Scope Ratings GmbH has assigned Malta an A+ long-term issuer and senior unsecured local and foreign currency rating, along with a short-term issuer rating of S-1+ in both local and foreign currency. All Outlooks are stable.
In its first time rating of Malta, the company said its A+ rating reflects the country’s euro area membership, high economic growth, prudent fiscal management and strong external position. The rating is challenged by contingent liabilities, unfavourable demographics, external vulnerabilities, and regulatory shortcomings of the financial sector.
The agency highlights Malta's buoyant economy, which has been outperforming the EU average behind only Ireland.
But despite the relative strengths of Malta’s rating, the agency points to risks from financially weak state-owned enterprises and supply side constraints induced by the tighter labour market.
It also points out that Malta is vulnerable to policy harmonisation risks and changes in EU corporate tax law. Finally, infrastructure bottlenecks and skills shortages are expected to weigh on the country's long-term growth potential.
It also points to developments regarding Pilatus Bank and the European Commission's call for Malta to take a stand on anti-money laundering measures. "Scope recognizes that the recent events have no likely impact on public finances but may affect Malta’s reputation of an emerging financial centre," it says.