Sri Lanka’s deal with China to develop the Hambantota Port will help boost Sri Lanka’s foreign-exchange reserves and help increase investor confidence, rating agency Moody’s said last week.

In its latest report, Moody’s said that the income from the stake sale of the Hambantota Port will feed into the Central Bank’s foreign-exchange reserves, which will help bolster investors confidence and encourage future portfolio inflows.

“Importantly, the sale will allow the government to set aside earnings to repay its upcoming debt maturities and reduce its external debt, a key constraint on Sri Lanka’s credit quality,” it added.

In addition, the statement by the rating agency said that the development of the broader Hambantota Port area will help bring in foreign direct investment into Sri Lanka, especially from China.