Malta’s Governance Framework: Insights from International Governance Indicators

Assessments of governance quality are often inspired by indices – such as those constructed in the World Bank’s Worldwide Governance Indicators project – and other assessments made by the credit rating agencies such as Moody’s. In light of the difficulties encountered in properly measuring governance standards, these scores are designed to track and provide information about various aspects of governance. However, despite their usefulness, such assessments are often difficult to make in an accurate and objective manner, as the construction of these indices often relies on subjective views by some, sometimes lacking transparency and proper documentation. The Maltese framework has in recent years attracted considerable attention, resulting in recommendations from the European Commission and Council of Europe. In this light, this note attempts to shed light on Malta’s governance framework primarily using the underlying indicators included in the World Bank’s Worldwide Governance Indicators project and a set of environmental, social and governance scores published by Moody’s. Looking at what has driven recent changes in the Worldwide Governance Indicators, it appears that for the most part, the decline derives from changes in assessments made by a small number of international commercial and non-governmental organisations, while the results of surveys carried out among local households do not tend to show similar trends. The assessments made by Moody’s indicate that although Malta remains somewhat exposed to some environmental and social risks, the country’s credit quality is positively impacted by its strong governance framework, largely due to positive perceptions of Malta’s budget management, transparency and disclosure, and policy credibility and effectiveness.