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Dr. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka, is optimistic that completing debt restructuring and beginning repayments will remove the country's 'default' status and restore access to international capital markets.
Dr. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka, expressed optimism about ending debt restructuring and starting debt repayment, which could remove the 'default' status assigned by global rating agencies. This would restore Sri Lanka's access to international capital markets. Following the completion of debt deals with bilateral creditors, Japan resumed development funding, and Sri Lanka is set to receive significant financial support. An agreement in principle to restructure $12.5 billion in bonds further raises expectations for an upgrade in Sri Lanka's credit rating.
Sri Lanka's sovereign credit rating was placed under restrictive and selective default statuses following the 2022 announcement to default on foreign currency liabilities. With the country nearing favorable bondholder debt deals, confidence in lending to Sri Lanka is anticipated to improve. The downgrades in Sri Lanka's sovereign ratings since December 2019 were partly due to the rating agencies' disconnect with the economic impact of unprecedented events like the pandemic on small economies.
