📊 S&P Affirms Sri Lanka’s 'CCC+/C' Rating with Stable Outlook

S&P Global Ratings has affirmed Sri Lanka’s sovereign credit ratings at 'CCC+/C' with a stable outlook, reflecting continued economic growth and fiscal reform despite elevated external risks. • Overall Credit Profile & Metrics Long- & Short-Term Foreign/Local Currency: Affirmed at 'CCC+/C'. Transfer & Convertibility Assessment: Revised upward to 'B-' from 'CCC+'. Real GDP Growth: Projected at 3.8% in 2026 (down from 5.1% in Q1) and 4.2% in 2027. Fiscal Deficit: Forecast at 5% of GDP in 2026, narrowing toward 4% by 2029. Net Government Debt: Projected at ~92% of GDP in 2026, declining to ~83% by 2029. • External & Sector Performance Gross Official Reserves: Stood at US$ 6.45 Bn in June (down from US$ 6.88 Bn in May). Current Account: Expected to return to a deficit of 1.7% of GDP in 2026 as imports rise. Revenue & Trade: Revenue boosted by lifting vehicle import restrictions and tax reforms; however, tourism arrivals dropped ~10% in June alongside slowing remittances. • Key Risks & Outlook External Vulnerabilities: Heightened risks from Middle East conflict, higher energy/fuel costs, and dependence on imported fuel and fertiliser. Rating Catalysts: Sustained fiscal/external improvement could trigger an upgrade, while renewed liquidity or funding stress could lead to a downgrade. Continued adherence to the IMF EFF program remains central to stability.