Standard & Poor's Ratings Services yesterday raised Sri Lanka's debt ratings to a stable outlook reflecting the country's strengthening of its finances following the end of the war last year.

S&P raised its long-term foreign currency sovereign credit rating on Sri Lanka to 'B+' from ‘B’ and the long-term local currency rating to 'BB-' from 'B+'. At the same time, S&P affirmed the 'B' rating on Sri Lanka’s sovereign debt.

According to the international rating service the stable rating outlook has been awarded in the expectation of rapid progress in addressing structural fiscal weaknesses, mostly on the revenue side and the strong growth prospects.

"The rating upgrade takes into account the continued strengthening of Sri Lanka's balance-of-payments position, and reflects Standard & Poor's expectation that the government's planned revenue reforms will improve public finances, such that fiscal deficits and public debt will decline again in a sustainable manner," said Standard & Poor's credit analyst Agost Benard.

"We may raise the ratings on Sri Lanka on evidence of more comprehensive fiscal or structural economic reforms resulting in faster-than-expected reduction of vulnerabilities posed by the high debt and interest burdens, and still-narrow economic profile," said Benard.

Standard & Poor's is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data.