During his weekly video blog, the Minister for Finance Prof. Edward Scicluna explores the nature and function of the oft-mentioned Credit Rating Agencies, such as Standard & Poor’s, Fitch IBCA, Moody’s and others such as DBRS.

Prof. Scicluna explains that the function of these agencies, despite how they are invariably mentioned within the context of country ratings, is to evaluate the risks pertaining to companies. This evaluation would be done for the use of investors and depositors, so that they can make informed decisions as to which financial institutions they do business with.

Prof. Scicluna also explains that national governments of countries also take out loans, and therefore are subject to similar risks. Therefore governments are obliged to provide information to these rating agencies, to ensure that investors are informed as to a country’s financial stability before they invest.

He adds that these important ratings are issued after wide-ranging consultation and discussions with various stakeholders, such as the Government, trade unions, companies, banks, and other institutions.

He notes that given how these institutions enjoy a global standing, their recent positive and reassuring endorsements to the Maltese economy give our country added economic and financial clout within the international scene.

He notes that the repeated positive ratings received by the Maltese economy strengthen Malta’s attractiveness to foreign investment.

– Friday, 19th December, 2014