Sri Lanka IMF disbursement credit positive - Moody's
The resumption of a loan programme with the International Monetary
Fund is positive for Sri Lanka's 'B1' credit rating, as it will help
boost investor confidence, Moody's Investors Service said.
“The disbursement is credit positive because it will help restore
investor confidence and shore up foreign exchange reserves, which had
been drained owing largely to an ineffective exchange rate policy in the
second half of 2011,” Cynthia Mar, an associate analyst at Moody's
sovereign risk group said in a weekly report.
“The reactivated IMF support programme is also a tacit endorsement of
Sri Lanka’s policy initiatives since February 2012, which were taken to
stem currency and foreign exchange reserve losses, and which we also
think will be effective.” Moody's said. The rating agency said
corrective actions, including a flexible exchange rate, rate hikes,
credit ceilings and energy price increase are expected to stabilize
reserves. With a US $ 427 m tranche from IMF reserves have reached US $
6.1 billion, agency said.
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