Sri Lanka-Singapore FTA is credit positive for both sovereigns: Moody’s

Jan 29, 2018 (LBO) – Moody’s Investors Service expects that the Sri Lanka-Singapore Free Trade Agreement will enhance the cross-border trade of goods and services and promote foreign direct investment (FDI) between the two countries, a credit positive for both.

Last Tuesday, Singapore (Aaa stable) and Sri Lanka (B1 negative) signed a free trade agreement, although the countries have not yet publicized the full details of it.

Moody’s Investors Service said the FTA will have a larger effect on Sri Lanka’s credit quality because the potential increase in current account inflows and inward investments would help reduce its elevated external vulnerability.

“The SLSFTA liberalizes bilateral trade in goods. Sri Lanka will eliminate tariffs on 80% of products over 15 years,” Moody’s said.

“Singapore’s Ministry of Trade and Industry estimates that the agreement will result in approximately SGD10 million in annual tariff savings.”

Full statement is reproduced below.

Sri Lanka-Singapore free trade agreement is credit positive for both sovereigns