In another evaluation of the Maltese economy, the international DBRS agency has confirmed Malta’s credit rating as A High, with stable trends. In their report on Malta, the agency’s economists observed that the country’s economic trends and fiscal policy in recent years have placed Malta in a relatively good state to cope with the risks from the Covid-19 pandemic.
The international credit agency’s report was made in the context of the effects left by the pandemic on economies worldwide. Whilst Malta maintained a very high rating, the same agency reviewed negatively its forecast rating for countries like France, Italy and the UK.
DBRS economists stated that the partial lockdown and travel restrictions aimed at controlling the spread will probably result in a temporary recession for Malta this year. They are optimistic, however, that the country is expected to make a strong recovery as a result of the gradual reopening of the economy. They remarked that uncertainty still existed on how the pandemic and tourism will evolve. The agency’s economists expect that fiscal balance and debts will be badly affected this year as the economy has shrunk at a fast pace, as well as in view of the fiscal assistance package and incentives offered by Government. They add, however, that the debt rate is still expected to be one of the lowest in the European Union.
DBRS economists once again gave a level A (High) rating with stable trends because of Malta’s membership of the eurozone, the moderate level of public debt and the domestic financial position, which is a strong one. On the other hand, they observe that the fact the economy is a small and open one exposes it to shocks from outside.
With this background, they state that tourism, an important source of income for the economy, jobs and foreign investment, will face challenges. In the same way, they add that Malta could suffer in attracting foreign investment unless measures are taken to address the risks of fiscal integrity and weakness in the administration of institutions as outlined by international entities. They noted that the authorities are carrying out what they described as a series of ambitious reforms for governance, and say Malta is being compared favourably with indicators of governance as stipulated by the World Bank. They pointed out that the Venice Commission has accepted the Government’s legislative proposals.
DBRS concluded that the Maltese economy will suffer less than other eurozone countries as a result of the pandemic, and the potential for growth will remain strong as the support measures by Government have stopped the chances of the loss of many jobs.