Fitch keeps Lanka’s Long-Term Foreign-Currency Issuer Default Rating at ‘Restricted Default’

Fitch Ratings, on Friday, reaffirmed Sri Lanka’s Long-Term Foreign-Currency Issuer Default Rating at ‘Restricted Default’, or RD.Fitch said that the country’s reserves levels will influence the rating only once they have moved it out of ‘RD’.

” Despite an increase in reserves over the last nine months to around 3.8 billion U.S dollars in July 2023, they remain well below the 7.3 billion dollar average over 2014-2019,” Fitch said in a statement.

Reserve dynamics among Asia Pacific countries appear to be diverging, with potential implications for their credit profiles, Fitch Ratings said.

“Some central banks have been able to accumulate reserves on current account improvements or investment inflows, while others still see their currencies under pressure from US Fed tightening prospects,” it said.

The rating agency said that official reserves among Fitch-rated countries in Asia Pacific increased by almost 170 billion dollars in the first half of 2023, mostly driven by growth among those with already large reserve buffers, including China (A+/Stable), Singapore (AAA/Stable), India (BBB-/Stable), Japan (A/Stable) and Taiwan (AA/Stable).