9 - 15 August 2001

Standard & Poor’s reaffirm ratings for Malta

Standard & Poor’s have reaffirmed its single A foreign currency and double A minus local currency long-term ratings for Malta. This reflects the gradual improvements in the government’s fiscal position, progress with structural reforms and strong, albeit weakened external position.
At the same time, Standard & Poor’s affirmed its A-1 foreign currency and A-1 plus local currency short-term ratings on Malta reporting the outlook as stable.
The general government deficit is forecast to narrow to 5.3 per cent of GDP in 2001, from a peak of 13 per cent in 1998, reflecting renewed efforts to broaden the tax base and contain public sector employment growth.
Further efforts to enforce existing taxation provisions, coupled with continued expenditure restraint, are expected to enable government to exceed its budget target of a deficit equivalent to four per cent of GDP in 2004.
Standard & Poor’s said that reductions in the fiscal deficit, coupled with a resumption of the government’s privatisation programme, are forecast to limit
further increases in the general government debt burden.
The debt burden is forecast to increase by six percentage points in 2001, to 66 per cent.
It noted that preparations for EU accession, including the gradual implementation of structural reforms, a stabilising general government debt burden, and continued fiscal restraint underpin the stable outlook.