Fitch rates Malta's long-term direction as 'positive'

July 23, 2019 | 1 minute read

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Last Friday, the rating agency Fitch reviewed the country’s economic prospects as ‘positive’ confirming the former A+ status. Following the issuance of this new revision, the government published a statement affirming that this was the best rating Malta has ever received.

Malta’s status was updated from ‘stable’ since the GDP growth is expected to continue to be steady with the debt-to-GDP ratio firmly improving and public finances remaining in surplus

The report which was issued last week, as requested by the Maltese government, listed a number of both positive and negative indicators.

The action report assessment was based on the premise that the government would intervene to assist Bank of Valletta if required, and that HSBC Malta would be backed by its parent company. 

Main comments

  • Fitch projects GDP growth at 5.5% in 2019, and 4.8% in 2020
  • Real estate prices show no indications of overheating
  • In comparison to the majority of A-rated peers, Malta’s institutional strengths are “stronger
  • Government surplus is expected to continue through 2021, at around the 1% mark. Revenue derived from selling citizenship will continue to decline, reaching 0.5% by 2021.
  • In 2011 debt-to-GDP stood at 70%, currently, it stands at 46%, expecting to drop to 40.3% by 2020
  • Fitch commented that the improved resources at the FIAU and MFSA “seem to have resulted in a surge in administrative penalties being enforced”
  • Banks are clearing bad loans which decreased from 7.3% of their books in 2015 to 3.3%.

 

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