On the 10th of July, Standard & Poor's revised Malta's economic and fiscal growth rating. Malta's economic outlook according to the agency's rating moved up from 'stable' to 'positive' with a BBB+/A-2 rating.
According to Standard & Poor's Ratings Services, Malta's outlook was rated as 'positive' partly due to the island's economic growth prospects remaining relatively strong within the EU. It is true that Malta is performing relatively well when compared to the rest of the EU member states and has also been achieving one of the most positive performances within the euro zone.
Prime Minister Joseph Muscat while visiting Malta's pavilion at the Milan Expo 2015 stated that Malta is experiencing the strongest economic growth out of the EU28 at the moment. Malta's outlook looks promising as by 2018, government debt will fall to 55% of the country's GDP in 2018, compared to 50% in 2014 if the government continues its budgetary consolidations. Simultaneously during the next 3 years, Malta's GDP will continue to grow, particularly due to heavy investments in the energy sector.
The Maltese government received the rating very positively and stated that this is highly encouraging to continue addressing challenges and turning these challenges into economic opportunities, such as in the case of the energy, pensions and health care sectors. The government is intent on promoting sustainability, employment and investment.
On the positive side, Malta's advantageous fiscal schemes have been successful at attracting foreign investment to the island, while manufacturing and services exports have proven to be the key economic drivers for the country. Malta's domestic financial situation also appears to be stable. Another piece of good news is that the Greek crisis is not likely to affect Malta's economic profile as the country has little direct financial links with Greece and therefore very limited exposure to Greek debt.
On the other hand, Standard & Poor's pointed out that tight public finances and rather high debt may restrict the government's flexibility in carrying out its planned reforms and Malta needs to be stricter in the implementation of its fiscal policy as leniency in this regard may elevate the debt problem and external liabilities.
Malta's rating, however, could improve further if the government managed to successfully implement its reform programme quicker than planned.
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