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22 November 2017

PM hails Lanka’s credit upgrade

Sri Lanka’s recent credit outlook upgrade by an international rating agency is a welcome step for the government’s debt-relief programs, Prime Minister Ranil Wickremesinghe said Monday evening.

“This is not an occasion to have a party,” he said.“It just says that our stabilization program is working.”

He was addressing a crowded ballroom at the Shangri-La Hotel, for Business Today’s “Top 30” business awards ceremony. Earlier in the day, the international credit-rating agency Standard and Poor’s revised its outlook on Sri Lanka from “negative” to “stable.”

In a written statement, S&P said they upgraded the country’s status because of the passage of the Inland Revenue Act, and their expectation that “that the government will maintain the reform momentum over the next 12 months and smooth the upcoming surge in debt redemption.”

But Premier Wickremesinghe urged caution. “This is not enough, I’ll be the first to say,” he said. “We have stabilized the economy, (but) how do we go forward?”

He said that the government is still combing through the debt, “looking for dead bodies.” He cited recent bills from a Singaporean company for work on the Northern Expressway in 2013 and 2014.

He said they had not been aware of the payment obligation until last week. “What had happened in the previous years was that there had been many projects approved which were not shown in the Appropriation Bill,” he told the Bond Commission earlier that day.Although S&P said that “the trend is positive for Sri Lanka’s monetary assessment,” they warned the country still has a long way to go in reducing debt servicing costs.

Sri Lanka’s ratio of interest payments to government revenue stands at 36 percent this year, the agency said. That’s the third highest ratio among nations the company rates, behind only Lebanon and Egypt.

But the Prime Minister said he was undeterred. He said the government, as shown through the 2018 budget, is prioritizing growth by fueling the private sector.