S&P keeps Malta at A- with stable outlook

Malta has retained its A- sovereign credit rating with a stable outlook following the latest annual review by international ratings agency Standard & Poor’s (S&P).

Unlike previous reviews, however, S&P did not publish an updated economic report on Malta, effectively leaving unchanged the assessment it issued in December last year. The decision indicates that the agency did not identify any major developments warranting a revision of its evaluation of Malta’s economy or public finances.

In its December report, S&P forecast that Malta’s economy would continue to outperform the eurozone average, projecting economic growth of close to 4% over the coming years. The agency also expected the country’s public finances to improve, with the budget deficit falling below the European Union’s 3% threshold and public debt remaining relatively low compared to many European counterparts.

Among its key projections was the expectation that Malta would exit the European Union’s Excessive Deficit Procedure (EDP). That forecast materialised in recent days when the European Commission announced that Malta would be removed from the procedure after reducing its deficit below 3% of gross domestic product ahead of schedule.

At the same time, S&P had highlighted a number of challenges facing the country, including the fiscal burden of energy subsidies. The agency also pointed to governance concerns and perceptions of corruption as areas that continue to pose risks.

The confirmation of Malta’s rating without any accompanying analytical update contrasts with S&P’s approach towards other European countries reviewed on the same day. In the case of Sweden, for example, the agency published an updated report despite maintaining the country’s rating, commenting on economic challenges and political uncertainty linked to next year’s elections.

The latest review therefore leaves Malta’s sovereign rating unchanged and suggests that S&P remains broadly comfortable with the outlook outlined in its December assessment, including its expectations for economic growth and fiscal consolidation.