Sri Lanka suicide bombings hit tourism earnings, raise borrowing risks: Fitch
ECONOMYNEXT – Sri Lanka will face heightened risks to its growth outlook and funding needs and lower tourism earnings after the Easter Sunday suicide bombings which killed over 300 people, including foreigners, Fitch Ratings has said.
The raing agency said in its Asia-Pacific sovereign credit overview for the second quarter of 2019 that outlooks for sovereigns remain stable, with global financial conditions easing, while global growth prospects have deteriorated.
“ . . . heightened external financing risks are a factor in the low ratings of Pakistan (B-) and Sri Lanka (B), both of which were downgraded in December 2018 and are seeking to stabilise their external finances with IMF assistance,” the report said.
Sri Lanka secured a staff-level agreement on the fifth review and extension of its International Monetary Fund programme in March.
“The tragic church and hotel bombings that occurred over the Easter weekend will undermine tourism receipts, which had been rising steadily in recent years to about 5 percent of GDP in 2018,” Fitch Ratings said.
Fitch downgraded Sri Lanka’s rating to ‘B’ from ‘B+’ last December on account of last year’s political crisis.
The church and hotel bombings will also “create new downside risks to the growth outlook,” the report said.
Sri Lanka’s recent 2.4 billion US dollar bond issuance in March helped ease near-term fiscal and external financing constraints, Fitch Ratings said.
But it noted that “conditions remain challenging in the wake of the Easter weekend church and hotel bombings.”
(COLOMBO, April 24, 2019-SB)