"The ratings downgrade of Sri Lanka reflects the increased vulnerability of sovereign creditworthiness to adverse shocks associated with rising inflation, persistently large fiscal deficits and worsened terms of trade due to soaring oil prices in the context of greater government recourse to commercial and market-based financing," James McCormack, Head of Asia sovereign ratings said.
Outlook
The outlook on the new downgraded rating was stable. Fitch also downgraded the country rating ceiling by one notch to 'B+', but kept the short term rating at 'B'.
Earlier Standard & Poor's, which had always rated Sri Lanka at 'B+', downgraded its rating outlook to negative, calling for better budgets.
Fitch said Sri Lanka had an "impeccable debt service record," as it had never defaulted on foreign borrowings. The country also had a good a business environment and its total foreign d