July 22, 2012 (LBO) – Sri Lanka is to begin talks with the International Monetary Fund for an ‘Extended Fund Facility’ which could result in citizens getting long term economic liberties and the implementation of prudent measures to prevent economic shocks that hurt people. A reduction of state interventions in the economy in the form of reducing energy price controls and ending contradictory monetary and exchange policies in February which resumed a suspended IMF program helped Sri Lanka retain its rating.
Deeper reforms, especially in state enterprises which are making massive losses and a burden on the poor, as well reducing state spending to curb deficits could result in the avoidance of future economic crises and result in rating upgrades.
“We may raise the sovereign rating on evidence of Sri Lanka’s progress in addressing the external weaknesses and domestic problems,” Standard and Poor’s said in a statement during the launch a billion dollar bond this month.
“Fiscal or structural economic reforms that reduce the vulnerabilities from high debt and interest burdens and the still-narrow economic profile would indicate such improvement.”
Standard and Poor’s had rated Sri Lanka at a speculative ‘B+’, four levels below a ‘BBB-‘ investment grade rating.