Credit ratings agency S&P Global on Friday upgraded Sri Lanka’s foreign currency ratings from the “selective default” it had languished in since 2022, on progress in restructuring the island country’s remaining commercial debt.
The upgrade in foreign currency ratings to “CCC+/C” reflects Sri Lanka’s strong economic recovery, rapid fiscal consolidation and reform momentum under its ongoing International Monetary Fund programme, S&P said.
The agency also noted improvements in the country’s external position, accumulation of foreign exchange reserves and efforts to mitigate fiscal risks stemming from its state-owned enterprises.
Sri Lanka’s economy grew 4.9% year-on-year in the second quarter of 2025, official data showed earlier in the week, underscoring a rebound from its worst financial crisis in decades.
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While S&P warned that global trade uncertainty could pose risks to Sri Lanka’s external sector, reduced tariffs on the country’s exports to the United States are expected to ease business uncertainty.
The agency had cut Sri Lanka’s rating as an issuer of foreign currency debt to “selective default” in April 2022 after the country missed sovereign bond interest payments.
It said on Friday the outlook on the rating is “stable”.
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