Sri Lanka needs to receive a credit rating of ‘B’ to regain international market access and thereby come out of its worst economic crisis, Executive Director of the independent think tank Verité Research, Nishan de Mel said.

Speaking at a virtual event held by First Capital on Tuesday (30), he said that Sri Lanka is out of the woods from the economic crisis when its debt becomes sustainable and debt sustainability comes not only with the completion of external debt restructuring but the ability to access the international financial market.

“To do that your credit rating has to go above ‘B-’ or at least up to ‘B’,” he said. 

He added that it was when Sri Lanka’s credit rating fell from ‘B’ to ‘B-’ in April 2020 that the country got shut out of the international market and the problem of diminishing reserves kicked in. 

He said that at the moment since Sri Lanka is not repaying its debt, the reserves keep building up and the country has to start repaying debt after the completion of the external debt restructuring even though the terms are made sweeter.

“The real litmus test of when you come out of the woods is when the world decides that you are credible enough or good for the money and the agencies are able to give a credit rating of ‘B’,” he said. 

De Mel said that even though credit ratings are likely to go up after external debt restructuring, “of course there is quite a long distance to go to get to ‘B’ and that is the point we should be focusing on,” he added.

The International Monetary Fund (IMF) programme forecasts that Sri Lanka will get international market access in 2027 with the external financing from International Sovereign Bonds worth $ 1.5 billion expected in the same year.