Fitch confirms Malta’s A+ rating with stable prospects

Article published on tvm.com.mt

 

Fitch credit rating agency confirmed Malta’s credit rating in A+ level with stable prospects after last February the agency upgraded the rating of the Maltese economy. Fitch economists said they expect that the Maltese economy will grow by 5.6% and the Government will register another surplus in its finances, while the country’s debt compared with the gross domestic product will continue to decrease.

Fitch experts stated that Malta’s rating in A+ level reflects the average income when compared with countries in the A level and also the economic growth and the Government’s financial situation, together with Euro membership.

Commenting on the Government’s debt reduction compared with the GDP, the agency said that banks working in the local market have a solid base. While evaluating the economic indicators, Fitch economist predict that this year the Government will have a balance of 1% of GDP in the budget.

They added that the financial targets may even be better than those predicted by the Government due to an increase in Government’s income from taxes and the citizenship investment programme, although they remarked that there was a decrease in the Government’s capital expenditure. The report points out that expenditure on capital projects is expected to rise again as the Government will start using new funds of the European budget and with projects carried out by the national fund which absorbs 70% of the citizenship programme.

Fitch economists further commented in a positive way on the Government’s prudent fiscal policy which is intended to sustain the budget balance from the ordinary income and without the income from the citizenship programme. The Government’s financial targets appear to be achieved also this year, they stated. The Government’s debt is expected to continue to decrease so that by 2020, this will be less than 41% of the GDP. The economists also observed a decrease of almost 10% in Government’s guarantees on debt following the end of the guarantee which the Government provided to Electrogas company to complete the gas power station project.

Fitch estimates that the Maltese economy will this year grow by 5.6%, sustained by public and private consumption and by an increase in investment. They noted the continued decrease in unemployment from 4% in June, while they observed that salaries increased by 1.8% in 2017. The economists said that Malta is sustaining the balance of payments through the gaming, financial services and tourism sectors. With just under the prediction of the European Commission, Fitch feels that within five years, the rate of economic growth will be 3% a year, and warns that the economy will start feeling the pressure of the infrastructure expenditure and the lack of workers.

Fitch agency added that the presence of foreign workers in the Maltese economy is addressing the lack of workers and contributes to the economic growth, while at the same time they are

decreasing the inflationary pressure in salaries. On the property market, the credit agency said there are indications that the market prices will not continue to increase with the same rhythm after the increase of 5.7% in prices last year.

 

To read the original PR, visit Fitch website.