S&P Global Ratings: Malta keeps ‘A-’ credit rating amid stable outlook

S&P Global Ratings has affirmed Malta’s ‘A-/A-2’ long and short term sovereign credit ratings with a stable outlook.

In its research update, S&P Global Ratings acknowledged Malta’s moderate economic growth and fiscal deficit reduction commitments. It said its main risks include external sector competitiveness declines and governance issues, particularly in anti-money laundering measures.

Malta’s real GDP growth is forecasted at 6.2% in 2024, moderating to 4% annually during 2025-2027. This growth is fueled by strong tourism demand, private consumption, and robust migratory flows.

Tourist arrivals increased by 19% in 2024 compared to 2023, with spending up 22%, showing resilience despite external economic challenges.

The fiscal deficit remains above EU limits, at 4.6% of GDP in 2023, placing Malta under the EU’s excessive deficit procedure.

However, government gross debt is manageable at 48% of GDP in 2024, with a projected stabilisation at around 42$ by 2027.

S&P Global Ratings warned that one of the key fiscal risks faced by Malta is the fixed energy price subsidies. While the subsidies are shielding the economy, it exposes the government’s fiscal policy to oil price volatility.

Since authorities hedged their petrol purchase price for the coming year, the energy prices should remain stable for the foreseeable future.

The credit rating company noted a 25% population increase since 2015, driven by liberal migration policies, which has bolstered economic growth. In view of this, tighter migration policies are expected to slow growth in the future.

Authorities have deferred reforms to align with EU minimum taxation rules, which preserves Malta’s competitive edge in attracting foreign investment, the report said.

However, Malta still scores weakly on corruption perception and rule of law metrics within the EU, despite judicial improvements.

Malta’s monetary system struggles with weak transmission of ECB rate policies, limiting economic stabilisation tools, the credit agency said.

Meanwhile, revised balance of payments statistics indicate a stronger-than-expected current account surplus, averaging 5.4% of GDP during 2024-2027.

In a post on X, Prime Minister Robert Abela described the rating as “another vote of confidence”.

“Lauding our decision to keep energy prices stable, they conclude that our rapidly growing economy shows no sign of being affected by weaker external conditions.”