S&P confirms Malta's ratings, outlook stable
Ratings Agency Standard & Poor's has affirmed its A/A-1 sovereign credit ratings on Malta and said the outlook was 'stable'.
"The stable outlook balances our expectation of continued fiscal consolidation in the medium term against the challenges of the economic reform agenda in combination with a high debt burden," the agency said in a statement.
"The ratings on the Republic of Malta are supported by the sovereign's strong political institutions and a commitment to economic reforms, which we believe are needed to maintain competitiveness."
It said the ratings were constrained by Malta's narrow economy, which was vulnerable to external shocks, and by the seizable public sector debt burden.
"The government is supporting the private sector's diversification into higher value-added manufacturing, as well as into new services sectors, in particular information and communications technology (ICT). This ongoing diversification should decrease the volatility of Malta's growth path and moderate the economy's vulnerability to external shocks, as well as offset the ongoing decline in manufacturing.
"The policy focus on improving the quality of human capital is crucial for implementing this higher growth strategy."
The agency noted that last year the general government deficit had deteriorated significantly to 4.7% of GDP after several years of fiscal consolidation.
"We expect the government to consolidate its fiscal position once the economy starts to recover, but at a modest pace. We also expect general government debt (including the state-guaranteed debt of Malta Freeport Corp. Ltd.) to remain at around 70% of GDP in the coming few years before starting to trend down towards the end of the forecast period."
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Peter Korsten
Jul 8th 2009, 11:40
Some people appear to mistake 'stable' for 'good'. If I get hit by a car and I'm in stable condition in hospital, it merely means I won't die just yet.
Malta's rating is still not quite 'AAA', and within the EU it's average at best. And the national debt, already quite high, is going up even further because of the deficit (which itself went up as well). I fail to see how someone in his or her right mind can consider that to be good news.
The problem that Malta has is a high level of hidden unemployment, because a succession of Labour and Nationalist governments focussed on creating jobs (perhaps in the hope of securing votes?) that didn't really exist. Working half days in summer is another way to hide unemployment.
Until more people start having real jobs, the economy will be a source of concern And quite frankly, I don't see the current government sacking the people that have these phantom jobs.
edwin formosa
Jul 7th 2009, 20:32
AAAAAra x'wahda din !!!!!! Mela veru PAR IDEJN SODI .
Paul Smith
Jul 7th 2009, 20:25
Joe Vella
The same economic geniuses that predicted stable economic growth in 2007 & 2008 as well as being big on some investment banks that were sold for $2 ?
We have just entered the third great depression and the debt burden on western nations are crushing us.
J Martinelli
Jul 7th 2009, 18:50
It is almost certain that Dr. Joseph Muscat has called his advisors to help him find the most obtuse angle from which to sow doubt about the S&P rating.
This is a very good endorsement of the government's fiscal policy in the face of the current world economic crisis.
The government continues on a steady course, maintaining direction in spite of agitated waters and making corrections as it steams ahead to arrive at its preordained destination which is excellence.
Joe Vella
Jul 7th 2009, 18:43
What does the messengers of Gloom and Doom have to say?