The government has decided to extend the services of sovereign rating agencies Fitch and Standard and Poor(S&P),by three years,commencing September 2009,State Minister for Media Lakshman Yapa Abeywardena said.

The two agencies have in the past downgraded Sri Lanka’s sovereign rating on several occasions.The last was in May when S&P reduced the long term foreign currency sovereign credit rating to B from B+ with a stable outlook, due to the deteriorating external liquidity position.Long term local currency rating was also downgraded to B+ from BB- ,while the short term rating on the sovereign, was affirmed B, with a stable outlook.

This prompted the Central Bank to say, that it would would have to review its relations with S&P and may deal with foreign investors directly.

Abeywardena, said that extension of the two rating agencies services, were approved by the cabinet of ministers, on the recommendation of President Mahinda Rajapaksa,in his capacity as Finance Minister.

"The decision was based on the advice given by the Attorney General, to authorize the Central Bank Governor to sign the agreements, on behalf of the Sri Lankan Government."

The cabinet,he said authorized the Central Bank to meet all expenses related to finalizing the agreement ,which would be reimbursed by the Treasury.

Another memorandum submitted by Rajapaksa,also in his capacity as Finance Minister,to enter into a Loan Facility Agreement with the Hungarian Export Import Bank Private Limited,for an amount not exceeding Euro 16,714,045,to rehabilitate the Labugama and Kalatuwawa Water Treatment Plants,was also approved by the cabinet of ministers,Yapa said.

"The exact quantum of the loan to be obtained,will be determined by the Treasury and re-lent to the National Water Supply and Drainage Board, for the purpose of rehabilitating the water treatment plants."