Fitch Ratings has confirmed Malta's Long-term rating at 'A', while also re-affirming a Stable Outlook.

In an announcement earlier this month, Fitch noted that Malta's capital markets remains very liquid, with the loan to deposit ratio of domestic banks at 63% in 1Q15. "The core banks, which have a balance sheet of around 260% of GDP, are well capitalised and delinquency portfolios have stabilised over the past year, while provisions for NPLs have increased." Positively, the credit rating agency notes that the regulatory environment has continued to evolve in the past six months, with a single-supervisory framework now in place and the establishment of a resolution fund. This should help underpin financial stability.

Looking at the broader economic picture, Fitch remarks that the Maltese economy will continue to outperform eurozone peers in the medium term. "The country's services sectors will remain the most dynamic, led by higher tourist arrivals and expansion of the gaming industry." The agency lauds the existence of a structural shift in the economy to higher value-added services. However, failure to improve productivity could create growth bottlenecks in the longer term.

Finally, Fitch forecasts a decrease in the fiscal deficit to 1.8% of GDP in 2015, an important step in the process of fiscal consolidation.

Fitch reaffirms Malta's 'A' rating

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