COLOMBO, Nov. 27 (Xinhua) -- Sri Lanka's Ministry of Finance on Friday dismissed Fitch Ratings' downgrade of the country's sovereign rating as an assessment based on uncorroborated facts.
"We do not accept this downgrade as it fails to recognize the robust policy framework of the new government for addressing the legacy issues, including the concerns raised by Fitch Ratings, and ensuring ongoing economic recovery and macroeconomic stability of the country," the ministry said in a statement.
Fitch Ratings has downgraded Sri Lanka's sovereign rating from B- to CCC following the government's budget proposals for 2021, local media reported.
Fitch said the downgrade was due to Sri Lanka's increasing sovereign debt-to-GDP ratio amid COVID-19-induced shocks to the economy. It estimates that Sri Lanka's debt-to-GDP ratio may increase from 86.8 percent in 2019 to 100 percent in 2020, possibly reaching 116 percent in 2024.
"The government's external-debt obligations amount to USD 23.2 billion between 2021 and 2025, or about 4 billion USD annually, against FX reserves at end-October of just USD 5.9 billion," the statement said.
However, it said the country's current account has not deteriorated thanks to import restrictions and higher-than-expected remittances.
Fitch projects Sri Lanka's growth to reach 4.9 percent in 2021, while official government figures have projected a 5.5-percent growth rate.
The Sri Lankan government announced its budget proposals for 2021 on Nov. 17, projecting a revenue of 10.6 million U.S. dollars, expenditure of 19 million U.S. dollars and a deficit of 8.5 million U.S. dollars.