July 8, 2014 (LBO) – Sri Lanka’s ‘B+’ rating was confirmed with a ‘stable’ outlook on lower inflation and better state enterprise performance despite weak institutions and high debt service, Standard and Poor’s, a rating agency said. S & P said there was a marked improvement in state-run Ceylon Electricity Board and Ceylon Petroleum Corporation and the central government budget gap was also expected to improve.
But with interest taking up about a third of government revenues over the next three years, the debt service burden was among the highest for 130 countries rates by S & P.
Government budgets had improved, and the national debt is expected to fall to about 70 percent of gross domestic product by 2016 from 27 percent in 2013, helped by some deficit reduction and faster growth.
The state had also improved infrastructure and rebuilt former war zones and growth was expected to be over 5.5 over the next few years.
But “some of the country’s political institutions lack extensive checks and balances, posing
risks to Sri Lanka’s institutional and governance effectiveness,” the agency said.
The full statement is reproduced below:-
S&P Affirms Sri Lanka ‘B+/B’ Ratings; Outlook Stable