Aug 20, Hong Kong: Fitch Ratings says Sri Lanka's strong economic growth is attracting foreign capital but foreign direct investment (FDI) inflows remain modest compared with rated peers, leading to rising external indebtedness.
The global rating agency in a report published today, says modest FDIs could be a source of vulnerability as the central banks of major advanced economies tighten global funding conditions.
In the report "Sri Lanka: How to Fund Growth?", Fitch says mobilizing more domestic savings could help fund growth without increasing reliance on foreign capital.
A smaller fiscal deficit would directly boost domestic savings, while lower and less volatile inflation could lead to higher private sector savings.
The report is available from www.fitchratings.com for FitchResearch subscribers. The report contains slides presented to Fitch's "Sovereign and Banking Round-table" held in Colombo on 6 August 2013.