Moody's revise GDP growth forecast from 3.4% to 2.6%

Colombo (News 1st): Moody’s Investors Service have revised its 2019 real GDP forecast to 2.6% from the previous estimate of 3.4% based on prospects of lower tourist arrivals and spending. The report adds that the slower real and nominal GDP growth will further challenge the government’s revenue and fiscal deficit projections while lower income from tourism will hurt tax receipts and government finances, and weigh on the current account deficit and foreign exchange inflows. It also warns that delays in the pace of government reforms would result in an even slower pace of fiscal and debt consolidation in the next few years than projected. According to Moody's, this could undermine international investor confidence, and threaten the government’s ability to refinance its upcoming debt obligations at a moderate cost. According to Moody’s Investors Service, large external debt refinancing schedule dominates credit risks over the next five years. In particular, the government is due to make principal payments of more than US$ 3 billion per year on external government debt from 2020-24. “But the government will remain highly vulnerable to sudden shifts in investor sentiment that could affect the availability and cost of these funding sources.”