Govt. targets B- sovereign rating by early 2027 ahead of global market return

Friday, 17 July 2026 00:50 - - {{hitsCtrl.values.hits}}

Treasury expects first sovereign ratings upgrade from current CCC+ by early next year
Officials say discussions underway with three global rating agencies as Sri Lanka prepares to raise $ 1.5 b in 2027-28
CoPF Chairman Dr. Harsha de Silva says external perception will be key despite improving fiscal indicators

The National People’s Power (NPP) Government is targeting its first sovereign credit rating upgrade since the debt crisis, with Treasury officials yesterday telling the Parliamentary Committee on Public Finance (CoPF) they expect the country’s rating to improve to B- by early 2027 as fiscal reforms and debt reduction continue.

Officials said discussions were underway with the three major international credit rating agencies, which are reviewing Sri Lanka’s recent macroeconomic and fiscal performance.

Responding to questions from CoPF Chairman Dr. Harsha de Silva, officials confirmed Sri Lanka’s current sovereign rating is CCC+ and said the immediate objective is to secure an upgrade to B-.

“For B-, by early next year,” a Treasury official said, adding that one of the principal concerns of rating agencies remains Sri Lanka’s debt-to-GDP ratio.

Dr. de Silva said improving fiscal indicators alone would not be sufficient, stressing that Sri Lanka would soon have to regain investor confidence as it returns to international capital markets.

“Whatever you say, you will have to go to the markets in 2027-28. You have to go to the market and raise $ 1.5 billion,” he said.

He noted that Sri Lanka’s governance-linked Bonds maturing in 2035 were trading at yields of around 8.3%-8.5%, describing those levels as “very high” despite the country’s improving macroeconomic performance.

The CoPF Chairman also cautioned that moving from CCC+ back to B+, where Sri Lanka was before successive downgrades, would require four rating upgrades.

“You can show us all these internal numbers. But ultimately, external perception matters a lot,” he said.

Treasury officials said public debt declined to 98.3% of GDP in 2025 and is projected to fall to around 86.7% by 2032, supported by sustained primary surpluses and continued fiscal consolidation.

They said continued progress under the International Monetary Fund (IMF)-supported reform program and further debt reduction would strengthen Sri Lanka’s case for future sovereign rating upgrades and support its planned return to international capital markets.