Fitch Ratings has upgraded Sri Lanka’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to ‘BB-‘from ‘B+’, stated the Central Bank.
The outlooks on these ratings are ‘Stable’. Further, Fitch has upgraded the Country Ceiling to ‘BB-‘ from ‘B+’ and affirmed the Short-Term Foreign-Currency IDR at ‘B’, the Bank said.
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, Central Bank added.
The Central Bank welcomes the upgrade and is confident that the measures taken towards the macroeconomic stability and improvement of the economy over the past several years would yield further favourable results in coming years.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.
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.
Meanwhile, Moody's Investors Service has upgraded outlook of Sri Lanka’s B1 foreign currency sovereign rating from ‘Stable’ to ‘Positive’.
On 14 September, Standard & Poor’s (S&P) also upgraded Sri Lanka’s long-term foreign currency sovereign credit rating to B+ and the long term local currency rating to BB- with a stable outlook.
The economy grew by 7.9 percent during the first quarter of 2011 compared to the 7.1 percent recorded in the same period of 2010.
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