Standard and Poor's confirms Malta's high credit rating

Credit rating agency Standard and Poor's has maintained its stable outlook for Malta in its latest analysis of the economy and public finances.

The agency yesterday reaffirmed its A/A1 sovereign credit rating, deemed to be among the highest.

It said the stable outlook balanced its expectations of a fiscal consolidation in the medium-term against the challenges of economic reform and the high debt burden.

The rating was supported by the country's strong political institutions and the commitment to economic reforms, which the agency said were needed to maintain competitiveness.

The agency noted that the government was supporting the private sector's diversification into higher value-added manufacturing and into new services sectors, in particular information and communications technology.

It said 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".

Standard and Poor's said Malta's creditworthiness could improve if a more competitive economy emerged and the debt burden would decline significantly.

"Conversely, in the case of sustained and significant fiscal deterioration, or significant setbacks in implementing the reform agenda and deterioration in the competitiveness of the economy, the ratings would come under pressure," the agency said.

ksansone@timesofmalta.com