese government's net debt burden or if contingent liabilities materialize.
"Negative pressure could also emerge if Malta's large financial sector were to experience sizable disinvestment or weakening access to external debt and
deposit financing."
S&P also comments on the continued rise in Non-Performing Loans held by the local banks.
"The continued rise in nonperforming loans (NPLs) to 9.5% by mid-2014, from 9.2% at end-2013 and 8% at end-2012, remains a challenge for the economy. Part of this increase relates to a regulatory change in the definition of NPLs.
"Almost half of the NPLs are concentrated in the construction and commercial real estate sectors. On the other hand, household mortgages are mostly performing with strong loan-to-value ratios.
"Banks' aggregate loan loss provisioning has improved and the NPL coverage ratio reached 42% in September 2014, a level that we still consider to be low despite collateral posted for the unprovisioned portion of NPLs."
To conclude: the S&P report confirms the good reports on the Maltese economy and its progress these last years, but the Maltese public in general and its government in particular must remain equally aware of pitfalls and hidden submerged rocks that may lie ahead.