Moody warns of possibly downgrading Sri Lanka’s rating

<p>Moody, a global rating agency, has placed Sri Lanka on a list of countries which may have their rating decreased if their economic situation worsens meaning that Sri Lanka may lose its B2 rating and be seen as a greater risk for investors.</p> <p>This statement follows calls from Gotabaya Rajapaksa, Sri Lanka's President, and&nbsp;Ranil Wickremesinghe, former Prime Minister, call for an easing of the lockdown.</p> <p>In Moody's&nbsp;statement, they clarify that the sharp slowdown of GDP and fall in export revenue will lead them to observe how the country is able to tackle the coronavirus and maintain its economy. The stated review period is 3 months but may be extended.</p> <p>According to Moody this review period will assess Sri Lanka’s capacity “to secure financing at manageable costs and in a way that does not further weaken the country’s external position and threaten macroeconomic stability. They further state that the review will likely also assess the government’s ability to “stabilise its debts burden and restore better debt affordability once the most acute phase of the shock has passed”.</p> <p>In their statement, they also clarify that Sri Lanka is at particular risk given the country’s “low reserve coverage of large forthcoming external debt payments and very weak debt affordability”. They further maintain that the particular industries that are at risk are Sri Lanka’s textile and garment exports.</p> <p>Read more from <a href="http://https://economynext.com/moodys-puts-sri-lanka-rating-on-watch-fo…;">Economy Next</a></p> <p>&nbsp;</p>