In one of the first reviews of the Maltese economy and financial system this year, credit rating agency Standard and Poor's has confirmed its present rating and stable outlook. Looking at Malta's financial sector, S&P highlighted the importance of the results of the European Central Bank's (ECB's) comprehensive review of Europe's largest banks, including the European Banking Authority's EU-wide stress test, released in October 2014, which had shown that Malta's banks to be substantially well-capitalized.
The report commented positively that at end-October 2014, the deposit-to-loan ratio in the banking sector was 151%, remarking that Malta's banking system has been historically deposit funded, and as such, remarks no specific risks in the financial sector.
Commenting on the general economy, the report noted that Malta's economic growth prospects remain strong relative to the Eurozone, with the ratings being supported by the agency's view of Malta's fairly strong institutions, its resilient economy, and its expectation of further fiscal consolidation. "We estimate general government gross debt at 71% of GDP in 2014. We estimate the 2014 general government deficit at 2.1% of GDP, versus 2.7% in 2013, reflecting higher tax receipts and supportive nominal GDP growth. We forecast that general government accounts will improve slowly through 2018, primarily owing to GDP growth. We project that spending will be at about 43% of GDP on average over our forecast horizon, higher than the 2008 peak at 42.6% of GDP, noted the report.
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