Sunday, February 19, 2012 Dr. Arujuna Sivananthan
With rating agencies being criticised for inertia, the contravening of terms of the IMF’s standby facility by Sri Lanka’s policy makers, and, their failure to consolidate both fiscal and current account deficits; the trajectory of its foreign currency credit rating remains uncertain.Rating agencies were blamed for not being forward looking in their assessment during the sub-prime and Eurozone debt crisis. Remedial steps have now been taken and their future ratings actions are likely to be anticipatory.
On the face of it some of Sri Lanka’s macroeconomic data is positive. Its inflation rate and nominal GDP growth are good. However, a reduction in the former was achieved through several changes in the basket of goods and services measuring it to reflect ‘shifting’ consumption patterns. GDP growth has been buoyant driven by post-war infrastructure development, which was financed through external borrowing.Read More »
