🇱🇰 Sri Lanka's Debt Restructuring: Fitch Signals Potential Upgrade

Fitch Ratings suggests that #SriLanka's ‘RD’ (Restricted Default) rating could be revised post-debt restructuring and normalization of international financial ties.

⭕ Current Status: Long-Term Foreign Currency IDR remains at ‘RD’ since May 2022 after Sri Lanka missed coupon payments.

⭕ Political Risks: The new administration is endorsing the IMF-backed debt restructuring deal with international bondholders, reduced uncertainty and political risks.

⭕ Vijitha Herath confirmed that swift action on restructuring was necessary to avoid economic delays and further complications.

⭕ Local-Currency IDR Update: Fitch upgraded the Long-Term Local-Currency IDR to ‘CCC-‘ in September 2023, following the successful completion of domestic debt optimization.

⭕ Debt Outlook: Despite restructuring, Sri Lanka’s debt-to-GDP ratio is forecasted by the IMF to remain high, gradually declining to ~103% by 2028, from 116% in 2022.

#SriLanka #DebtRestructuring #IMF #EconomicUpdate #FitchRatings