Sri Lanka, Sept. 23 -- Four years after Sri Lanka's economic collapse pushed its sovereign rating into default territory, the country has climbed back into the single-'B' category, earning international recognition for a recovery built on higher taxes, tighter spending and painful economic reforms.

Fitch Ratings yesterday upgraded Sri Lanka's Long-Term Issuer Default Ratings to 'B-' from 'CCC+' and assigned a Stable Outlook, signalling that the immediate danger of another sovereign default has receded, even as the country remains a high-risk borrower burdened by heavy debt and limited foreign-exchange protection.

The upgrade is more than a symbolic vote of confidence as it strengthens Sri Lanka's credibility among international investo...