Sri Lanka says Fitch rating outlook cut ‘unwarranted’

Feb 28, 2009 (LBO) – The cut in the outlook of Sri Lanka’s ‘B+’ sovereign rating to ‘negative’ by Fitch Ratings is ‘unwarranted’ and ‘pessimistic’ the island’s Central Bank said. The Central Bank said the rating agency had a “pessimistic view” of various measures being taken by Sri Lanka to increase the country’s flagging foreign reserves.

Sri Lanka also disputed a Fitch assessment that the current account deficit of the balance of payments in 2009 would be 4.9 percent of gross domestic product (GDP) saying it would be 2.7 percent.

Meanwhile economic growth in 2009 would be higher than the 3.0 percent forecasted by the agency, as areas in the north and east, taken from Tamil Tiger guerillas would be generating growth with reconstruction.

“The war on terror is also about to end, and an increased volume of remittances are expected for reconstruction and rehabilitation in newly liberated areas,” the Central Bank said.

Sri Lankan military is engaged in a last ditch battle with Tamil Tigers, who are now confined to a small area in the northeast of the island.

Economists have said that Sri Lanka’s balance of payments crisis, is a stereotypical problem that af