In a statement by the Ministry of Finance, the Economy and Investment, it said that the “Government is committed to take all necessary actions to strengthen and ensure the country’s economic and financial stability.”

In the context of the European Sovereign Debt crises the Maltese Government said it understands “Moody’s decision to reclassify Malta’s foreign and local-currency Government bond ratings from A1 to A2, while maintaining Malta’s ‘A’ credit rating. As clearly stated in Moody’s reports, Malta’s country ceilings for bonds and bank deposits are unaffected by today’s rating action and remain at Aaa, in line with the euro area’s ceilings.”

The Government said that it “expresses its disappointment that, as emphasized by Moody’s, Malta’s reclassification was considered necessary because of the deteriorating global economic outlook and the continued instability in the euro area and their potential adverse impact on Malta’s economy and this notwithstanding Government’s efforts to successfully address the economic crises and Malta’s continued efforts towards sustainable finances.”

The statement continued, “it is also to be noted that Moody’s acknowledge the limited impact on the Maltese Economy of the 2008-2009 crises and that this impact was only limited because of the Government’s efforts to: assist manufacturing companies that faced severe declines in external demand; promote the tourism product; and invest in the development of new routes.”

“On the other hand, Government’s decision to postpone the deficit reduction targets to finance our impetus package in the 2009 Budget, saved more than 5,000 jobs, and has ensured that Malta’s manufacturing sector capacity was increased rather than slashed. However, Government acknowledges the fact that this decision, as Moody’s put it, meant that the expected improvement in the Government Balance Sheet, post entry to the EMU, did not materialise,” it said.

The Government said that Moody’s statement confirms the Government’s “ongoing stance that, despite our rather positive economic performance, continued caution and prudence are still required when taking policy decisions that affect Government revenues, or increase Government expenditure and subsidies.”

“Malta’s open economy, while proving to be resilient in the face of the economic turmoil of the last three years, will always be exposed to international economic realities. Malta has managed to continue to sustain above EU average growth rates and significantly lower levels of unemployment when compared to our EU partners, because of the various structural reforms that continue to be implemented and the incentives we have given to small business and industry to sustain economic growth. Therefore, it would be highly imprudent to steer Government’s economic and financial management policy away from its current emphasis on continued macroeconomic stability and economic growth,” the statement continued.

“This Government’s strategy has served Malta well, as evidenced by our past and current economic and financial performance. The Maltese economy is growing at a healthy rate. Investment, including foreign direct investment, has increased. Merchandise exports have increased substantially. Likewise, the services sectors – tourism, financial services and others – are contributing substantially to the country’s current economic and employment growth. The number of gainfully occupied persons is increasing. Unemployment is on the decline. Our public finances are also being consolidated as planned; indeed the latest Eurostat financial data show that Malta’s debt at 68% is well below the euro area average of 85.1%.”

The Government said that the international economic and financial system is going through renewed and serious challenges, as emphasized by Moody’s statement and within this context, the Government will continue to:

(a) take the right decisions in order to ensure the country’s continued macroeconomic stability;

(b) take active measures to consolidate the country’s public finances and ensure their long-term sustainability;

(c) implement the right strategies to safeguard and improve Malta’s international competitiveness;

(d) actively promote Malta as an attractive base for local and foreign direct investment;

(e) support through a targeted approach any viable enterprise that would face temporary difficulties with view to safeguarding current investment and jobs.

“Finally, while taking note of Moody’s concerns, the Government is committed to take all necessary actions to strengthen and ensure the country’s economic and financial stability,” the statment concluded.

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