- No sustained rise in commodity prices, particularly in crude oil, in line with Fitch's Global Economic Outlook. Fitch said though debt levels were high, a budget for 2014 signalled a commitment to reduce debt and improve the fiscal side.
The full statement is reproduced below:-
Fitch Rates Sri Lanka's Bond at 'BB-(EXP)'
06 Jan 2014 12:55 AM (EST) Fitch Ratings-Hong Kong-06 January 2014: Fitch Ratings has assigned Sri Lanka's forthcoming US dollar-denominated global bonds due 2019 an expected rating of 'BB-(EXP)'. The final rating is contingent on the receipt of final documentation conforming to information already received.
The expected rating is in line with Sri Lanka's Long-Term Foreign Currency Issuer Default Rating (IDR) of 'BB-' with Stable Outlook.
buy doxycycline online buy doxycycline online no prescription
The sovereign's Long-Term Local Currency IDR is also 'BB-' with Stable Outlook.
KEY RATING DRIVERS
Sri Lanka's 'BB-' IDRs reflect the following key rating drivers:
- Relatively strong growth, a comparatively high level of human development and a solid payment record.
- The fiscal deficit (Fitch estimates 5.
8% of GDP in 2013) and government debt burden (77.2% of GDP in 2013) remain at relatively high levels, although the 2014 budget signals commitment to medium-term debt reduction and an ability to maintain a gradual fiscal consolidation trend.
- The external finances form a weakness with a persistent but narrowing current account deficit and higher net external debt level (36.6% of GDP) compared with peers also rated in the 'BB' category (on average, 22.
8% of GDP).
RATING SENSITIVITIES
The Stable Outlook reflects Fitch's assessment that upside and downside risks to the rating are currently well balanced.
The main factors that individually, or collectively, could trigger negative rating action are:
- An extended period of economic overheating accompanied by a large surge in inflation.
- A material deterioration in the public finances, which leads to a substantial increase in Sri Lanka's general government debt-to-GDP ratio.
- An intensification in external financing risks, particularly a renewed widening in the current account deficit combined with a fall in capital inflows.
The main factors that individually, or collectively, could trigger positive rating action are:
- Sustained improvement in the macroeconomic outlook that is consistent with healthy economic growth coupled with moderate and stable inflation and external equilibrium.
- A material improvement in Sri Lanka's public finances underpinned by a higher government revenue-to-GDP ratio and conversely a large decline in the general government debt-to-GDP ratio.
- Significant improvement in the external finances, with smaller current account deficits and higher levels of non-debt capital inflows (that is, foreign direct investment).
KEY ASSUMPTIONS
- Sri Lanka's political landscape remains broadly stable and there is no renewal in the civil conflict that previously lasted 26 years and ended in 2009.
- Concessional financing by international donors/lenders will remain a continuing feature of the government's financing programme.