Issue link: https://maltatoday.uberflip.com/i/1016519
NEWS maltatoday | SUNDAY • 19 AUGUST 2018 KURT SANSONE RATING agency DBRS has confirmed Malta's high credit rating but foresees major risks to the economy from an es- calating global trade war and Brexit's impact on tourism. The Canadian rating agency on Friday evening maintained Malta's A rating with a stable outlook. It noted that Malta contin- ued to outperform EU average growth rates while producing budgetary surpluses and main- taining a steadily declining public debt ratio. External trade pressures However, Malta's open econ- omy could be vulnerable to ex- ternal shocks from the global trade war fuelled by the US de- cision to impose import tariffs on goods from various coun- tries. DBRS also cautioned that for the medium term, changes to corporate taxation at an in- ternational level could have "a disproportionate impact" on Malta. The agency also lists rising pension and healthcare costs as long-term concerns. DBRS said it was prudent for the government to stick to its medium-term objectives on maintaining a surplus in central government's public finances without considering income from the Individual In- vestor Programme. The passport-sale pro- gramme has boosted the gen- eral government surplus over the past two years. The agency commented posi- tively on Malta's declining debt as a ratio of GDP, which is one of the lowest in the EU, but noted that the central govern- ment's outstanding guarantees on debt held by public agencies remained high at 9.6% of GDP last year, even though this de- clined from 13.7% in 2016. Housing market DBRS said although pres- sure is mounting on the hous- ing market with prices rising at 9.1% last year, it did not see any immediate risks given the favourable labour market con- ditions and increasing housing supply. Some Maltese characteristics such as the high level of finan- cial wealth held by households, high levels of home ownership and banks' conservative lend- ing practices, lessened the risks emanating from the housing market. Pilatus Bank The agency noted the con- cern of reputational risk to the banking sector from "alleged shortfalls in the implementa- tion" of the EU's anti-money laundering rules in relation to Pilatus Bank. Describing Pilatus as a small bank with no systemic implica- tions, DBRS said that a risk as- sessment showed that the gov- ernment has presented a series of "strategic initiatives" to en- hance the anti-money launder- ing framework. At the start of August, Stand- ard & Poor's, a rating agency, increased the Maltese banking sector's risk score on the back of money laundering allega- tions against Pilatus Bank and expensive litigation issues con- cerning Bank of Valletta. DBRS said Malta's institu- tions were stable despite not- ing that the country's Rule of Law ranking has been drop- ping since 2007. However, DBRS also took note of the recently concluded Egrant in- quiry, which it said found "no evidence of corrupt practices, money laundering or suspect financial transactions". ksansone@mediatoday.com.mt SICILY SEPTEMBER OFFER Oer is not valid for travel on the 8th and 21st September. Conditions apply. Oer is not available online. Oer is valid only Malta/Sicily/Malta. Not valid on commercial vehicle drivers. T 2206 9022 E res@virtuferries.com W virtuferries.com FULL REFUND Full refund for cancellations up to 24 hours prior departure. CHILDREN TRAVEL FREE 2 children under 14 years travel free when travelling with 2 paying adults. NO BAGGAGE CHARGES No personal baggage overweight charges. NO PENALTIES No no-show penalty on passenger tickets. No penalties for name change on passenger/vehicle tickets. DAY RETURN €132 €92 RETURN €148 €99 DBRS confirms Malta's credit rating at A