The Government of Sri Lanka (GOSL) is disappointed with today’s rating action by S & P Global Ratings (S&P) at a time when the Parliament of Sri Lanka has just passed, with an overwhelming majority, the new Government’s first full-year Budget for 2021, which laid out a carefully crafted medium term policy framework, alongside a novel orientation for a solid recovery of the economy in the period ahead, a media release from the Finance Ministry stated.
It is surprising to note that S&P, in its assessment has ignored the envisaged medium –term positive developments as a result of several key proposals presented in the Government Budget 2021 with regard to fiscal consolidation and deficit financing in the period ahead.
As indicated in the Budget 2021, the Government has adopted a novel approach in relation to foreign financing, while enhancing the effectiveness of already secured financing channels, aimed at reducing the share of foreign financing of the budget deficit over the medium term.
Yet, S&P, in its medium term projections, grossly overstates the level of fiscal deficit and the external deficit of the country, the release added.