Fitch upgrades Sri Lanka

Fitch Ratings said it upgraded Sri Lanka's long-term foreign- and local-currency issuer default ratings to BB- from B+, along with its country ceiling to BB- from B+.

The outlook is stable.

The agency also affirmed its short-term foreign-currency issuer default rating at B.

The upgrade reflects the stabilization and recovery of the economy under the country's International Monetary Fund program and increased efforts to address the chronic budget deficit position, Fitch said.

Real GDP grew an impressive 8% in 2010, up from a 3.5% rise in 2009 as Sri Lanka's post-war economic transformation continued to gain traction, particularly with the integration of the war-torn northern and eastern provinces, the agency said.

Consumer price inflation, which has historically proven to be high and volatile, has been relatively well behaved, rising 7.5% year-over-year in the first half of 2011, compared with a 6.2% rise in 2010, Fitch said.

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