Malta's credit rating by Moody's

Reference is made to the recent coverage in the Press to commentsreportedly made by Ms Hanan Amin-Salem, Moody's analyst, with regard to apossible review of Malta'sinternational credit rating.

It should be pointed out that according to the official statementissued by Moody's Investors Services in July 1997, the negative outlook on Malta's A2credit rating "was prompted by the continued imbalances in the country'sfiscal and external accounts". In Moody's 1997 statement, no referencewhatsoever was made to any of the arguments which Ms Amin-Salem is reported tohave recently said to the Press.

This statement followed a visit to Malta during 5-6 June 1997 by ateam from Moody's consisting of Mr Larson and Ms Vartanesyan, both VicePresidents and Senior Analysts, who met the Finance Minister and seniorofficials from the Government and the Central Bank as well as a privateeconomist.

It is well known that over the past year the Maltese Authorities haveplaced top priority to addressing effectively the deficits on the Government'sfiscal position and the Balance of Payments. The policies that have been taken,which include the 1998 budgetary measures and strategies to restructure themanufacturing sector, should contribute to a reduction of these deficits tosustainable levels over the medium term.

The statement issued by Moody's on 22 January 1998 referred to"concern that domestic political constraints may impede efforts to trimthe large fiscal deficit and to proceed with other structural reforms that arenecessary to raise the level of the country's competitiveness". Again, noreference was made in Moody's latest statement to the arguments beingattributed to Ms Amin-Salem.

There can be no doubt that Moody's statement was made expresslywith reference to political and industrial action carried out since last BudgetDay, to protest against and to undermine the important measures presented inthe Budget for 1998. The latter sought to contain and reverse the dynamics ofstructural deficit built into Government finance by the previous Nationalistadministration.

The Government is firmlycommitted to continue to take all the necessary action to carry out the reformsto address the problems referred to in Moody's statement and will beelaborating further on the progress achieved so far with the delegation fromMoody's which will be visiting Malta next month. It is hoped that once Moody'srepresentatives have acquired all the relevant information, they will be in abetter position to assess Government's plans to address the issues of concernover the medium term.

MALTESE TRANSLATION

L-ghoti tal-kredtu lil Malta minn Moddy's

Qed issir riferenza ghar-rapporti li dehru dan l-ahharfil-gurnali dwar kummenti li qalu li saru minnMs Hanan Amin-Salem, l-analista ta' Moody's dwar revizjoni tal-ghotita' kredtu internazzjonali lil Malta.

Jehtieg jinghad li skond l-istqarrija ufficjali maghrufa mill-Moody'sInvestors Services f'Lulju 1997, id-dehra negattiva fuq l-ghoti tal-kredtuA2 lil Malta"tqanqlet mill-izbilanci bla qtugh fil-kontijiet fiskali u barranintal-pajjiz". Fl-istqarrija tal-1997 ta' Moody's, l-ebdariferenza ta' xejn ma ssir ghall-argumenti li Ms Amin-Salem hija rrappurtatili qalet dan l-ahhar lill-Istampa.

Din l-istqarrija saret wara zjara f'Malta bejn il-5 u s-6 ta'Gunju 1997 minn grupp ta' Moody'smaghmul minnMr Larson u Ms Vartanesyan, it-tnejn Vici-Presidenti u analisti anzjani liltaqghu mal-Ministru tal-Finanzi u ufficjali gholjin min-naha tal-Gvern utal-Bank Centrali kif ukoll ma` ekonomista privat.

Hija haga maghrufa sew li fis-snin li ghaddew l-AwtoritajietMaltin taw l-oghla prijorita` lill-hidma li biha jittrattaw effettivamentid-deficit fil-qaghda fiskali tal-Gvern u fil-Bilanc tal-Pagamenti.Il-mizuri li ttiehdu, fosthom dawk tal-budget u l-istrategiji biexjinbena mill-gdid il-qasam tal-manifattura, ghandhom jaghtu kontributlit-tnaqqis tad-deficit fl-oqsma msemmija sakemm jintlahqu livelli sostenibblifuq medda qasira ta` zmien.

L-Istqarrija maghrufa minn Moody's fit-22 ta` Jannar 1998semmiet it-"thassib li r-razan politiku domestiku jista` jfixkell-isforzi li jnaqqsu d-deficit fiskali qawwi u t-tkomplija ta` riformistrutturali ohrajn li huma mehtiega biex joghla l-livell tal-hilakompetittiva tal-pajjiz." Terga`, ma saret l-ebda riferenzaghall-ahhar stqarrija ta` Moody's dwar l-argumenti li gew attribwitilil Ms Amin-Salem.

Ma hemm l-ebda dubju li l-istqarrija ta` Moody's saretsewwasew b'riferenza ghall-azzjoni politika u industrijali mwettqa minn Jum il-Budget biexjipprotestaw kontra l-mizuri siewja u ta` fejda tal-Budget tal-1998 ujdghajfuhom. Dawn il-mizuri kienu u ghadhom mahsuba biex irazznu u jdawrud-dinamika tad-deficit strutturali mdahhlin fil-finanzi tal-GvernNazzjonalista ta` qabel.

Il-Gvern jinsab impennjat bis-shih li jibqa`jiehu l-mizuri kollha mehtiega biex iwettaq ir-riformi li jiehdu hsiebil-problemi msemmija fl-istqarrija ta` Moody`s u se jelabora aktar fuqil-progress milhuq sa issa mad-delegazzjoni ta` Moody`s li se zzurlil Malta x-xahar id-diehel. Huwa ttamat li malli r-rapprezentanti ta` Moody`sjiksbu t-taghrif relevanti kollu jkunu f`qaghda ahjar biex jiznul-pjani tal-Gvern li bihom behsiebu jittratta l-kwestjonijiet li jqanqluthassib fuq medda qasira ta` zmien.