Global ratings agency Fitch Ratings has upgraded Sri Lanka’s Long‑Term Issuer Default Rating (IDR) to ‘B-’ from ‘CCC+’, with a Stable Outlook, citing the country’s progress in macro‑stabilization policies and structural reforms.
Issuing a statement today (22), Fitch said the upgrade reflects “sharp improvements in fiscal and external balances, and a modest rebuilding of FX reserves,” noting that fiscal discipline and revenue mobilization are expected to sustain primary surpluses and keep debt on a downward trend.
The agency highlighted that Sri Lanka’s credit profile remains constrained by high debt‑to‑GDP and debt service ratios compared to peers, as well as modest FX reserve buffers. However, continued IMF support, revenue reforms, and adherence to fiscal frameworks are seen as strengthening resilience.
Fitch forecasts a primary surplus of 2.6% of GDP in 2026, down from a record 5.4% in 2025, supported by tax reforms and revenue growth. Government debt is projected to fall to 92.9% of GDP in 2026, while reserves are expected to reach USD 7.7 billion by end‑2026.
Despite external risks from energy shocks and rising debt repayments, Fitch noted Sri Lanka’s economy has shown resilience, with GDP growth forecast at 4.1% in 2026. Inflation is expected to average 6.3% in 2026 before easing below the Central Bank’s 5% target.
The agency said further upgrades could follow if debt ratios decline substantially and FX reserves rise sustainably, while slippage in fiscal discipline or external liquidity pressures could trigger a downgrade.
Full statement : https://www.fitchratings.com/resear...ades-sri-lanka-to-b-outlook-stable-22-09-2026
Issuing a statement today (22), Fitch said the upgrade reflects “sharp improvements in fiscal and external balances, and a modest rebuilding of FX reserves,” noting that fiscal discipline and revenue mobilization are expected to sustain primary surpluses and keep debt on a downward trend.
The agency highlighted that Sri Lanka’s credit profile remains constrained by high debt‑to‑GDP and debt service ratios compared to peers, as well as modest FX reserve buffers. However, continued IMF support, revenue reforms, and adherence to fiscal frameworks are seen as strengthening resilience.
Fitch forecasts a primary surplus of 2.6% of GDP in 2026, down from a record 5.4% in 2025, supported by tax reforms and revenue growth. Government debt is projected to fall to 92.9% of GDP in 2026, while reserves are expected to reach USD 7.7 billion by end‑2026.
Despite external risks from energy shocks and rising debt repayments, Fitch noted Sri Lanka’s economy has shown resilience, with GDP growth forecast at 4.1% in 2026. Inflation is expected to average 6.3% in 2026 before easing below the Central Bank’s 5% target.
The agency said further upgrades could follow if debt ratios decline substantially and FX reserves rise sustainably, while slippage in fiscal discipline or external liquidity pressures could trigger a downgrade.
Full statement : https://www.fitchratings.com/resear...ades-sri-lanka-to-b-outlook-stable-22-09-2026
