Medium term sovereign rating:

Strategy yields positive results

Sri Lanka’s sovereign credit rating has been upgraded by the international rating agencies, Standard and Poor’s (SandP) and Fitch Ratings, who have recently assigned improved credit ratings to the country. A third rating agency, Moody’s Investors Service, has also assigned a comparable credit rating to Sri Lanka.

On September 14, Standard and Poor’s (SandP) 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. On September 21, Fitch Ratings affirmed Sri Lanka’s long term foreign and local currency Issuer Default Ratings (IDR) at B+ while upgrading the outlook to ‘Positive’.

On September 22, Moody’s Investors Service assigned a B1 foreign currency issuer rating with a stable outlook.

Accordingly, the current sovereign ratings of the country stand as follows:

Rating Agency

Rating Outlook

SandP B+ Stable

Fitch B+ Positive

Moody’s B1 Stable

Given the many positive developments in the country during the post-conflict period, these rating upgrades have been expected.

The improved macroeconomic fundamentals, prudent monetary policy, fiscal consolidation, planned structural improvements of the economy, and high economic growth prospects will further support the enhancement of Sri Lanka’s sovereign credit rating in the near to medium term.

These upgrades could be viewed as an outcome of the strategy towards upgrading Sri Lanka’s sovereign rating over the medium term.

For this purpose the Central Bank of Sri Lanka recently appointed a high level Sovereign Rating Committee (SRC), comprising senior officials of the Finance and Planning Ministry, Central Bank of Sri Lanka and some private sector leaders.

The SRC has been assigned to make regular reviews on the developments of the economy and have negotiations with the rating agencies through Rating Advisors towards upgrading the country’s sovereign rating.