Sri Lanka will start discussions with credit rating agencies for a rating upgrade after reaching a staff level agreement with the International Monetary Fund (IMF) for the 5th instalment of the US $1.5 loan facility.
“It’s better for us to complete the IMF negotiations and then go out and get some money to build our reserves. After that, we can talk to rating agencies,” the Central Bank Governor Dr.Indrajit Coomaraswamy said.
Following the October 26 political crisis, all three international credit rating agencies—Fitch, Moody’s, and Standard & Poor’s—downgraded Sri Lanka’s credit ratings citing the country’s refinancing risks and uncertain policy outlook. However, the Governor last week said the government will go to international capital markets without asking for a rating upgrade from the credit rating agencies as the yields have come down on Sri Lanka’s dollar denominated ISBs. He was confident that the government and the IMF will soon reach a staff level agreement to resume the IMF programme, which was stalled subsequent to the political crisis. He was optimistic that IMF representatives who are holding discussions with the Central Bank and Treasury officials will be flexible on Sri Lanka.
“The Finance Minister went to Washington to signal that the government is keen to remain engaged with the IMF, and the Managing Director of IMF also said they would seek to show some flexibility. The talks are taking place in this spirit.
“IMF has its own framework and they have to work within that framework; but my sense is that they are trying to be flexible as much as they could, being within that framework,” Dr.Coomaraswamy said.
“The talks are moving ahead and it’s constructive. We will know where we stand in a few days,” he added.