S&P confirms Sri Lanka ‘B+/B’ ratings, with stable outlook

SINGAPORE - Standard & Poor's has affirmed its 'B+' long-term and 'B' short-term sovereign credit ratings on Sri Lanka. The outlook remains stable, with the transfer and convertibility risk assessment unchanged at 'B+'.

“The rating on Sri Lanka reflects the country's relatively low wealth, improving but still moderately weak external liquidity, and a high government debt and interest burden,” S&P says. “In addition, uncertainty over the Government's commitment to reforms after the August 17 Parliamentary elections, and gaps in institutional capacity, pose risks to Sri Lanka's institutional and governance effectiveness, which we consider to be a credit weakness.

“These rating constraints weigh against what we consider to be robust growth prospects, which are above average for sovereigns at similar levels of development.

“Sri Lanka's growth outlook continues to be underpinned by Government investment (including rebuilding the war-torn northern districts), rising tourist arrivals, garment sector activity and declining inflation, which we expect to remain in the single digits.” www.standadandpoors.com (ATI).