Malta Credit Rating Upgraded To A+
by Amanda Banks, Lowtax.net, London
15 August, 2017
Malta's sovereign credit rating has been increased from A to A+ with a stable outlook by international crediting rating firm Fitch, and follows Standard and Poor's credit rating upgrade of the island in October of last year.
Fitch said one of the main contributors to this upgrade is the "fast declining gross general government debt," which is expected to "decrease to 50 percent of GDP in 2019... supported by strong nominal GDP growth and recurrent primary surpluses." Fitch added that it expects Government-guaranteed liabilities to decline in the coming years.
Another main driver contributing to this upgrade is the positive turnaround in the fiscal balance. Fitch says it expects Malta to continue to achieve a fiscal surplus in the coming years, reflecting improved tax collection and tax revenue, reduction in unnecessary expenditure on social benefits, easing of pension pressures, and the island government's support for higher economic growth.
Fitch also forecast the Maltese economy to continue growing at a faster pace than that of similarly rated countries, fueled by the solid performance of Maltese exports, notably in the services sector, and a dynamic labor market. Investment is expected to pick up in 2019, boosted by the gradual absorption of new EU funds and the launch of large transport, health, and education projects.
Fitch said the Maltese banking sector is expected to remain sound with improved profitability, non-performing loans on a declining trend, improved capitalization, and conservative lending.
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