Scope Ratings reviews its ratings either yearly, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations. Scope performs monitoring reviews to determine whether outstanding ratings remains proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology/ies, latest developments, and the rated entity’s financial and operational aspects relative to similarly rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for the Republic of Malta (A+/Stable; S-1+/Stable) on 15 January 2021, incorporating the update from the sovereign methodology. The review resulted in no action on the assigned ratings. This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Key rating factors

The Republic of Malta’s long-term A+/Stable ratings are underpinned by the following credit strengths: i) the country’s robust growth potential; ii) a track record of effective fiscal consolidation with a steadily declining debt-to-GDP ratio entering the Covid-19 crisis, supported by strong growth, fiscal surpluses and declining interest payments; and iii) a strong external position with consistent current account surpluses, a net international creditor position, further bolstered by euro area membership. These factors underpin Scope’s view that the country is well positioned to weather the Covid-19 crisis and will return to a positive trend of strong growth from 2021 onward. Challenges relate to: i) its small and very open economy that is exposed to external shocks; ii) fiscal risks related to an ageing population and government guarantees; and iii) lingering albeit improving institutional and administrative deficiencies related to governance and oversight in the financial sector which constrain improvements in the country’s reputation as an emerging financial centre and could pose financial stability risks.

For the updated scorecards accompanying this review, click here.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Rating Methodology: Sovereign Ratings, 9 October 2020) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Thibault Vasse, Analyst.
The final ratings were first released by Scope on 9 November 2018.

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