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Wednesday, February 3, 2010, 12:16

Moody's praises Malta's economic resilience

Warns about oversized and inefficient public sector, and over-reliance on public subsidies

Moody's Investors' Service has praised Malta for its economic resilience.

In a report issued today, the ratings agency said: "Malta's A1 government ratings reflect the country's high economic resiliency and its very high financial robustness.

"The country's primary challenge is to maintain economic competitiveness over the longer term, building on and securing its success in attracting investment in fields such as remote gaming, financial services, call centres and pharmaceuticals.

Dietmar Hornung, Vice President-Senior Analyst in Moody's Sovereign Risk Group and author of the report, said that Malta has made substantial progress towards real convergence with the rest of the eurozone.

"Although competitiveness in some traditional export industries is decreasing as a result of real income convergence, market liberalisation and EU membership are facilitating new export-oriented activities.

"Key to addressing the competitiveness issue will be making progress on structural reforms associated with the EU's Lisbon Agenda.

"These problems will be exacerbated in coming years due to the ageing population," he warned.

The analyst noted that Malta's institutional strength benefited from the EU accession process.

"Now, the risk of economic disruption from the political cycle is far less than it has been historically, not least because of the heavy constraints on economic policy that are imposed by Malta's membership of the EU and its adoption of the euro,"

Moody's said it also considered Malta's susceptibility to event risk as being very low.

"For one thing, its adoption of the euro has effectively eliminated the risk of an external financial crisis. Malta's banks also weathered the initial stage of the crisis relatively unscathed, but their concentration risk is considerable, given their high exposure to the real estate sector.."

The outlook on Malta's government ratings is stable but Moody's said it saw a clear need for Malta to address its structural economic problems if it was to continue its real convergence with core eurozone countries and remain competitive over the longer term.

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Adrian Archer

Feb 4th 2010, 10:29

I believe that moody hit out the good and bad things about this economy. Our economy was more resilient to the crises. The question is whether the government had anything to do with it. First of all I think more credit must be given to the businessmen as they drive the economy. Secondly some credit must be given to the government as it has given some platform to it.

BUT, people should not just read the main title, they should at least read the second title...inefficient public sector, over reliance on public subsidies and falling competitiveness are not of a praise to the current government.

I think that this is quite a balanced report giving due credit to the government on some aspects and hammering them on other issues.

Apart from that (like others pointed out here), this is a credit rating company. Lehmann Brother had a similar company say it had the highest ranking of credit rating one hour before it went to chapter 11 of bankruptcy!!! So it is up to you to believe in it or not!

M.Gauci

Feb 4th 2010, 09:39

@Paul Smith

I don't know where you come from and therefore I do not know how democracy works where you were brought up. However in the rest of the free world, governments are elected by the people who have voting rights to choose a government for any number of times they wish to do so.

It is highly impertinent to state that if another PN government is chosen by the people, then Malta might as well abonden democracy. This is like saying that England is not democratic because in the last 3 elections, the people voted Labour and did not swing left to right like a drunkerd at every election.

We will vote a different government, not because you say so, want so, or will call us undemocratic, but once we feel there is a true and proper alternative to the present one.

Ever since 1981 this has not been the case, well we were tricked it was so, for one minor blip, but that sorted itself nicely thankfuly.

If you think Malta is not democratic, you should try Zimbabwe. Bon Voyage Mr. Smith.

Gianninu Saliba

Feb 3rd 2010, 21:31

Mr. Smith, you have put your foot in it. If you want to know if Labour can do worse than the PN in government, don't ask me, ask Mintoff. But make sure that he is given the lie detector test when he is answering. Moody"s is not the only rating agency that complimented the PN Government. The various UN agencies, Eurostat, the EU Commission, Maltese business will not be the last.to praise the Maltese Government's policies. The electorate at the next General Elections will do the same. Joseph Muscat knows that he has to cling to straws, that's why he came out with the 'idea' of allowing the police and service men to join a trade union if he was to become Prime Minister (that will be the day). He is hoping that these people are nothing more than imzazen.

Paul Smith

Feb 3rd 2010, 19:15

Gianninu Saliba
I was unaware that Moody's was the rest of the world, new one on me. Take you silly Blue and Red glasses off man, what a sad divided country you are! If a PN government goes on any longer, you may as well abandon democracy because you will be verging on dictatorship. Can the PL really do any worse?

P. Schembri

Feb 3rd 2010, 19:00

Ha, jha ha. We all know what Moody's said before the current recession hit us! So what Moody's say, we'll take with a pinch of salt. A drowning man clutches at every straw he finds!

C, Bartolo

Feb 3rd 2010, 18:43

@ Pat Muscat

Moody's is an international rating agency and is INDEPENDENT from any government or institution.... Check your facts before u blatter trash on this site. www.moodys.com

Gianninu Saliba

Feb 3rd 2010, 17:19

Shame, Joseph Muscat is not in the mood for Moody. Actually, Joseph must be very upset that he and his Progressive Party proclaim Doom and Gloom and the rest of the world compliments our Nationalist Government. Sorry, Joseph your credibility is crumbling.

J Busuttil

Feb 3rd 2010, 17:12

Oops the Labour people knows more than Moodys. And is L-Orizzont going to publish this report? I do'nt think so.

Ivan Attard

Feb 3rd 2010, 16:09

The last time Moody reported on the economic progress of Malta was in January 1998. We were all faced by the same troubles that we are undergoing during these times - high electricity bills, bad governance, dissense and lack of agreement between Parliamentary members representing the government etc. We all know what happened during that year!

I think that this government is moving the same way as the Labour government did during 1996-1998 and it merits the same destiny as the latter!

P.Zammit

Feb 3rd 2010, 15:55

@Muscat Pat

Probably, they are more dependable, professional and have integrity much more than Labour's (PL/MLP/Moviment/Liberli/socjalisiti/etc?) reports.

Muscat Pat

Feb 3rd 2010, 15:47

But who pays the bill for Moody's report? Few would know, but it is our Government.

joseph saliba

Feb 3rd 2010, 15:09

moaning about lack of subsidies in water an electricity when the facts show that our bills are being heavily subsidised; blaming shortfall in participation in solar energy subsidy projects; Infering that problems relating to unemployment, deficit in tertiary education and relative poverty are all due to the ministers' inefficiency and or corruption, besides being untruthful cheap propoganda which win votes is very damaging to the same people one claims he is defending. Let those who have ears hear.

joe caruana

Feb 3rd 2010, 14:49

To all of you that think highly of these credit rating agencies. Anyone remembers what the credit rating for Lehman Bros. was a day before the collapse and a day after? These are only overpaid 'experts' who just tell us what happened after it happens.

A. Mifsud

Feb 3rd 2010, 14:44

Credit where credit is due!

"warns about oversized and inefficient public sector, and over-reliance on public subsidies"

is settur pubbliku qed jifga it tkattir u tkabbir ta l ekonomija...il gvern ghandu jhalli s settur privat jimrah filwaqt li jkompli jincentivah u bla ma jpoggi pizijiet akbar fuq dan is settur ... u dan il pajjiz jkun hafna ahjar. Fuq is sussidju ilna nafuha l istorja...miljuni kbar ta liri tac cittadini litteralment mormija biex nipprotegu kumpanijji inefficenti u falluti (bhat Tarznari - Trasport Pubbliku ecc ecc)

Paul Barrett

Feb 3rd 2010, 14:22

This is obviously a good report by an independent and trustworthy source. I do however feel that the comment "low female participation in the labour force," undermines the value that women give outside the pure 'labour force' definition. By far the majority of women work extremely hard in support of the working member(s) of the family and indeed some work even harder and far longer hours.
We already have many unemployed so what part of the labour force are they expected to participate in, swapping a male for a female worker to provide a politically correct balance really does not make logical sense.

Joseph E Briffa

Feb 3rd 2010, 14:18

This is encouraging news coming from Moody's..they call a spade a spade. All Maltese should feel a sense of relief and we should all continue striving to improve our lot and not wait for others to help us. Nobody owes us a living. If we all work hard we will all benefit, if we just lie back we will all sink.

C. Sapiano

Feb 3rd 2010, 14:11

And this in a recession. So these are the true facts after all. I think that the recession in Malta is more mathematical than real. For once reality is better than figures.

Paul Smith

Feb 3rd 2010, 14:02

Ratings agencies are so un-important! Is this the same Moody's that failed to predict the financial crisis in the first place? The same ratings agencies that said nothing about massive global credit expansion and said nothing about public sector debt in Greece, Ireland Spain and Portugal?
sorry, i have no time for these ratings agencies and their trumped up overpaid executives.

So many of us armchair economists saw this whole s-storm coming and were laughed at - Google Peter schiff - now there is a real economist - Moody's S&P all overpaid suits who could not find there backside if they needed to attend it! Hope your reading Moody's!

joe vella

Feb 3rd 2010, 13:57

an oversized and inefficient public service?
whoever said this?
do we need moody's to tell all this?
ask anybody who needs a service from the so called public service!
and worse of all it just gets worse and worse, despite all the nice words we get told!

G.Debono

Feb 3rd 2010, 13:44

@R.Ferriggi.

You are of course correct. However please note that the opposition (in tandem with the GWU) will not help the governemtn to reduce the size of such entities and therefore gain better economies.

It is all ok for Joe Muscat to quote managenent and financial accounting ratios to impress that Enemalta could have a better costing strategy, but the bottom line, irrelevant of how to categorise your cost of sales, your sales remain as they are and have to do good for inefficinecies.
Now, what are Enemalta's greatest inefficiencies? Well some of them are out dated practices but the major ones are employment bloating. Some of this problem can be directly attributed to the PN government for giving free jobs on or before elections.

However to reduce our own water/fuel/electricity bill we have to rationalise resources. Will the MLP (+GWU) allow the PN government to do this? NO because of bad and short term political gain. Our bills can get cheaper if this is done.

Of course I am not advocating that people just end up without a job, we need retraining and reassignment of people to the private sector if possible. MLP/GWU will put spokes in the wheels!

A. Zahra

Feb 3rd 2010, 13:42

@ J. ferrigi
Areas of weakness for Malta include an oversized and inefficient public sector, an over-reliance on public subsidies, insufficient spending on research and development, and a low female participation in the labour force," said Mr. Hornung

@ r.ferrigi
Solutions for the problem areas you pointed out:
"an oversized and inefficient public sector" - Solution: sack civil servants or privatise government departments.
"An over-reliance on public subsidies" - solution: forget our social conscence and stop most subsidies
"Insufficient spending on research and development" - Solution - make more funds available to the university to fund research and development if necessary even by increasing taxes.
I am sure that you will find the solutions acceptable. Frankly I do not

P Muscat

Feb 3rd 2010, 13:37

Well that's one story we won't be hearing about on One News! And I guess J Grima, IGalea and the Lil'Elves will also not be wasting their time on this story. C'est la vie - and Life IS good in spite of the motley crew!

Victor Ross

Feb 3rd 2010, 13:36

Hi Gloomers and Doomers.........where are you ???????????

J Martinelli

Feb 3rd 2010, 13:17

@ r ferriggi

Do you propose forcing women to work?
Do you propose reducing Social Services and assistance to those who really need help?
Do you propose massive reductions in the Public Service?

The real tragedy in this Island is the fact that rather than finding ways to solve problems, there are those who are constantly finding new ways of hindering the government. Unfortunately some of those happen to be within the government ranks.

Besides the government issues, there are also those who stubbornly evade taxes and only turning Malta into a police State will finally goad them to cough up what they owe AND on time!

Mr. Hornung may very well be a highly paid official but his salary is not paid by the Maltese taxpayer!

E. Azzopardi

Feb 3rd 2010, 13:04

Now this is an independent and very serious international entity.
So all of us Maltese should be happy about this, IRRESPECTIVE. It is good news for ALL OF US , repeat ALL OF US and there are no two ways about it. You cannot argue with this. Period.
We do have many faults but let us give due credit where it belongs.
.

r ferriggi

Feb 3rd 2010, 12:54

"Areas of weakness for Malta include an oversized and inefficient public sector, an over-reliance on public subsidies, insufficient spending on research and development, and a low female participation in the labour force," said Mr. Hornung

this is the tragedy of this country... ( i am aware of being negative).....

while of course thanking Mr Hornung for repeating...but do we need Mr Hornung to tell us these things?? or some highly paid consultant??

what are the authorities waiting for to tackle them??

the normal hard-working class is fed up with the current political class's attitude.

they treat us like idiots.

N.Farrugia

Feb 3rd 2010, 12:51

One News room please note!! Maybe do left it for the 7.30pm news bulletin!! Charles Mangion what are your comments? L-Orizzont will definitely have it tomorrow in its front page!! Sorry but you all lost your credibility!!

joe cutajar

Feb 3rd 2010, 12:24

u mela dak u il partit nazzjonalista fil gvern. u mela il-p.l. fil gvern imorru il-bahar grazzi gonzi

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Moody's praises Malta's economic resilience

Warns about oversized and inefficient public sector, and over-reliance on public subsidies

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