Fitch upgrades Sri Lanka
Affirms LT IDRs at ‘B+’:
Fitch Ratings yesterday affirmed Sri Lanka’s Long-term foreign and
local currency Issuer Default Ratings (IDRs) at ‘B+’, and simultaneously
revised the Outlook to Positive from Stable. Fitch also has affirmed Sri
Lanka’s Short-term IDR at ‘B’ and Country Ceiling at ‘B+’.
The Outlook revision is in large part a reflection of Sri Lanka’s
economy benefitting from the end of a war in 2009, from a more
disciplined policy framework put in place under the Stand-By Arrangement
(SBA) with the IMF, and from an improved external liquidity position
bolstered by the IMF program.
Fitch believes these developments support the prospects for Sri Lanka
to achieve sustained medium-term growth, without a resurgence in
inflation or another bout of external liquidity stress (as experienced
over end-2008 to early-2009). Foreign exchange reserves stood at
USD5.8bn at end- July 2010, well above the low of USD1.1bn in March
2009, bolstered by USD1.0bn of IMF funds.
Sri Lanka has made headway in rebuilding and integrating the two
war-torn Northern and Eastern provinces into the rest of the local
economy, which is helping to boost Sri Lanka’s productive capacity,
particularly in the agriculture and tourism sectors.
This is highlighted by real GDP growing 8.5 percent yoy in Q210, from
a 7.1 percent yoy rise in Q110. Fitch is forecasting real GDP growth to
average 7.2 percent in 2010-2012, versus an average of 5.1 percent over
the last 20 years. |