COLOMBO, Nov 28 (NNN-SLNEWS) – Sri Lanka’s Ministry of Finance dismissed Fitch Ratings’ downgrade of the country’s sovereign rating, as an assessment based on uncorroborated facts.
“We do not accept this downgrade, as it fails to recognise the robust policy framework of the new government for addressing the legacy issues, including concerns raised by Fitch Ratings, and ensuring ongoing economic recovery and macroeconomic stability of the country,” the ministry said in a statement.
Fitch Ratings downgraded Sri Lanka’s sovereign rating from B- to CCC, following the government’s budget proposals for 2021, local media reported.
Fitch said, the downgrade was due to Sri Lanka’s increasing sovereign debt-to-GDP ratio amid COVID-19-induced shocks to the economy. It estimates that Sri Lanka’s debt-to-GDP ratio may increase from 86.8 percent in 2019 to 100 percent in 2020, possibly reaching 116 percent in 2024.
“The government’s external-debt obligations amount to USD 23.2 billion between 2021 and 2025, or about four billion USD annually, against FX reserves at end-Oct of just USD 5.9 billion,” the statement said.
However, it said, the country’s current account has not deteriorated, thanks to import restrictions and higher-than-expected remittances.
Fitch projects Sri Lanka’s growth to reach 4.9 percent in 2021, while official government figures projected a 5.5-percent growth rate.
The Sri Lankan government announced its budget proposals for 2021 on Nov 17, projecting a revenue of 10.6 million U.S. dollars, expenditure of 19 million U.S. dollars and a deficit of 8.5 million U.S. dollars.– NNN-SLNEWS
