Fitch ratings: Sri Lanka's external and public finances a concern

Sri Lanka's external and public finances are of concern whilst macroeconomic performance is stable, according to international rating agency Fitch, a report said here on Monday. In its latest overview over Asia Pacific countries, Fitch said Sri Lanka's Foreign Currency (FC) and Local Currency (LC) ratings have been affirmed at BB- with Stable Outlook in April 2013. This balances the strength of the country's resilient growth performance and strong payment record against the weaknesses of its fiscal and external balance sheets, it added. Fitch said the Sri Lankan economy was growing at a more sustainable level as real GDP grew by 6.0 percent Year on Year ( YoY) in the first quarter of 2013 and inflation pressure has moderated, rising by 6.8 percent YoY in second quarter of 2013. "Sri Lanka's external finances remain a source of concern due to a heavy external debt refinancing schedule, where an average of 1.9 billion U.S. dollars per annum in sovereign debt is projected to mature during 2013-2015," it said. Fitch said foreign reserves, however, remain at a healthy level, standing at 6.9 billion U.S. dollars at the end of April in 2013. It also said progress on fiscal consolidation has been slow as the budget deficit fell to 6.4 percent of GDP in 2012. According to Fitch the key rating drivers for Sri Lanka are on the upsides -- sustained improvements in both the public and external finances whilst on the downside was an intensification in external financing risks and an extended period of overheating or a significant deterioration in the public finances.