{"id":121290,"date":"2021-12-18T17:09:30","date_gmt":"2021-12-19T00:09:30","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=121290"},"modified":"2021-12-18T17:10:01","modified_gmt":"2021-12-19T00:10:01","slug":"fitch-downgrades-sri-lankas-long-term-foreign-currency-idr-to-cc","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2021\/12\/18\/fitch-downgrades-sri-lankas-long-term-foreign-currency-idr-to-cc\/","title":{"rendered":"Fitch downgrades Sri Lanka\u2019s Long-Term Foreign-Currency IDR to \u2018CC\u2019"},"content":{"rendered":"<h2><span style=\"color: #0000ff;\"><em>Courtesy Adaderana<\/em><\/span><\/h2>\n\n\n<p><em><strong>(AFP)<\/strong>&nbsp;<\/em>International ratings agency&nbsp;<a href=\"https:\/\/www.fitchratings.com\/research\/sovereigns\/fitch-downgrades-sri-lanka-long-term-foreign-currency-idr-to-cc-17-12-2021\">Fitch downgraded&nbsp;Sri Lanka Saturday by one notch to CC\u201d&nbsp;<\/a>due to mounting fears of a sovereign default on its $26 billion foreign debt.<\/p>\n\n\n\n<p>The downgrade came a day after Sri Lanka reported a 1.5 percent contraction in the third quarter of this year as a foreign exchange crisis wrecked its recovery from the coronavirus pandemic.<\/p>\n\n\n\n<figure class=\"wp-block-embed-youtube wp-block-embed is-type-video is-provider-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"\u0dc1\u0dca\u200d\u0dbb\u0dd3 \u0dbd\u0d82\u0d9a\u0dcf\u0dc0 \u0dab\u0dba \u0db4\u0dd0\u0dc4\u0dd0\u0dbb\u0dc4\u0dd0\u0dbb\u0dd3\u0db8\u0dda \u0d85\u0dc0\u0daf\u0dcf\u0db1\u0db8\u0d9a ?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/6X-o5Uf5F4U?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>Fitch said the downgrade reflected its view of an increased probability of a default event in coming months\u201d as Sri Lanka\u2019s foreign reserves slumped to $1.58 billion at the end of November.<\/p>\n\n\n\n<p>We believe it will be difficult for the government to meet its external debt obligations in 2022 and 2023 in the absence of new external financing sources,\u201d the agency said in a statement.<\/p>\n\n\n\n<p>It noted Sri Lanka had to repay two international sovereign bonds of $500 million in January 2022 and $1.0 billion in July 2022 with little improvement in capital inflows into the nation of 21 million people.<\/p>\n\n\n\n<p>Foreign-currency debt service payments, including principal and interest, for next year total $6.9 billion, or the equivalent of nearly 430 percent of the island\u2019s official gross international reserves as of November 2021.<\/p>\n\n\n\n<p>Cumulative foreign-currency debt service, including interest and principal, amounts to about $26 billion from 2022 through to 2026,\u201d Fitch said.<\/p>\n\n\n\n<p>The island\u2019s tourism-dependent economy was hammered by the pandemic and authorities responded to falling foreign exchange reserves with a broad import ban, triggering shortages including food, fuel and medicines.<\/p>\n\n\n\n<p>The crisis has spread to affect manufacturing and services and agriculture has also suffered badly due to a ban on agrochemical imports.<\/p>\n\n\n\n<p>Sri Lanka\u2019s economy had grown 12.3 percent in the second quarter but a third wave of infections that forced a 41-day curfew saw services and industries heavily affected, the statistics office said on Friday.<\/p>\n\n\n\n<p>Its foreign reserves of $1.58 billion at the end of November compared with $7.5 billion when the government of President Gotabaya Rajapaksa took over two years ago.<\/p>\n\n\n\n<p>Supermarkets have rationed staples such as milk powder, sugar, lentils, tinned fish and rice as commercial banks ran out of dollars to finance imports.<\/p>\n\n\n\n<p>The central bank has been appealing for foreign currency, even loose change people may have after returning from overseas trips, as the government desperately looks for dollars.<\/p>\n\n\n\n<p>The banking regulator has also warned it will freeze accounts of informal money changers who offer higher prices for hard currency than official exchange rates.<\/p>\n\n\n\n<p><br><em>-Agencies<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Courtesy Adaderana (AFP)&nbsp;International ratings agency&nbsp;Fitch downgraded&nbsp;Sri Lanka Saturday by one notch to CC\u201d&nbsp;due to mounting fears of a sovereign default on its $26 billion foreign debt. The downgrade came a day after Sri Lanka reported a 1.5 percent contraction in the third quarter of this year as a foreign exchange crisis wrecked its recovery from [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[102],"tags":[],"class_list":["post-121290","post","type-post","status-publish","format-standard","hentry","category-economy"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/121290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=121290"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/121290\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=121290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=121290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=121290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}