Sri Lanka disputes Fitch’s sovereign downgrade

April 03, 2008 (LBO) — Sri Lanka has disputed a sovereign credit downgrade by one notch to ‘B+’ by Fitch Ratings Thursday, saying it was based on the rating agency’s pessimistic views and was not in line with economic fundamentals. . “The downward revision of ratings is based on Fitch’s pessimistic views on the security situation, inflation and foreign currency borrowings,” Sri Lanka’s central bank said.

“…Sri Lankan authorities believe a downgrade in ratings is not in line with the recent improvements in the country’s macroeconomic fundamentals and its future outlook.”

The Central Bank said Fitch had cited many positive factors about Sri Lanka, such as measures to increase revenue, cutting of some subsidies, a reduction of debt ratios, and tightening of monetary policy.

“In addition, Fitch has recognized that food and oil price shocks have contributed to sharp acceleration in consumer price inflation in Sri Lanka,” the Central Bank said.

“The country’s impeccable debt service record has also been highlighted together with the improvement of the business environment in comparison to its regional and rating peers, and the moderate external debt service burden.”

Central Bank said the Fitch downgrade w