S&P raises outlook for Sri Lanka debt
International credit rating agency Standard and Poor's has raised the outlook on its rating for Sri Lanka's debt to "stable" from "negative" following a 2.6-billion-dollar IMF bailout package.
The move to a stable outlook reflects the improving state of the government's finances and means the risk of a further downgrade of the main credit rating is diminished.
The agency kept Sri Lanka's rating at "B", which is five notches below investment grade despite an improvement in the island's foreign reserves.
"The ratings could be raised if government policies lead to a sustainable boost in tax revenues and reduced fiscal imbalances," S & P said in a statement received here late Tuesday.
Sri Lanka's foreign reserves, which fell to an eight-year low of 1.3 billion dollars in March, have climbed to 3.2 billion dollars, boosted by inflows for bonds, the central bank governor Nivard Cabraal said Tuesday.
In July, the IMF approved a 20-month 2.6-billion-dollar loan and immediately released 322 million dollars to help avert a balance of payments crisis in the island that is just recovering from a 37-year war with ethnic Tamil rebels.
Sri Lanka plans to sell bonds worth 500 million dollars to overseas investors next month to offset projected spending needed to rebuild infrastructure and homes in the war-torn north and east.