Dr. jur. Jörg WernerCredit rating agencies assess the creditworthiness of companies and nations globally. Ever since the 2007/2008 financial crisis – when we watched Greece face successive downgrades – the significance of these rankings has been clear to everyone. Although they might not make front-page news as often these days, they hold immense value for the financial sector, especially when investors are choosing between different jurisdictions.
Fitch had previously rated Malta as 'A', classifying the jurisdiction as highly reliable with low default risk. This has now been upgraded to 'A+'. The agency projects that Malta’s debt will drop to 50% of GDP by 2019, continuing the country’s trajectory of debt reduction. Last year, Malta achieved a budget surplus, allowing it to pay down existing debt. Naturally, this improves Malta’s risk profile and confirms the island's positive economic outlook.
Another agency, DBRS, has also improved its assessment. Assigning an 'A' rating, they also predict that debt levels will decrease and that the positive trends in Malta’s national budget are set to continue.
Maltese Finance Minister Edward Scicluna welcomed the adjustments, noting that they validate the government's hard work over recent years. The budgetary improvements are the result of prudent decisions aimed at meeting specific targets. Malta is increasingly becoming a frontrunner within the EU. Whether in terms of economic growth, employment rates, or debt management - Malta is performing exceptionally well.
It is fair to say the government has done its homework. Investment-friendly legislation and a transparent legal framework are driving economic growth. In the long run, this benefits the local population, as the economy moves away from its historic over-reliance on tourism.
