Moody’s ratings agency has affirmed its ‘A3 Positive’ rating for Malta, a decision welcomed by the Finance Ministry.

Moody’s highlighted sustained progress by Malta on public sector debt reduction and the prospects for further fiscal consolidation on the back of a buoyant economic performance. It said it will upgrade the rating for Malta to A2 if the improvement in fiscal strength is sustained.

In a commentary, it noted Malta's strong economic growth, rising per-capita income and high scores in terms of global competitiveness.

"While its small size and openness make it susceptible to external shocks, Malta is able to weather such storms due to the high level of competitiveness as well as elevated wealth levels," it said. 

Malta’s institutional strength was deemed ‘high’.

"Moody’s acknowledges that Malta's fiscal consolidation efforts are bearing fruit as the fiscal surplus is expected to hover around 2.5 per cent in 2018 and 2019. This, coupled with strong economic growth, will continue to contribute towards a rapid reduction of Malta’s debt-to-GDP ratio," the agency added.  

It said it considered Malta’s susceptibility to event risk, stemming from the banking sector primarily, as ‘low’, based on the relative size of the sector in the economy and the financial soundness of the domestically oriented institutions, amongst others.