In a statement, the Maltese government said that DBRS Inc. confirmed the local and foreign currency issued ratings for Malta at 'A' as well as the short term foreign and local currency ratings at R-1 (low). All the ratings demonstrate that Malta's economic position is stable.
Looking at Malta's economic situation
Amongst other factors, Malta's euro zone membership ensures the island's access to European markets, leading to strong macroeconomic policies and opening up channels of support from European institutions. In addition, households' stable financial position as well as the island's attractive business environment support Malta's position.
Malta's public finances, as also previously pointed out by other rating agencies such as Standard & Poor's expose the country's economic situation to a certain degree of vulnerability. Therefore, Malta can hardly afford any slippages in its public finance strategy and execution. Fiscal consolidation and a considerable reduction in public debt will further stabilise and reinforce Malta's current position. On a positive note, public debt is presently on a steady decline.
At present, the island is also exposed to external shocks due to its dependence on industries such as tourism whose success is directly tied to external demand, however, low reliance on external credit and a solid external position counteract this. Other factors that could potentially undermine Malta's position are its relatively low rates of productivity growth and labour force participation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.