Fitch upgrades Sri Lanka's credit rating to B-minus with stable outlook

The upgrade reflects Fitch's assessment that Sri Lanka has made meaningful progress in addressing macroeconomic imbalances that triggered its sovereign debt crisis in 2022. The agency maintained a stable outlook on the rating, indicating expectations that the country will continue its reform momentum in coming months.

Sri Lanka's economy has shown signs of stabilisation following the implementation of stringent fiscal and monetary measures under an International Monetary Fund bailout programme. Key indicators including inflation moderation, foreign exchange reserves rebuilding, and improved current account balances have supported the upgrade decision.

The stable outlook suggests Fitch does not anticipate further rating changes in the near term, provided the government sustains its fiscal consolidation efforts and maintains policy consistency. However, the agency typically notes that rating revisions could occur if economic conditions deteriorate or reform implementation stalls.

The upgrade comes as Sri Lanka continues navigating its recovery path following months of economic hardship that included severe shortages of essential goods and sharp currency depreciation. Successful completion of IMF programme milestones and continued adherence to agreed reform targets remain critical for future rating improvements.