Fitch Ratings Re-Affirms Malta’s Credit Rating at A+ with a Stable Outlook
The Ministry for Finance and Financial Services welcomes the latest credit rating report published by Fitch which re-affirms Malta’s credit rating at A+ with a stable outlook amid the global pandemic.
This positive rating reflects Malta’s high income per capita and its large net external creditor position, amongst other factors. Fitch also notes that Malta’s medium-term potential growth remains strong and well above the eurozone average.
Despite the external shock, Fitch expects Malta to maintain a current account surplus in the medium term, while retaining its large net creditor position.
As a result of the travelling restrictions and the effects of COVID-19 on global tourism, Fitch forecasts Malta’s real GDP to contract by 6.9 per cent in 2020. Nevertheless, economic growth is expected to rebound and increase by 4.1 per cent in 2021.
Fitch estimates a fiscal deficit of 9.2 per cent of GDP this year due to impact of the pandemic on the Government revenues as well as the additional expenditure on financial packages implemented by the Government to supplement the income of families and businesses. Nevertheless, as of next year, the deficit is expected to start falling again.
On the financial sector, Fitch believes that the financial soundness indicators are strong and provide a buffer to the financial system in the event of a sharper GDP contraction than forecast. It also positively notes that the non-performing loans (NPLs) have declined in recent years.
Minister for Finance and Financial Services Edward Scicluna said that, “that Fitch has re-affirmed the A+ rating for Malta despite the economic impact of the pandemic is welcome news. It points to the trust that the credit rating agency has in our economy’s resilience.”