DBRS confirms Malta's credit rating and economic outlook
Analysts say tax revenues have been higher than expected but war in Iran is a concern
Morningstar DBRS has confirmed Malta’s long-term foreign and local currency issuer ratings at ‘A (high)’ and its short-term ratings at ‘R-1 (middle)’.
The trend on all ratings remains ‘Stable’.
Following a robust growth period, Malta’s real GDP expansion moderated to 4 per cent in 2025 as private consumption growth slowed. While the economy has demonstrated “significant resilience”, analysts warn that the current geopolitical climate - specifically disruptions in the Middle East and the volatility of global energy markets - poses a renewed challenge.
And much like other countries, short-term downside risks to the economy have increased in recent weeks following attacks on Iran and the subsequent impact on oil and gas supplies.
“While Malta has only limited direct trade links with the Middle East, weaker-than-expected global growth would weigh on external demand for Maltese goods and services exports. Furthermore, potentially higher-for-longer global energy prices are a risk factor for the government's fiscal balance given its fixed price energy policy. Maintaining the current freeze on domestic energy prices would necessitate higher energy subsidies, thereby adding to budgetary pressures,” DBRS noted.
Prime Minister Robert Abela said Malta had maintained its rating even as other countries faced downgrades, and attributed that to "our shielding of households from price shocks, continued growth of Government income despite tax cuts and our moderate debt which allows us space to intervene as needed".
Tax revenues defy expectations
Analysts noted that Malta’s budget deficit narrowed to an estimated 3.0% of GDP in 2025, down from 4.4% in 2023, saying the consolidation was driven by buoyant tax receipts, which consistently outperformed budgetary targets.
Morningstar DBRS identifies these higher-than-planned tax revenues - bolstered by cyclical economic growth and improved administrative efficiency in tax collection - as an upside risk to Malta’s fiscal outlook.
Malta’s Euro area membership, solid external position, strong banking sector buffers and positive debt metrics when compared to its Eurozone peers were all cited as positives underpinning the country’s credit rating.
The country’s economy remains small and vulnerable to external shocks, however, and analysts warned that commitment to improve the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) framework is “crucial” to protect the international reputation of Malta’s banking sector.
Morningstar DBRS said it could upgrade Malta’s rating if public debt metrics improved or the country provided evidence of increased resiliency to external shocks. It could downgrade the country’s credit rating if public debt metrics significantly worsened or Malta’s institutions deteriorate in quality.