Fitch Upgrades Sri Lanka to 'B-' on Reform Progress, Stable Outlook
Fitch raised Sri Lanka's long-term foreign-currency rating to 'B-' from 'CCC+', citing macro-stabilization policies and structural reforms.
Fitch has raised Sri Lanka's long-term foreign-currency default rating to 'B-' from 'CCC+', assigning a stable outlook, as macro-stabilization measures and structural reforms reduce the island nation's external financing risks.
The agency said the upgrade reflects the implementation of policies that have provided a measure of resilience against shocks. Sri Lanka's credit profile, however, continues to face constraints from elevated debt and debt-service ratios, while its foreign-exchange reserve buffers remain modest.
Energy costs are a further source of pressure. Because Sri Lanka imports all of its fuel, higher prices linked to the US-Iran conflict are expected to push the current account back into deficit in 2026, ending three consecutive years of surpluses. Steadily rising remittances are helping to cushion that impact.
Fitch noted that economic growth has held up despite these headwinds, with financing from the International Monetary Fund and other multilateral agencies offering steady external support that mitigates near-term current account strains.