Sri Lanka’s maturing foreign debt, budget deficit a concern: Fitch

July 15, 2013 (LBO) – Sri Lanka’s 6.0 percent growth level and lower inflation helped its ‘BB-‘ rating but a high budget deficit and maturing foreign debt were concerns, Fitch Ratings has said in a regional review. An improvement in public or external financing can help an improve the while a significant deterioration in public finances will negative for the rating, Fitch said. Fitch confirmed ‘BB-‘ rating with a stable outlook in April. Inflation pressure has moderated and real gross domestic product grew 6.0 percent in the first quarter of 2013.

Fitch said Sri Lanka’s external finances were a “source of concern due to a heavy external debt refinancing schedule” with foreign debt averaging 1.9 billion dollars of sovereign debt due to mature from 2013 to 2015.

Foreign reserves at 6.9 billion dollars were healthy, Fitch said.

Progress on reducing the budget deficit was slow though the deficit fell to 6.4 percent in 2012.