S&P keeps Sri Lanka at ‘CCC+/C’ with stable outlook

Sri Lanka achieved one of the largest worldwide advancements in investor communication transparency according to the annual Investor Relations and Debt Transparency Report published this month by the Institute of International Finance.

Fifty-seven emerging and developing economies underwent evaluation regarding fiscal policy, debt, and information-sharing openness.

Sri Lanka secured 14th place overall by scoring nearly 44 out of 50 points, surpassing the survey average of 37 points.

The nation attained the fourth-largest single-year jump globally after raising its score by more than 6 points, following Vietnam, Belize, and Mozambique.

Full scores went to Sri Lanka in areas like senior policymaker access and forward-looking policy availability.

Deficiencies appeared in investor outreach, reflecting low scores for active contact list maintenance, publication of presentation archives, and non-deal roadshows.

The transparency dividend concept forms the core argument, indicating that predictable disclosure lowers borrowing costs via reduced uncertainty, though openness exposes fiscal vulnerabilities instead of hiding them.

Formal investor relations programmes operate in 41 countries globally, rising from 8 in 2005.

S&P Global Ratings maintained Sri Lanka at triple-C-plus with a stable outlook alongside cautious forecasts.

Vulnerable conditions define the rating, which relies heavily on favourable circumstances.

Projections show the budget deficit widening to more than double this year at 5% of national output, while the current account moves from surplus to deficit.

Temporary factors such as Cyclone Ditwah and the Middle East conflict drive these shifts, combined with one-off revenue gains from past vehicle import restrictions that increase import bills.

Usable reserves face a drop to roughly 2 months of import cover, and remittance growth slowed from over 30% in May to 9% in June due to tourism, energy, and remittance exposure to the Middle East.

Institutional assessments and defaults from 2022 and 2023 cap the rating, meaning continued growth and reserve recovery will not trigger rapid rating upgrades.