Global credit rating agency Moody’s recently reported that while Sri Lanka’s economic recovery is largely on the right track, several key risks continue to challenge its progress.
Moody’s highlighted the country’s high debt burden, limited fiscal space, and ongoing reliance on external financial assistance as primary risk factors impacting economic advancement.
However, the agency noted in its report that the implementation of financial reforms, robust tourism revenue, and growth in foreign remittances have significantly boosted the economy’s recovery journey. These observations followed Moody’s periodic review of Sri Lanka’s credit rating.
Despite some easing of government liquidity pressures after a series of debt restructuring following the severe economic crisis in 2022, Moody’s indicated that the ability to secure international loans remains weak.
Slowdown in Economic Growth Predicted
According to the Moody’s report, Sri Lanka recorded an economic growth rate of 5 percent last year, which was 4.8 percent in the first six months of this year.
However, Moody’s predicts a slowdown in this economic growth in the coming period, anticipating an overall growth of 4.5 percent by the end of this year. Additionally, they expect consumer demand to grow with increasing social expenditures.
