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News | Wednesday, 15 July 2009

Moody’s keeps mum on Malta visit

Charlot Zahra

International credit agency Moody’s kept secret a visit made to Malta by one of its analysts to assess the country’s credit rating last week.
When asked to confirm the visit of the credit analyst to Malta and the people that the analyst met during his or her visit to Malta, a spokesperson for Moody’s told Business Today that “as a matter of policy, Moody’s does not discuss with the media or any other market participant the whereabouts of its analyst.
“What I can tell you is that we monitor all our ratings on a continuous basis and that Malta is at present rated A1 with a stable outlook, as per the latest Credit opinion Moody’s published on 8 Jun 2009,” added Francesco Meucci, who handles Media Relations on behalf of the credit-rating agency in London.
Furthermore, Meucci told Business Today that he was “not made aware of the travel schedules of our analysts, nor of any of the relevant details”.
However, sources close to the visit told Business Today that during its visit to Malta, the Moody’s delegation met senior officials from the Central Bank of Malta, Finance Minister Tonio Fenech, as well as trade unions and employers’ organisations.
The Moody’s credit analyst discussed with the authorities the credit worthiness of the country. “Thus the European Commission’s excessive deficit procedures featured highly on the agenda,” our sources, who did not wish to be identified, told Business Today.
Moreover, doubt was expressed “whether the deficit could be reigned in by 2010 due to the fact that at the moment, the global economy is going through a down turn.”
Moreover, during the meetings, the analyst pointed out “that during 2008 when Malta experienced a growth in GDP, Malta still had an increased deficit unlike Cyprus which complimented its economic growth with a surplus in its finances,” our sources added.
The Moody’s analyst was “fully aware” of the prevailing statistics indicating clearly that investment has contracted and that the economy had gone into recession considering that there were two successive quarters of contraction.
In view of this, the Moody’s analyst expressed the opinion that “government expenditure has to be more controlled,” the sources told Business Today.
On his part, Charles Mangion, Labour’s spokesperson for Economic and Finance, confirmed the visit of the Moody’s analyst to Malta, with a meeting with the Moody’s analyst on 7 July 2009.
“The reasons given by the government that the increased deficit was due to Drydocks closure and subsidy to Enemalta were discussed and obviously the question that arose was that these two issues could have been estimated in the 2008 budget estimates but were in my opinion purposely overlooked for electoral convenience,” Mangion told Business Today.
Mangion said that during the meeting, he also raised the problem of “unjustified cost overruns” in capital projects.
Moody’s, Mangion explained, “were more interested to listen to and evaluate Labour’s assessment of the situation and reserved its own opinion to a later stage.”
“However, they will continue to monitor our public finances and economic progress, and I think that it is unlikely that at this stage they will not downgrade Malta’s credit rating,” Mangion told Business Today.

czahra@mediatoday.com.mt

 

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15 July 2009
ISSUE NO. 590

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