Fitch and Moody's upgrade Lanka's sovereign rating

Fitch Ratings has upgraded Sri Lanka's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'BB-' from 'B+'. The outlooks on these ratings are 'Stable'.

Further, Fitch has upgraded the Country Ceiling to 'BB-' from 'B+' and affirmed the Short-Term Foreign-Currency IDR at 'B'.

Meanwhile, Moody's Investors Service has upgraded outlook of Sri Lanka's B1 foreign currency sovereign rating from 'Stable' to 'Positive' due to the key factors - increasingly evident peace dividend reflected in greater macroeconomic and financial stability; policy orientation of fiscal reform and economic growth, supported by a successful IMF program; improving external payments position; and reduction in political event risk following the end of terrorism in 2009.

Fitch's decision to upgrade the ratings was based on the stabilis ation and recovery of the economy and increased efforts by the Government to bring down the budget deficit.

Moody's has said that augmented investor confidence and the increase in investments along with the falling inflation, the economy is expected to expand sustainably by 8-9 percent in the medium term.

The Central Bank has welcomed the upgrade and is confident that the measures taken towards macroeconomic stability and economic improvement would yield further favourable results.