Sri Lanka rating outlook cut ‘shocking, outrageous, arbitrary’: Central Bank

May 22, 2009 (LBO) – Sri Lanka’s central bank said a cut in the country’s rating outlook by Standard & Poor’s was “outrageous, arbitrary and biased” and the county will “be compelled to review its relationship” with the rating agency. S&P cut the outlook on Sri Lanka’s speculative ‘B’ rating to ‘negative’ from ‘stable’ citing bad budget, fallen foreign reserves and a delay in the passing on the International Monetary Fund (IMF) loan.

The Central Bank said Sri Lanka was “deeply shocked” at the “incredulous decision” of S&P to downgrade the outlook.

The central bank says S & P reports have been “clearly biased” in the past and has shown a “marked reluctance” to consider “positive factors” in the Sri Lankan economy.

“This stance naturally casts serious doubts about their ability to provide an impartial and professional judgment about Sri Lanka’s credit,” the Central Bank said.

“In that light, the Sri Lankan authorities will now be compelled to review its relationship with this rating agency.”

The full Central Bank statement is reproduced below

S & P DECISION TO DOWNGRADE SRI LANKA’S OUTLOOK “SHOCKING”

The Sri Lankan authorities are deeply shocked to note the incredulous decision of