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Fitch upgrades Sri Lanka to ‘B-’

The Ceylon Chamber of Commerce is pleased to see the tangible results of the commitment and sustained efforts towards restoring Sri Lanka’s macroeconomic stability, reflected in Fitch Ratings’ decision to upgrade the country’s Long-Term Foreign Currency Issuer Default Rating from ‘CCC+’ to ‘B-’ with a Stable Outlook.

The upgrade is an important development in Sri Lanka’s economic recovery and provides recognition of the progress made following several years of significant economic challenges. Over the past six years, Sri Lanka has undertaken a difficult process of economic adjustment, including fiscal consolidation, revenue mobilisation, debt restructuring, and structural reforms.

The improved rating also reflects greater confidence in Sri Lanka’s macroeconomic stability and resilience. Over the past few years, the country has had to navigate significant external pressures, including impacts of the Hormuz conflict and climate- and environment-related shocks. The ability to maintain stability through these challenges highlights that the recovery has a solid foundation.

The priority now must be to preserve this stability and build on it through implementation of reforms related to trade facilitation, digital, and labour amongst others that will drive growth and investment. Sri Lanka will need to maintain primary surpluses and sustain revenue mobilisation.

At the same time, there is a need to gradually create greater fiscal space through a continued reduction in debt and debt-service ratios. Improving foreign exchange reserves will be important to ensure that the gains in stability are sustained. A targeted approach to poverty reduction should also remain a priority to ensure that the benefits of economic recovery and growth are broadly shared across society.

The improved rating should also be viewed as an opportunity to strategically leverage the progress achieved to attract investment. Greater sovereign credibility can support investor confidence and create a stronger platform for attracting foreign direct investment, expanding productive capacity, and accelerating private sector-led growth.

The Ceylon Chamber of Commerce remains committed to supporting this process and contributing to the policy dialogue needed to strengthen Sri Lanka’s economic fundamentals, improve the business environment, and translate stability into sustainable and inclusive growth.