VALLETTA (MALTA) (ITALPRESS/MNA) – Credit rating agency Morningstar DBRS has reaffirmed Maltàs long-term foreign and local currency issuer ratings at A (high) with a stable outlook, underlining the country’s robust economic growth and resilient external position. The agency also confirmed Maltàs short-term foreign and local currency ratings at R-1 (middle) in its latest report published Friday.
Despite headwinds from global economic uncertainty, DBRS credited Maltàs diversified, services-driven economy for outperforming the Eurozone, while also pointing to mounting pressures from fiscal deficits, population growth, and governance issues.
Maltàs economy expanded by 6% in 2024, a sharp contrast to the 0.9% average growth across the Eurozone. The performance was fueled by strong tourism, professional services, and financial sector exports. While growth is projected to slow to 4% in 2025 and 3.6% in 2026, DBRS expects Malta to continue outpacing its European peers.
“Despite global uncertainties, Maltàs service-driven economy is less vulnerable to trade shocks like higher US tariffs,” DBRS noted. However, it cautioned that the country’s labour-intensive growth model and rising population density could put pressure on infrastructure.
The agency observed that Maltàs fiscal deficit narrowed to 3.7% of GDP in 2024, down from 4.6% in 2023, driven by strong revenues. Nonetheless, DBRS warned of ongoing fiscal pressures, including energy subsidies and new spending commitments like the teachers’ wage agreement.
The Central Bank of Malta projects the deficit to fall below the EU’s 3% threshold by 2026, but DBRS highlighted that new household support measures-such as income tax cuts costing an estimated 0.5% of GDP – could slow fiscal consolidation.
In addition, continued reliance on energy subsidies and uncertainties surrounding revenue from the citizenship-by-investment scheme and corporate tax reforms were flagged as risks to fiscal stability.
Maltàs public debt is expected to rise gradually from 48.9% of GDP in 2024 to 50.1% by 2026, still below the Euro area average. The country’s interest burden remains relatively low, providing the government with fiscal flexibility if economic conditions deteriorate.
“While debt is higher than before the COVID-19 shock in 2019, the current level gives the government valuable space to support the economy if under stress,” DBRS said.
DBRS praised Maltàs banking sector for its strong capital position and low levels of bad loans. Core domestic banks had a Tier 1 capital ratio of 21% and a non-performing loan (NPL) ratio of 2.1%. However, the sector’s high exposure to residential mortgages-accounting for 66% of total private sector loans – was noted as a vulnerability.
Governance remains a “mixed picture,” according to the report. While DBRS acknowledged Maltàs removal from the FATF grey list and ongoing judicial reforms, it also pointed out declining indicators for government effectiveness and control of corruption.
The agency called for “more tangible evidence of enhanced efficiency and effectiveness” in Maltàs institutions, particularly in the judiciary and anti-corruption efforts.
DBRS indicated that a credit rating upgrade could occur if Malta demonstrates significant improvement in debt reduction or increased economic resilience. Conversely, a downgrade could result from a reversal in governance reforms or a deterioration in public finances.
Social and governance factors-especially human capital and institutional transparency – played a significant role in the credit rating assessment, the agency emphasized.
– Foto IPA Agency –
(ITALPRESS).
