International credit rating agency, DBRS, has affirmed Malta’s credit rating at A while upgrading the trend on the ratings to positive.

The development comes weeks after credit rating upgrades by Standard and Poor’s and Fitch.

DBRS acknowledges that, following a fiscal consolidation process since 2013, Malta’s fiscal out-turns came in better than expected in 2016 where decades of fiscal deficits were turned into surpluses.

The credit rating agency also noted that in 2016, the government debt ratio, which was already 12 percentage points lower than its 2011 peak, fell below 60% of the GDP.

DBRS attributes the improvement in public finances to “strong revenues as well as moderation in expenditure, and supported by a strengthened fiscal framework”.

However, Malta's contingent liabilities remain a source of vulnerability, its economy is exposed to external shocks and pressures from the rising age-related costs, if unaddressed, could pose a concern for pensions, DBRS warns. 

We directed our efforts to address such issues, bringing about an upgrade to Malta’s rating, and hence honouring our promise- Edward Scicluna

Finance Minister Edward Scicluna said: “Four years ago, we had promised to work on upgrading Malta’s credit rating which would make our country more attractive to foreign investors. In contrast with the past deteriorating state of public finances with a ballooning deficit and debt ratios, we directed our efforts to address such issues, bringing about an upgrade to Malta’s rating, and hence honouring our promise.”

DBRS positively expects that the improvement in the fiscal position over the past three years is likely to be sustained. A sound budget position, together with solid growth, is expected to lead to the further reduction in the public debt ratio.

It also acknowledges the government’s efforts to address structural and fiscal challenges including the restructuring of Enemalta and Air Malta, and measures to address tax evasion and informality.

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