Rapping with ratings

Wednesday, 20 July 2011 00:54 - - {{hitsCtrl.values.hits}}

Economic Development Minister Basil Rajapaksa yesterday showcased the sovereign upgrades by rating agencies to critics of the Government, saying it was a sign of global confidence on the country’s sound policies.

“At the time when some disgruntled elements, both local and foreign, are trying to create a negative picture of the Sri Lankan economy, Fitch and Moody’s decision is welcome,” Rajapaksa said during a meeting with high ranking Ministry officials yesterday.

On Monday Fitch upgraded Sri Lanka’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to ‘BB-’ from ‘B+’. The Outlooks on both ratings are Stable. At the same time, the agency upgraded the Country Ceiling to ‘BB-’ from ‘B+’ and affirmed the Short-Term Foreign-Currency IDR at ‘B’.

Moody’s Investors Service has changed the outlook on Sri Lanka’s B1 foreign currency sovereign rating to positive from stable. However these ratings are three to four notches below investment grade.

Yesterday Standard & Poor’s also revised its outlook on the long-term foreign currency sovereign credit rating on Sri Lanka to positive from stable.

At the same time, Standard & Poor’s affirmed its ‘B+/B’ foreign currency and ‘BB-/B’ local currency sovereign credit ratings on Sri Lanka. The outlook on the long-term local currency rating is stable. The transfer and convertibility (T&C) assessment is unchanged at ‘B+’.

Minister Rajapaksa said ratings upgrade confirmed Sri Lanka had won the confidence of the world on its economic development policies and macroeconomic strategies.

“These world renowned rating agencies have expressed their confidence on outlook of Sri Lankan economy,” he said adding that “Even some big countries are facing debt problems these days. But Sri Lanka is well ahead of its targeted goals, growth rate, inflation budget control and foreign exchange reserves.”

Minister Rajapaksa also said countries like Japan, Vietnam and Korea were in a desperate situation when their wars ended. These countries were able to recover only after 10 to 15 years after the end of the wars. The Marshall Plan was implemented after World War II to help war affected Western countries.

“But Sri Lanka without such help was able to show strong performance in the economy within a short period of time after the war,” he added.

“Economic management of the Mahinda Rajapaksa Government is so effective; the people reap benefits of the peace in such a short period of time. Big queues for foods, shortage of consumer items, unemployment, inflation and begging were common things in the war affected countries. But Sri Lanka was able to achieve economic progress without going through any of these things,” Rajapaksa said.

“Sri Lanka is now experiencing a very strong and stable economic environment for the first time in the economic history of the country after the independence,” Minister added.

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