Moody’s ratings downgrade unwarranted: Sri Lanka’s Finance Ministry

Sep 28, 2020 (LBO) – Sri Lanka’s Finance Ministry says that the Moody’s ratings downgrade today is unwarranted.

Releasing a statement shortly after Moody’s downgraded Sri Lanka’s ratings to Caa1 from B2, the Finance Ministry said that such an announcement is unwarranted especially at a time when the new Government is about to announce its Budget for 2021, spelling out the policy framework proposed in the medium term.

“We observe, with disappointment, today’s rating downgrade by Moody’s Investors Service and the recent release of an erroneous analysis by an international investment bank expressing concerns about Sri Lanka’s economic and financial strength and external debt service capacity,” the Finance Ministry said.

“This downgrade and the report fail to do justice to the ground reality of the ongoing rapid economic recovery backed by vastly improved business confidence arising from the return of political and policy stability after a lapse of five years.”

According to the Finance Ministry, all payment transactions for the repayment of the International Sovereign Bond of US dollars 1 billion maturing on 04 October 2020 have already been lined up and funds will be credited to the paying agent’s account on 02 October 2020.

“It is puzzling that Moody’s has downgraded Sri Lanka on the eve of this repayment, which seems similar to the previous premature and reckless downgrades by rating agencies in the immediate aftermath of the end of the internal conflict in 2009 and during the political impasse at end 2018,” the Finance Ministry stressed.

“Foreign investors are invited not to be dissuaded by the recent unwarranted rating downgrade and the erroneous analysis published recklessly, but to be guided by improving economic conditions.”

Related: Moody’s downgrades Sri Lanka’s ratings to Caa1, outlook changed to stable

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