Moody's Ratings issued a sovereign rating review for Sri Lanka on October 15, 2025, reaffirming the country's Caa1 rating with a stable outlook. The rating agency acknowledged that Sri Lanka's economic recovery is progressing, supported by fiscal reforms, a rebound in tourism, and strong remittance inflows. Real GDP grew by 4.8% year-on-year in the first half of 2025, and Moody's anticipates growth to be around 4.5% by the end of the year. However, Moody's also cautioned that the nation's significant debt burden, limited fiscal flexibility, and reliance on external financing continue to pose substantial risks to its stability. The report highlighted that while liquidity risks have diminished following the 2022 debt restructuring, external vulnerabilities remain a key concern. The stable outlook reflects a balance between optimism over reform progress and the fragility of Sri Lanka's fiscal situation.