Sri Lanka budget good for rating: Fitch

Nov 25, 2013 (LBO) – Fitch Ratings said the Sri Lanka’s recent budget would help Sri Lanka’s ‘BB” sovereign rating. Fitch said Sri Lanka has to guard against foreign debt.

“The Sri Lankan government also has a significant amount of foreign currency debt,” Fitch said.

“At around 33% of GDP this poses a risk to the medium-term goal of debt reduction should the Sri Lankan rupee unexpectedly weaken.”

“It also signals a strong statement of commitment to medium-term debt reduction,” Fitch Ratings said.

“The ability to maintain the fiscal consolidation trend provides support to Sri Lanka’s’ ‘BB-‘/Stable sovereign rating.

“At the same time, both its fiscal deficits and government debt burden still stand at relatively high levels.”

Sri Lanka raised a series of taxes and also trimmed some subsidies amid an economic downturn that had reduced revenues.

Provisional data showed that Sri Lanka is set to reduce its budget deficit to 5.8 percent of gross domestic product this year from 6.4 percent in 2012.

Fitch said authorities are hoping to reduce the budget deficit to 5.0 percent of GDP i