Fitch affirms Malta’s A+ rating and revises the outlook to Stable
Fitch affirmed Malta’s sovereign credit rating at ‘A+’, though revising Malta’s outlook to ‘stable’ as a result of the impact of the global COVID-19 pandemic on Malta’s economy and public finances. Fitch forecasts real GDP to contract by 5.9 per cent in 2020 but to revert back to a healthy growth rate of 3.6 per cent in 2021.
Fitch expects the current healthy current account surpluses to be maintained in 2020, in spite of the external shock caused by the global pandemic. However, in view of the significant increases in public expenditure and the fall in revenues, the deficit could reach 8.1 per cent this year. Malta’s high governance score, and its strong financial soundness indicators which provide buffers to the financial system in the event of a sharper contraction than forecast, also contributed to this ‘A+’ rating.
Similar to the IMF and Moody’s, Fitch also expects economic growth to rebound in 2021 while expecting the government’s relief measures to combat the disease and to soften the impact of the shock on the Maltese economy.
Fitch commended the government’s swift response to the health risks associated with COVID-19. Indeed, it notes that on March 7th, before any case was diagnosed, the authorities mobilised the healthcare system and implemented comprehensive containment and mitigation measures.
Finance Minister Edward Scicluna said, “Fitch has confirmed that Malta is able to withstand the inevitable shock to its public finances in view that it is better prepared for such an eventuality than its peer.”