Payments to credit rating agencies have not “exploded” in recent years, Finance Minister Edward Scicluna has insisted, despite data he tabled in Parliament recently showing otherwise.
In comments on a video on his Facebook page, Prof. Scicluna dismissed claims which he said were suggesting that the government was paying the agencies to secure a positive rating.
“Their obligation is to the world and the public. The agencies’ reputation is at stake and they are there to give ratings. Their rating is important because banks then use these to make certain important decisions,” Prof. Scicluna said in the video.
Read: Government payments to credit rating agencies soar since 2013
In recent years, the government has used the ratings by a number of such agencies, including those by world-renowned agencies like Fitch, DBRS, Moody’s and Standard and Poor’s, when speaking about Malta’s booming economy.
Credit rating agencies are independent companies that assign ratings which reflect the ability of a debtor to pay back debt. Agencies rate countries as well as private firms. Ratings are either solicited or unsolicited, with agencies initiating them themselves.
The country has been paying for such ratings for many years
While not divulging any figures, the minister insisted that the country had been paying for such ratings for many years, insisting that these were crucial for a country or company.
According to Prof. Scicluna, it was “simply not true” that the payments to rating agencies had increased significantly since Labour took office in 2013.
His claim comes just weeks after data he tabled in Parliament last month, in reply to a question by Nationalist MP Jason Azzopardi, showed that since 2013, the payments had soared, with the government forking out a total of €237,502 last year alone.
In 2013, the figure stood at €121,119, going up to €126,567 in the following year and €214,702 in 2015 before peaking at €248,697 in 2016.
Following the minister’s comments, this newspaper asked the government for the amount paid to credit rating agencies prior to 2013, however, the information was not supplied by the time of going to print.
Earlier this month, Times of Malta had also asked for a breakdown of fees that were paid to each of the four main agencies but this data was also not provided.
According to information in the Government Gazette, the Finance Ministry issued a direct order to Fitch Ratings worth a total of €80,000 over two years.