S&P Cuts Sri Lanka Outlook to Negative on Funding Pressures

Standard & Poor’s cut Sri Lanka’s outlook to negative from stable citing worsening external and fiscal indicators, less than two weeks after Fitch Ratings lowered its credit ratings.

S&P affirmed the island nation’s B+ long-term and B short-term sovereign ratings, saying robust economic growth prospects are countered by high government debt at 72 percent of gross domestic product. It predicts Sri Lanka’s trade deficit will balloon to 11.4 percent of GDP in 2016 from 10.2 percent over the previous two years as remittances slow and investor outflows are seen reversing only in 2017.