DBRS confirms Malta at A (high) stable, says FATF decision will be mitigated if government continues on this path

The Dominion Bond Rating Service (DBRS) has confirmed Malta’s ‘A’ (high) rating as it continues to maintain a ‘stable’ outlook trend.

With reference to the recent FATF decision which placed Malta on the grey list, the rating agency said that if the Maltese government continues on the path it has taken, the effect of this decision would be mitigated.

“Malta’s strong economic and fiscal track record prior to the Covid-19 pandemic shock offsets the risks to the ratings,” DBRS said in a statement on Saturday.

It also noted Malta’s recent progress on improving its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework as well as the government’s efforts to solving remaning challenges within the sector.

DBRS also highlighted that Malta was hit by the pandemic after a prolonged period of strong economic and fiscal performance which led to businesses being resilient, while allowing the government to give strong support.

Although this support has led to an increase in deficit, international experts believe that the government’s situation will improve rapidly. In contrast, they argued that the government aid had controlled the shock that the pandemic could have brought to unemployment, the statement read.

DBRS economists said that “this year the Maltese economy is expected to be driven by domestic demand.

A key factor behind the economic recovery is Malta’s remarkable pace of vaccination which is expected to attract tourists back to the island while eventually allowing the lifting of restrictions.”  

DBRS’ report also claimed that European funds are able to improve the economic performance of Malta even more than expected.

In addition, the rating agency’s report highlights the confidence it has in the government’s ability to secure public finances after the pandemic.

The positive outcome of Moneyval which indicates that the authorities are making great progress in the regulatory field, while banks have remained resilient despite the impact of the pandemic was also noted by the rating agency.

International experts highlighted that “the World Bank’s governance indicators for Malta are broadly in line with those of the EU average.”

DBRS also noted that “Prime Minister Robert Abela has provided a new impetus to strengthen the rule of law since coming into office in January 2020,” while mentioning the words of praise that the Venice Commission had for the new laws passed through Parliament.