S&P lowers Sri Lanka view to negative

Standard & Poor’s said it revised the outlook on the B+ long-term sovereign credit ratings on the Democratic Socialist Republic of Sri Lanka to negative from stable.

The agency also said it affirmed the country’s long-term rating and the B short-term credit rating and left the transfer and convertibility risk assessment on Sri Lanka unchanged at B+.

The negative outlook reflects rising pressure on Sri Lanka’s external liquidity resulting from a weaker trade balance and remittances, S&P said, and short-term capital outflows that have eroded its reserve buffers.

The outlook also considers the country’s weakened public finances, the agency added.

Sizable and rising projected fiscal deficits are expected to push borrowings higher in 2016 through 2019, S&P said.

Authorities face significant challenges in effectively addressing the rising imbalance due to institutional constraints and fragmented political landscape, the agency said.

The rating constraints also include the country’s weak external liquidity and high general government net debt burden at 72% of GDP in 2015, S&P said.

© 2015 Prospect News.
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