Fitch Ratings has upgraded Sri Lanka's Long-Term Issuer Default Ratings (IDRs) to 'B-' from 'CCC+'. The Outlook is Stable.
The upgrade reflects the implementation of macro-stabilization policies, underpinned by structural reforms, which have eased external financing risks and provide a degree of resilience to shocks.
This is reflected by sharp improvements in fiscal and external balances, and a modest rebuilding of FX reserves. Fiscal discipline and revenue mobilization efforts should support sustained primary surpluses that keep government debt-to-GDP on a downward trend and reduce risks of a reemergence in external imbalances.
Sri Lanka's credit profile remains hindered by still-high government debt-to-GDP and debt service ratios compared to rating peers, despite the recent restructuring and macroeconomic adjustment. FX reserve buffers remain modest, particularly considering a rise in external debt service over the next five years.
Source: Fitch Ratings
--Agencies
