The International Monetary Fund (IMF) on Wednesday said that it supported Sri Lanka’s plans to engage in “collaborative dialogue” with creditors, a day after the country unilaterally suspended external debt payments amid a severe economic crisis.
“We assessed Sri Lanka’s debt to be unsustainable and that the country’s fiscal efforts and macroeconomic policy adjustments alone could not restore debt sustainability,” Masahiro Nozaki, IMF’s mission chief for Sri Lanka, said.
“Therefore, we welcome the Sri Lankan authorities’ plan to engage in a collaborative dialogue with their creditors,” Nozaki said, adding that the IMF was assessing the specific implications of Sri Lanka’s recent announcement.
Fitch Ratings said it has downgraded Sri Lanka’s long-term foreign-currency issuer default rating (IDR) to ‘C’ from ‘CC’.
The agency said the downgrade reflects its view that a sovereign default process has begun.
Fitch said long-term local-currency IDR has been affirmed at ‘CCC’ and country ceiling at ‘B minus’, adding that issue ratings on foreign-currency bonds issued on international markets have also been downgraded to ‘C’ from ‘CC’.
- Reuters, with additional editing by George Russell