Global rating agency Fitch Ratings has upgraded Sri Lanka’s long-term foreign-currency Issuer Default Rating (IDR) from ‘CCC+’ to ‘B-’, while maintaining a Stable outlook.
Fitch said the upgrade reflects the implementation of macroeconomic stabilisation policies and structural reforms that have helped reduce external financing risks.
The agency also highlighted Sri Lanka’s resilience in dealing with external economic shocks, noting that ongoing reforms have strengthened the country’s external financial position.
However, Fitch said Sri Lanka’s credit profile remains constrained by high debt and debt-servicing levels, as well as relatively low foreign exchange reserves.
The agency also warned that Sri Lanka could record a current account deficit in 2026 after three consecutive years of surpluses, partly due to higher energy prices. Rising foreign remittances, however, are helping to ease some of the pressure.
Fitch noted that Sri Lanka’s economic growth remains resilient despite these challenges, while financing from the International Monetary Fund (IMF) and other multilateral institutions continues to provide external support and help address short-term financing pressures.
