Even if Sri Lanka exits the group of defaulters, it is still not possible for the country to become an active member of the international financial market, says MP Dr. Harsha de Silva.
He emphasized the importance of continuing agreed-upon economic reforms and raising the country’s credit rating to BBB to achieve this goal.
Samagi Jana Balawegaya MP Dr. Harsha de Silva made this statement while explaining Sri Lanka’s current economic situation:
“The recent upgrades in Fitch and Moody’s ratings are great news for the entire country,” he said.
“However, we have not yet achieved a rating that allows us to borrow from the international market. To reach a rating like BBB, the economy must grow stronger.”
Dr. de Silva credited the efforts of the previous government and the bills passed in Parliament for stabilizing the economy after its decline. He highlighted that the credit rating improvements result from maintaining agreements made just two days before the presidential election.
“This progress is not due to any new initiative but rather due to effective debt restructuring efforts. The improved credit rating has been achieved by adhering to the original agreement without altering a single detail,” he explained.
He criticized those who had previously claimed that the Debt Sustainability Analysis (DSA) could be revised, saying, “Some promised before the election to change the DSA, but when the opportunity arose to restructure debt, no alternative DSA was used. Telling the public falsehoods knowingly is problematic. However, continuing the previous work as it stands benefits the country.”
Dr. de Silva also pointed out the recent economic growth, stating, “The third quarter grew by 5.5%. The question now is, what steps must be taken to sustain this growth?”
He noted that credit rating agencies have indicated the possibility of further upgrades if economic reforms continue as expected.
“By 2027, according to the IMF agreement, we will need to borrow dollars from the international financial market again. A country does not simply go bankrupt; rather, the government loses its ability to repay debts. In 2022, Sri Lanka declared its inability to pay foreign debts, which put the country in the group of defaulters,” he said.
“Two and a half years later, Sri Lanka has been removed from the group of defaulters. However, becoming an active member of the international financial market will take at least two more years. If we continue with the agreed reforms and raise our credit rating to BBB, we can re-enter the international financial market. Right now, we are not in a position to issue sovereign bonds.”
Within days of Fitch Ratings upgrading Sri Lanka’s credit rating, Moody’s, another leading global credit rating agency, also upgraded the country’s long-term foreign exchange debt rating from “Ca” to “Caa1.”
Dr. Harsha de Silva concluded by emphasizing the need for consistent reforms and stability to achieve a stronger economic position.
