The government’s attempts to blame the eurozone crisis for Moody’s credit rating downgrade have been flatly refuted by the agency’s report on Malta’s economy, Labour MEP Edward Scicluna said yesterday.

The government’s “apologetic” response to Moody’s downgrade is that it was an automatic response to the eurozone crisis rather than a judgement on Malta’s economic performance, Prof. Scicluna said.

The crisis has resulted in rating downgrades only for countries that were economically weak or had to provide life-support for their banks, the economist said, adding that weak growth forecasts and low investment meant it would be difficult for Malta to win back the A1 credit rating.

A reading of the Moody’s report shows that it explicitly refutes the government’s explanation. Although Moody’s agrees that the crisis has hit a number of countries, not every country has been hit in the same manner. Moody’s points out that Estonia will keep its A1 credit rating. The same is true for the Czech Republic.

Even if the crisis ended tomorrow, and demand for Malta’s exports and services went up, the IMF estimates that the maximum growth rate Malta could achieve is two per cent. The reason for this is the very low level of investment which falls well short of the level required for an A1 country.

Moody’s also notes that Malta’s projected low economic growth in the medium-term future will not lead to a debt reduction significant enough to win back its A1 status.