In this article we will dive into Malta A2 Rating from Moody’s
When it comes to the world of finance, ratings are an integral part of understanding how healthy an institution or nation is, financially speaking. There are three major credit rating agencies known as the big three. They are made up of; Moody’s, S&P, and Fitch.
For the purpose of our discussion today, we are focusing on Moody’s. As one of the big three, they are the most trusted name in the financial world, and thus their credit ratings carry a lot of water. Recently, Moody’s upgraded the country of Malta’s rating from A3 to A2, which indicates big things for the small island nation. Today, we will examine why the rating was upgraded and how it will impact Malta going forward.
The Timeline of the Moody’s Rating Upgrade for Malta
The recent upgrade to Malta’s financial Moody’s rating was it’s first in 11 years, and it is a positive signal to the global stage about the improvements that Malta is making. Malta has seen steady financial growth thanks to its improved fiscal policy framework that was built to encourage growth.
One of Malta’s biggest improvements is the reduction of its national debt. At the end of 2011, Malta’s debt-to-GDP ratio was 70.2 percent. By the end of 2018, it had been reduced further to 46 percent. Even more encouraging, is the fact that it is projected to drop another 40 percent by the end of this year.
The other aspect considered for the granting of this rating was the rate of growth of the economy. In recent years, Malta’s outlook was declared “positive” but has now changed to “stable”. While this may initially sound like a downgrade, it is actually a positive statement. Growth is one thing, but eventually, you hit a ceiling. When growth slows, that is when you find out if the previous growth is sustainable. Malta has proven that its growth is.
This upgrade puts Malta in the top 19 of countries in Europe. For comparison’s sake, Malta is now on par with countries like Iceland, Ireland, and Poland, amongst others. This increase in status bodes well for Malta’s future.
The Future for Malta Moody’s Rating
The outlook for Malta is a bright one moving forward. It has shown an ability to decrease its debt and has put the necessary framework in place to cultivate economic growth. The local government was understandably ecstatic about this rating, as Moody’s joins the other two of the big three rating agencies to bump up Malta’s rating. This third-party validation is a signal to the world that Malta is on the rise, and that its growth is sustainable.
What the Moody’s rating means for Malta
Credit ratings are, at their base level, an assessment of the risk of investing in a country. Even with a growing economy and shrinking debt, the financial world turns to these third-party rating agencies to determine the strength of their economy. Over the past two decades, Malta has made major improvements and it has managed to do so through a ton of hard work. These recent rating bumps have confirmed that all of that work has paid off.
The best news here is that Malta is showing no signs of slowing down. It is working towards completely eliminating its debt and it has hit a level of secure sustainability that lets investors know that they are in good hands. The future is bright for this ever-growing economy.