S&P confirmed a selective default (SD) rating on Sri Lanka foreign currency debt, with a negative outlook on the rupee debt rated at CCC-. The negative outlook on the long-term local currency rating reflects a high risk of commercial debt repayments over the next six months in the context of Sri Lanka’s economic and fiscal pressures. Nonetheless, the establishment of a new IMF EFF program in March 2023 is expected to help stabilize the country’s conditions and contribute to reform and recovery over the next few years.