Credit rating agency DBRS has confirmed Malta’s long-term foreign and local currency issuer ratings at A and its short-term foreign and local currency issuer ratings at R-1 (low).

“The A rating reflects Malta’s Eurozone membership, which ensures reliable access to European markets, fosters strong and credible macroeconomic policies and makes available financial facilities from European institutions,’ DBRS said.

“The country’s solid external position also supports Malta’s ratings, together with a favourable public debt structure and the robust financial position of households.”

It warned, however, that Malta’s public finances remain a source of vulnerability, and its economy is exposed to external shocks, particularly those emanating from within the EU.

“Furthermore, pressures from the rising costs of Malta’s ageing population, if unaddressed, could pose a concern for the pensions system. The Stable trends reflect DBRS’s assessment that risks to the ratings are broadly balanced. The ongoing improvement in the fiscal position and strong economic performance counterbalance Malta’s fiscal vulnerabilities and the potential impact from a slowdown in European economies.”

The Toronto-based agency said “the expansion of trade and travel links with Europe – with Malta serving as an access point to the region after it joined the European Union (EU) in 2004 and adopted the Euro in 2008 – have provided a boost to the country’s economy. Higher employment generated by trade and tourism have increased national income. Malta’s economy is among the fastest growing in the Euro area and its growth prospects look favourable. Fiscal, monetary and financial policy institutions have also strengthened in line with the EU Stability and Growth Pact.”

Some of Malta’s credit challenges are associated with the exposure of its public sector and the still moderately high, albeit declining, level of public debt.

The government lauded the result, highlighting DBRS comments that noted that "important improvements in fiscal management have been undertaken, after weak fiscal performances in the past" and that previously public expenditure overruns and weak internal controls "were common in the past". 

DBRS, the government said, found that Malta enjoyed "relatively sound public institutions" and said this ran counter to the Opposition's "destructive campaign" against them.