Fitch Rating Grading
Fitch Ratings has upgraded Sri Lanka's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'BB-' from 'B+' with the outlooks on both as 'Stable'. Fitch has also upgraded the Country Ceiling to 'BB-' from 'B+' and affirmed the Short-Term Foreign-Currency IDR at 'B'.
Welcoming the upgrade the Central Bank in a statement said it is confident that the measures taken towards the macroeconomic stability and improvement of the economy over the past several years would yield further favorable results in the near future.
"Fitch's decision to upgrade the ratings has been based on the stabilization and recovery of the economy and increased efforts by the Government to bring down the budget deficit," the Central Bank said. The Bank attributed the global rating agencies' decisions to the greater macroeconomic and financial stability brought by the peace dividend after the end of three-decade long war in May 2009.
IMF Government Agreement Helps Upward
Another factor was the policy orientation of fiscal reform and economic growth, adjusted to fit the IMF program that provided the country with a 2.6 billion-dollar Stand-by Arrangement. The Bank also said the improving external payments position and the reduction in political event risk following the end of the civil war contributed to the rating agencies' decision to upgrade the ratings.
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