Malta’s economy is "among the fastest growing in the Euro area and its growth prospects look favourable" but its public finances "remain a source of vulnerability", credit rating agency DBRS has said. 

The Toronto-based agency confirmed Malta's 'A' long-term foreign and local currency rating, with its short-term rating also confirmed at R-1 (low). 

It praised the country's solid external position, favourable public debt structure and the robust financial position of households. 

The rating agency cautioned that despite the positives, Malta remained vulnerable to external shocks - especially those from within the EU - and that public debt, though declining, remained moderately high. Malta's ageing population also presented risks, the agency said, noting that labour-market participation, though rising, "remains among the lowest in the EU." 

Malta's rating could be further consolidated if the government continued to drive down debt, improved public efficiency, boosted private investment and brought more people into the workforce, DBRS said. 

Counterwise, Malta's rating would suffer if additional contingent liabilities emerged from either state-owned enterprises or the financial sector, or if a large or prolonged external shock hit the local economy. 

'Another positive report' - Government

In a statement, the government highlighted DBRS comments that noted that "important improvements in fiscal management have been undertaken, after weak fiscal performances in the past" and that previously public expenditure overruns and weak internal controls "were common in the past". 

It said that the agency had found that Malta enjoyed "relatively sound public institutions" and said this ran counter to the Opposition's "destructive campaign" against them.