The Minister for Finance Edward Scicluna welcomes the latest credit rating report published by Moody’s which expects our country to benefit from strong economic growth this year and the next, backed by solid consumer spending and investment.
The report confirms Malta’s A3 Government bond rating and re-affirms Malta’s outlook as stable, supported by the healthy economic outlook and the Government’s access to a large and reliable domestic funding pool. Indeed, Moody’s describe theeconomic growth recorded in 2015 as “impressive”, with private consumption and investment being the main growth drivers.
PRESS RELEASE ISSUED BY THE MINISTRY FOR FINANCE
The credit rating agency attributes the increase in private consumption to various Government initiatives, including income tax cuts, reduced electricity tariffs and the affirmative performance in the labour market such as the low unemployment levelsand associated wage increases.
With regard to investment, it notes that capital expenditure has been supported by large-scale energy projects such as the building of a re-gasification plant, the conversion of an oil-powered plant to gas power, and the completion of the interconnector.
Moody’s acknowledges the progress made in the labour market as the labour participation rate, particularly that of females and youths, has increased. This, Moody’s states, reflects the progress on a number of measures including free childcare centres, in-work benefits, tax rebates, the establishment of a maternity leave fund, and the promotion of flexible hours arrangements.
Moody’s welcomes the latest Government initiatives to improve access to credit which include the setting up of a National Credit Registry. These initiatives will, over time, improve the World Bank Doing Business Report’s rankings.
Moody’s acknowledges the Government’s efforts to consolidate public finances and notes that, in 2015, Malta recorded the lowest deficit over the last decade. As a result, Moody’s expects the deficit-to-GDP ratio to fall below 1 per cent this year,and the debt-to-GDP ratio to fall below 60 per cent by 2017.
Moody’s also acknowledges the Government’s efforts to reform the energy sector, particularly the restructuring of Enemalta to make it financially viable, in line with recommendations from the IMF and the European Commission.
On the external sector, Moody’s expects net exports to contribute positively to economic growth as exports of pharmaceuticals, tourism and gaming are expected to increase.
Moody’s considers Malta’s institutional strength as very high due to its favourable scores in the Worldwide Governance Indicators with Malta’s ranking outperforming its rating peers and its robust policy framework.
Minister for Finance Edward Scicluna remarked that: “I am pleased to note that Moody’s, along with other independent international institutions, are expecting the robust economic growth recorded in the recent years to remain so in the coming years thanks to various reforms and initiatives undertaken by this Government to boost private consumption and investment.”
– Tuesday, 24th May, 2016