Fitch downgrade unacceptable - Ministry of Finance

The Ministry of Finance issued a statement on the rating action taken by Fitch Ratings, to downgrade Sri Lanka's long term foreign currency issuer default rating to "CCC". The statement reads, "We do not accept this downgrade as it fails to recognize the robust policy framework of the new government for addressing legacy issues, including the concerns raised by Fitch ratings and ensuring ongoing economic recovery and macroeconomic stability of the country" The statement further adds that Fitch Ratings has ignored several key proposals in the government budget 2021 with regard to debt financing. The Ministry of Finance says Fitch ratings has based its rating on the "existing financial model" which is a backward approach in contrast to the forward looking financial model of the government. The statement further adds, " such action simply demonstrates the prejudicial approach of Fitch Ratings and lacks due consideration to alternative strategies that the government is committed to embark on in the period ahead" The statement concludes with the Government of Sri Lanka reaffirming to foreign investors that have put faith in Sri Lanka continuously over the past several years that Sri Lanka remains willing and able to meet debt obligations, as it has done impeccably in the past. Investors are invited to approach the Sri Lankan policy authorities at the highest levels who are dedicated to facilitate any one-on-one or roadshow discussions, without being dissuaded by baseless rating action. Yesterday, Fitch Ratings downgraded Sri Lanka's Long-Term Foreign-Currency Issuer Default Rating to 'CCC' from B-, elaborating that there is a substantial credit risk. The statement issued by Fitch Ratings notes, the downgrade reflects Sri Lanka's increasingly challenging external-debt repayment position over the medium term.