Sri Jayawardenepura Kotte:Fitch Ratings has upgraded Sri Lanka’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-‘ from ‘CCC+’, accompanied by a Stable Outlook. This change reflects a positive assessment of the country’s economic progress over the past two years, as detailed in Fitch’s rating action issued on September 22, 2026.

According to News.LK, Labour Minister and Deputy Minister of Finance and Planning, Dr. Anil Jayantha, commented on the upgrade, stating that it acknowledges the improvements in Sri Lanka’s economic landscape, particularly in government revenue collection. In 2025, government revenue rose to 16.7% of GDP, surpassing the International Monetary Fund’s (IMF) target of 15.3%. This performance also resulted in a primary surplus of 5.4% of GDP, exceeding the previous target of 2.3%.

Dr. Jayantha noted that these fiscal improvements have diminished the government’s need for borrowing and bolstered its ability to manage existing debt. He emphasized Sri Lanka’s resilience in main
taining revenue collection despite facing challenges such as the Ditwah cyclone disaster and geopolitical tensions in the Middle East.

The minister also mentioned the robust performance of Sri Lanka’s external sector, which has been pivotal in enhancing the country’s debt repayment capacity. Export earnings, tourism revenue, and workers’ remittances have played a significant role in building foreign exchange reserves, even amid external pressures.

Fitch’s rating definitions classify a ‘B’ rating as highly speculative, indicating that while there is a material risk of default, a limited margin of safety still exists.