The independent credit rating institution defines one of the main contributors to this upgrade as the ‘fast declining gross general government debt’ which is expected to ‘decrease to 50% of GDP in 2019...supported by strong nominal GDP growth and recurrent primary surpluses.’ Fitch added that it also expects Government-guaranteed liabilities to decline in the coming years.

In a statement, the ministry said that another main driver contributing to this upgrade is the positive turnaround in the fiscal balance, where the Government successfully turned years and years of fiscal deficits into a fiscal surplus last year. Fitch expects Malta to continue achieving a fiscal surplus in the coming years, which, it added, reflects the Government’s efforts to improve tax collection and tax revenue; reduce unnecessary expenditure on social benefits and ease pension pressures; and support higher robust economic growth.

Fitch expects the Maltese economy to continue growing at a faster pace than that ofsimilarly rated countries, fueled by the solid performance of Maltese exports, notably in the services sector, a dynamic labour market, and investment. The latter is expected to pick up in 2019, boosted by the gradual absorption of new EU funds and the launching of large transport, health, and education projects, the ministry said.

Malta’s rating upgrade also reflects the fact that Malta successfully built a large net external creditor position. Fitch expects Malta’s external position to remain strong, where the current account surplus is expected to increase to well over 7 per cent in the 2017-2019 period.

The credit rating report acknowledges Malta’s improvement in the ‘Ease of Doing Business’ report, where Malta’s ranking improved by 7 places in just one year. Fitch also notes that Malta’s credit rating upgrade also reflects its strong governance.

Fitch expects the Maltese banking sector to remain sound with improved profitability, non-performing loans on a declining trend, improved capitalisation, and conservative lending.

Minister for Finance Edward Scicluna states that: ‘Government’s vision for Malta is turning into reality, in that Malta is becoming a solid top performer in economic growth, employment growth, and sound public finances. All this is being confirmed by the rating agencies.’