Updated: Malta's credit rating lowered

(Adds government statement)

Standard and Poor's has lowered Malta's credit rating a notch to A-.

The government said it noted the decision, which highlighted the fact that the international crisis was worsening.

The agency downgraded France's top AAA to AA+, with a negative outlook, but left European powerhouse Germany's unchanged at AAA, stable.

S&P also downgraded Italy by two notches to BBB+, negative outlook, with Spain cut two notches to A, negative outlook, as part of a major overhaul of ratings on 16 of the 17 eurozone nations, with Greece excluded.

S&P said its rating actions reflected its view that "the policy initiatives taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone."

S&P, one of the top three global ratings agencies, said it cut its long-term ratings on Cyprus, Italy, Portugal and Spain by two notches.

Austria, France, Malta, Slovakia and Slovenia were cut one notch while Belgium, Estonia, Finland, Germany, Ireland, Luxembourg and the Netherlands all had their ratings affirmed.

In December, S&P announced that it was putting the eurozone countries on review for downgrade in view of the worsening debt crisis and the failure of EU leaders to put a halt to the problems. 

In December, S&P announced that it was putting the eurozone countries on review for downgrade in view of the worsening debt crisis and the failure of EU leaders to put a halt to the problems.

Greece, which has seen its ratings repeatedly downgraded since it triggered the eurozone debt crisis last year, has a rating equivalent to that of a partial default from S&P at CC with negative outlook.

In a statement, the Finance Ministry said it took note of S&P’s decision, which, in the agency’s own words, had been taken in reflection of “deepening political, financial, and monetary problems within the eurozone, into which Malta is closely integrated”. 

Malta, the ministry said, was included in this downgrade exercise despite receiving a positive bill of health on its public finances just this week from the European Commission.

The government, the ministry said, joined the other member states affected by the decision in re-affirming that far-reaching measures had been taken to overcome the crisis, ensure sound public finances and return to a path of growth and job creation.

“Today’s decision by Standard and Poor’s highlights that worsening of the international crisis. Government has repeatedly warned over the past few weeks that Malta’s interdependence with the performance of the European economy will create important challenges for Malta in 2012. The lack of stability and the bleak outlook of the international markets and in our major trading partners threaten investment and job creation.

“Today’s decision also confirms government’s responsible and prudent approach in taking further cost cutting measures in view of the ongoing deterioration of the international economic and financial situation, which took place in the past two months following the announcement of Budget 2012.

“Unfortunately, the Opposition showed complete shallowness and detachment from the economic reality surrounding us when questioning the timing of government’s decision to implement further administrative cost-cutting initiatives.

“The government is committed to continue to strive to ensure that the impact on the Maltese economy is contained so that Maltese jobs will continue to be safeguarded. It reminds that the hallmark of the PN government has been its success in creating jobs and in safeguarding them. It will continue to do so,” it said.