Ageing costs: Fitch sees severe long-term impact on Malta
Japan, Ireland and Cyprus face the largest jump in ageing costs over the next decade, while Luxembourg, Belgium, Malta and Slovenia face the most severe impact over the very long term, Fitch rating agency said today.
In a report issued this morning, it said that whilst a successful resolution of the current fiscal crisis remains the most important driver for many advanced-economy ratings, without further reform to address the impact of long-term ageing these economies face a second, longer-term fiscal shock.
Without the implementation of mitigating reforms the median country analysed in our new report today is projected to see its budget worsen by 0.6% of GDP by 2020 and 4.9% of GDP by 2050. Consequently, many of these countries would experience escalating government debt-to-GDP ratios, with the average EU27 debt-to-GDP projected by Fitch to rise by 6.9% by 2020 and 119.4% by 2050.
"Without reforms to boost labour productivity and/or participation rates in many other advanced economies, population ageing will cause potential GDP growth to decline over the long-term, exacerbating the fiscal challenge," the agency said.
Few countries face an imminent problem. However, without major pension reforms Fitch would expect to take negative rating actions over the next decade on the countries facing the most pressing ageing pressures.
For illustration, under a no policy response scenario, Fitch's Sovereign Rating Model (SRM) predicts a 1.5-notch downgrade by 2030 for countries with the worst ageing problem, and a five-notch downgrade for them by 2050.
According to the model, Japan, Ireland and Cyprus face the largest jump in ageing costs over the next decade, while Luxembourg, Belgium, Malta and Slovenia face the most severe impact over the very long term. In particular, the setback to pension reform was a key contributory factor to the downgrade of Slovenia's ratings in 2011.
Despite the fiscal challenge currently facing some periphery eurozone countries, their recent experience also shows the power of reforms in transforming long-term projections. Recent reforms in Portugal, Italy and Greece have effectively neutralised the long-term impact of ageing on public finances in those countries.
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Philip Micallef
Jan 21st, 18:31
Am afraid all these credit agencies are a byproduct of the antisocial aspect of Capitalism as practised in the United States of America. It is all too obvious.
Dav Bezz
Jan 21st, 18:11
Dan kollhu juri li ghandna problema kbira li hawn iktar anzjani milli zghazagh. Iktar ma jmur iktar naraw lill-familja bhalha piz finanzjarju, apparti li vera trid jkollok amont sew biex tghajjex familja komda.Is-sens ta'familja spiccat, nawguwa kif inridu u nsejna x inhuma r-responsabbilitajiet tal-genituri. Kullhadd x-xoghol u t-tfal wahedhom id-dar fejn gieli qas platt lest ma jsibu llum.
ALEX GRECH
Jan 21st, 17:44
Stop spending ,and spending on credit. There are two types of people in this world, the two types are givers and takers. When you have more takers in a nation than givers,you bankrupt the nation.
Richard Farrugia
Jan 21st, 17:41
Ageing costs rise primarily because d NI system is a quasi-ponzi scheme.Banks provide little interests on savings and retirement wealth programmes are quazi non existant. The extended family system is eroding.Home ownership is not valued best to support the living. Medical treatment and care cartels feast on the old age persons resources.Why we do not look up to Paris WHO"s best
Victor Gauci
Jan 21st, 16:12
Ftit ilu l- pl ma qalx il fitch ha jzomm il rating ghax bis sahha tal Pl ghax ha zomm il qafas tal budget?
Roger Davies-Barrett
Jan 21st, 15:08
So if the Government were to ring fence NI payments and not use our NI payments to finance other non pension schemes then they would not have an aging problem. Look at the NSO figures just to see how much of your NI contributions are actually being spent on Pensions. I promise you it will shock you and make you afraid of the future just like it did me. NI is not for expensive unwanted projects..
Charles Grixti
Jan 21st, 16:33
You hit the nail right on the head. This is exactly what governments have been doing. Little be little, Fitch et al will be proposing the Eskimo solution, sent old people on an ice flow to their doom. Nobody should be allowed to exist unless they are producing all their lives and that is why in the US the business lobby is proposing retirement at age 70!
R ferriggi
Jan 21st, 15:05
ofcourse it is worrying!!!
why?? because this '''' kollox b xejn '' mentality BY BOTH political parties is an unsustainable lie.
if you grab a calculator,,,, and work out the future exponential costs,,,, you will understand!!!
as that singer said '''' that was just a dream'''.
i repeat--------- both parties red and blue.
anthony brincat
Jan 21st, 14:34
mr dimech ix xjuh gonzipn qieghad joqtolom bil kiesha li hawn taf li il gass 20ewro haliena siehbi tal misthija
Mary Camenzuli
Jan 21st, 16:40
Issa jraħħashulek Joseph....
.
pat muscat
Jan 21st, 13:50
GonziPN kellu 25 sena biex jippjana u jikkonsolida dan kollu. Bhal ma ghamel bl-EneMalta u l-kontijiet bl-gholi u d-dejn li hu nefah: halli halla kollox bhal qasba tixxejjer mar-rih!
Joseph Micallef
Jan 21st, 14:33
You must be very young. I remember the KMB's govt importing water in tankers from Sicily, booking the water bowerser to come and fill the tanks on the roof, powercuts on a schedule, the most advanced enforced teleconferencing system, paramilitary corps were the only chance of employment and the list goes on. In the 25 years we have a flowing water, 2 powerstations, real telephony, to continue
Joseph Micallef
Jan 21st, 14:39
To continue re these last 25 years: University for all, reopened MCAST after being closed in 78, choice of food, choice of TV and radio stations, no limit on how much money per day you can take with you when you go abroad, not having to pay 11 week's salary for a basic colour tv plus paying and extra 113 euro to register to get it, don't have to beg to get a telephone line, choice of schools.
Joseph Micallef
Jan 21st, 15:06
@ Joseph Micallef,
Let me answer you. If Pat Muscat was young, you must have been younger than my Mr. Micallef. Alex Cachia Zammit sending the maltese people to Australia leaving their homeland due to the incompetence of Borg Olivier's government. When Fenech Adami and his clique betrayed Borg Olivier in the middle of the night in Valletta.
Joseph Micallef
Jan 21st, 15:08
The maltese workers (all of them), particularly those at the drydocks, ended up in their retirement age without pension and thus becoming poor and begging for money at the doors of the same drydocks where the used to work. Where secondary education was not obligatory. When females where only good for the 'kcina' according to the PN. Where children's allowance were not existing.
Joseph Micallef
Jan 21st, 15:10
where social benefits like bonus, national insurance, minimum wage, collective agreements etc.. were non-existing and were brought to like thanks to the stellar leadership of Dom Mintoff. Electricity and its widespread distribution was made practical and reachable for everyone thanks to Dom Mintoff when agreements with US, UK and Italy where made. University was made accessible to the
Joseph Micallef
Jan 21st, 15:12
working class thanks to Dom Mintoff too. The labour party took care of you since your conception, when you were still in mummy's tummy till you'll pass away: children's allowance, pensions, bonuses, 40 hour week work, vacation leaves, sick leave. All those were given to you by Dom Mintoff. Dak imissek tiftakar sabih. Hawn min jaf naqra iktar minn dak li qieghed tipprova tinfurmana bih inti.
Joseph Micallef
Jan 21st, 15:15
And don't speak rubbish. Flowing water was introduced by the knights of St.John mate. Mela qatt ma rajt l-aquadotti? Two powerstations? Are you ok? The marsa one which the pn pledged to close down was erected by the labour party. Real telehpony? Mela min waqqafha t-telemalta? Choice of food? Jien dejjem kilt perfett taht il-partit laburista. Forsi trid titghallem tiekol.
pat muscat
Jan 21st, 15:32
@Joseph Micallef.
I commented on the 'age reform' which GonziPN studied, and studied and now Fitch is telling us that since studies led to no action; the fiscal challenge( already burdened with an BBB+ downgrade thanks to Gonzi)-is going to be greater!
Lawrence Fenech
Jan 21st, 13:42
Zewg soluzzjonijiet jew malli nghalqu il-61 jisparawlna jew inkella inehhi il-pensjoni ta' kullhadd inkluz ta' dawk li hadu 600 euro fil gimgha u baqu' f'buthom.
E Gatt
Jan 21st, 13:23
We live longer because of our genes, lifestyle, and other factors such as having access to an excellent health service.
True, Malta and other countries such as Luxembourg (EU richest country) has a severe aging issue.
We can’t shy away from addressing the economic impact, however people living longer healthier lives should be something to celebrate - MLP commentators please note.
JANICE Biggs
Jan 21st, 13:16
Well then my Maltese friends if your Government Mr.Gozzinz/ is worried about the long term ageing problem and the impact it would have on Malta, i would therefore suggest your tourist board stop advertising Malta as the perfect country to retire for us ex-pat due to a better climate/food hence people will LIVE LONGER -MAKEUP YOUR MIND JOHN, WHO ARE THE WHINGERS NOW THEN EH?
A Spiteri
Jan 21st, 13:14
so labour's proposal to offer free childcare now makes more sense. i'm one of those who is against having the government offering more freebies, but at the stage and considering that their proposal would only cost 3million a year, i say let's go for it. always better than increasing the social security bill and the retiring age!
Denis Pace
Jan 21st, 16:26
freebies...
Nothing comes free!!!!
twanny borg
Jan 21st, 12:48
jekk ifalli l-pjan li jrid jaghmel il-pl ikollna inkisru s-servizzi socjali. il-pjan tal-pl ifakkarni fil-progett tal-ispining and weaving fabrika tat-tessuti li l-makni blajnihom minghand ic-cinizi qodma bil-konsegwenza li din ghalqet ghax ma kienitx kompettitiva. austin gatt kien profettiku meta qal li jilghab imhatra li l-fabriki tat-tessuti malta mhux ser ikunu kompettitivi u hekk gara.
pat muscat
Jan 21st, 13:48
@Twanny Borg.
Its good to remind the young commentator that the 'servizzi socjali' which he boasts about were introduced and consolidated by Labour: PN followed suit. 'Gol-hajt, diga qeghdin', unless you are one of those who believe Dr Gonzi and not Standard and Poor's last week' s report. As for Austin Gatt, the less you mention him, the less harm you do to GonziPN!
Denis Pace
Jan 21st, 16:28
@pat muscat
The truth is that we are being conned continously.
Nothing comes free.
Labour's exploits in the 70's came at a price.
Our economy was in the dumps.
We are slowly heading in the same direction......
Etienne Galea
Jan 21st, 12:47
Imma x'ghandhom x'jaqsmu Gonzi, Tonio Fenech, J Muscat, u semmu lil min tridu. Il-problema hi l-birth rate qeda tonqos. Ma nahsibx illi ser nitolbu lil J Muscat jew lil Gonzi jigu jghamlulna t-tfal hux? Nahseb iktar irridu inharsu lejna infusna u naraw ghalfejn il-birth rate naqset. Nahseb iktar sirna skjavi tal-loans u hemmek forsi il-gvern, ikun min ikun, irrid jara x'ser jghamel!
twanny borg
Jan 21st, 12:43
tiftakru l-pl jiem qabel l-elezzjoni li ghaddiet kemm il-pl qal li jekk jerga jitla gonzipn l-isptar u l-medicini isiru bil-hlas? kemm bezzaw nies!! il-pl qed iwieghed kollox anki ikun xi jkun il-kaz ma jghollix l-eta' tal-penzjoni. dik serjeta' tipperikola l-penzjonijiet b'hafna weghdi. le le ahjar kif ahna ghax nafu fejn qeghdin.
V. Cauchi
Jan 21st, 12:40
Ageing is not the only problem facing a fledgling island like Malta and surely many other issues will crop up before 2030 or 2050. The real question is Malta's status within the EU, its vaunted independence and its perennial craving to imitate larger nations. Our best time was between 1964 and 2004 when we could have solved our economic problems even better if only we were not politically divided.
Richard Ellul
Jan 21st, 12:39
We had minestra and brodu almost all week, soppa ta l`armla once a week, Mum never worked, Dad had one job. We were an average family of seven siblings. We were happy playing in the dirt, fighting between eachother, going to the 7am mass daily and we grew up ok. Today, everyone is money rich compared to those days however are we happy? Nobody has enough these days. Its all about personal gain.
Alfred Dimech
Jan 21st, 12:33
Sinjuri Joseph Micallef, Jana Vella & co,
Onestament nispera li Joseph Muscat qed jhallaskom talli tiktbu dawn il-kummenti, ghax li wiehed jikteb kummenti hekk min jeddhu ma titwemminx. Xi stennejtu li jaghmel Gonzi biex jnaqqas din il-problema? Jnaqqas il-penzjonijiet? Mur oqghod bil-PL imbaghad! Is-social services mhumiex sostenibbli malta, u ilhom hekk minn wara zmien Borg Olivier.
Paul Cassar
Jan 21st, 12:30
dear gonzipn..............................ANOTHER economic parameter is seriously negative .....................please ask
tonio fenech to join you in running away from office as fast as you can................................for our sake.
C Muscat
Jan 21st, 12:28
Finanzi fis-sod...HaHa haj.
Shame Gonzi u Tonio...
Welcome Joseph PL
Alfred Dimech
Jan 21st, 13:09
U x'jista jaghmel Joseph Muscat biex jirranga din is-sitwazzjoni? Jbaxxi il-penzjonijiet? Jisforza private pensions bhall-Amerka? Joqtol ix-xjuh malli jaghlqu 75?
Alex Cutajar
Jan 21st, 12:18
Par idejn sodi my foot.
First Standard and Poor's and now Fitch.
Moody's have been downgraded less than a year ago.
Alex- www,alexcutajar.com
Denis Pace
Jan 21st, 16:32
Why are Labour apologetics consistently missing the point?
There are loads of arguments which can be made to criticise the Government, but this is not one of them
Joseph Micallef
Jan 21st, 12:05
When was cost of living never high? I think that the concept of a family with children have changed a lot and more inventives for bigger families should be introduced. Contrary to what is being stated by others here the PN govt already started to tackle the problem in stages even without the help of the opposition who preferred to stay gallarija because this is an unpopular subject to touch.
Jonathan Deeley
Jan 21st, 11:59
The Government could have been more pro-active in promoting a 'Private Pension' industry in Malta.
M Abdilla
Jan 21st, 11:59
As long as the cost of living is high, people will definitely not want to have more than two children...and obviously this will have a long term effect
Ian Ellul
Jan 21st, 11:55
grazzi GonziPN!
matthew tanti
Jan 21st, 11:55
how grumpy you are! this report is saying that we have too few young people who have to support too many old people - the solution is produce more youngsters! now that is fun!
Mark Spiteri
Jan 21st, 11:55
So its Gonzi's fault that people are living more on this Island due to his exceptional health policies....
Joseph Micallef
Jan 21st, 11:50
Another blow for GonziPN. Hawn hu c-certifikat tal-Fitch dear GonziPN. Sa dalghodu, in-nies tal-PN kienu qeghdin jiftahru li l-Fitch zammew ir-rating eccellenti ta' Malta. Hawn hu r-rating eccellenti GonziPN! Inti gibtna bhal Cipru mhux Dr.Muscat. X'misthija marelli. X'misthija!!
G. Cachia
Jan 21st, 12:57
Int taf x'int tghid jew ghadek ma qomtx dalghodu? Nithassrek tisthi forsi ghandek ghalxiex.
Joseph Micallef
Jan 21st, 14:11
@ G. Cachia,
Can you be so kind and enlighten us all with your deep wisdom so as to be able to interpret what Fitch has said please? Otherwise, your comment can be regarded as rubbish.
Jana Vella
Jan 21st, 11:49
Well, well....another problem that the PN conveniently swept under the carpets.... nice way to say you have “a pair of firm hands”!!!
Mr Joe Micallef
Jan 21st, 12:05
What the heck are you talking about! The main cause of this serious impeding problem is RNI and all governments can do is to try and mitigate it.
Joseph N. Attard
Jan 21st, 12:05
@ Jana Vella: Can't you read? " In the long term...." What exactly did you expect the PN to do: order people to stop ageing? That is the problem with many similar comments: Irrespective of the serious subject under discussion, people just vent their political passions. What about some constructive criticism instead?
R. Aquilina
Jan 21st, 11:48
Is this JM's fault also.....We wait.
Paul Caruana
Jan 21st, 11:36
I suspect that over the next decade, the pensionable age will be once again be raised from the current 65 to 68 years!
Charles Cremona
Jan 21st, 11:55
Paul: That's what it is in many if not all advanced countries a lot richer than us, what's so special about us?
D M Grech
Jan 21st, 12:06
My concern is not the minimum pensionable age but:
1) Sufficient jobs for the older portion of the labour force
2) sufficient pension value to sustain quality of life
This is a serious demographic issue that needs to be addressed with job creation, education and health care for the older set. Sorry the resemblance to the PN's election buzz phrase is coincidence.
Joseph Micallef
Jan 21st, 11:23
GonziPN... at its worst. Kemm se nivvota bil-qalb fl-elezzjoni li gejja....
twanny borg
Jan 21st, 12:49
u kemm se jiddispjacik waral-elezjoni li gejja............
Joseph Micallef
Jan 21st, 11:21
Oooohhhhh at last the biggg baloon inflated by GonziPN when during these days, to make up for the shameful result of Standard & Poor's, continously where praising Fitch for giving us an excellent rating, finally burst into pieces. Now Fitch is also putting GonziPN into shame! Itshi GonziPN jekk taf! PS. Now we're like Cyprus. Mela mhux Dr.Muscat brought us like Cyprus, but GonziPN!
Mike Abbot
Jan 21st, 12:39
'shameful result of Standard & Poor's'
lol
have you seen the rest of europe???
L Zammit
Jan 21st, 13:29
"mhux Dr.Muscat brought us like Cyprus, but GonziPN!" Tixtieq tista tghid hekk sincerament, imma dan ikun sagrilegg.
Joseph Micallef
Jan 21st, 15:19
X'jinteressani mil 'rest of europe'? Mela meta inti kont tmur hazin fl-ezami, kont tikkonsla b'min mar aghar minnek? U le, ara l-vera hawn min m'ghandux b'xix jargumenta. Inhares lejn min mar ahjar bhal Svezja, Norvegja, Danimarka, Germanja ecc..
Please choose the reason of your report below: