Fitch Ratings has today affirmed Sri Lanka's Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'B+', and simultaneously revised the Outlook to Positive from Stable. Fitch also has affirmed Sri Lanka's Short-term IDR at 'B' and Country Ceiling at 'B+'.
The Outlook revision is in large part a reflection of Sri Lanka's economy benefitting from the end of a prolonged civil war in 2009, from a more disciplined policy framework put in place under the Stand-By Arrangement (SBA) with the IMF, and from an improved external liquidity position bolstered by the IMF programme. Fitch believes these developments support the prospects for Sri Lanka to achieve sustained medium-term growth, without a resurgence in inflation or another bout of external liquidity stress (as experienced over end-2008 to early-2009). Foreign exchange reserves stood at USD5.8bn at end- July 2010, well above the low of USD1.1bn in March 2009, bolstered by