Standard & Poor’s ratings agency on Friday lowered the outlook on Sri Lanka’s ‘B+’ long-term sovereign credit rating to negative from stable, citing rising fiscal and external imbalances. The announcement came just 11 days after Fitch ratings on February 29 downgraded Sri Lanka’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) ‘B+’ from ‘BB-’.
Standard & Poor’s confirmed the ‘B+/B’ ratings and the ‘B’ short-term credit rating and left its transfer and convertibility risk assessment on Sri Lanka unchanged at ‘B+’.
“Sri Lanka’s external and fiscal performances have underperformed our expectations,” a statement from S&P’s said adding that a high government debt, interest burden, and gaps in institutional capacity constrain its policy options and responsiveness.
“The negative outlook indicates that we could lower our rating on Sri Lanka in the next 12 months if we see no tangible signs of a substantial and sustained reversal of the weakening of external and fiscal credit metrics we currently project,” S&P’s said.