State Minister for Finance, Capital Market, and State Enterprise Reforms Ajith Nivard Cabraal requested foreign investors not to be dissuaded by the recent unwarranted rating downgrade and the erroneous analysis published recklessly by Moody's Investors Service, but to be guided by improving economic conditions.

"Foreign investors, we are advising them not to be dissuaded by the recent ‘unwarranted’ rating downgrade. Because every time they had acted on some of those downgrades, particularly in the case of Sri Lanka, many people have lost money. They have reacted to those downgrades, they have sometimes sold off their positions and later on, they had to buy those same positions at a much higher price," the State Minister said whilst addressing a media briefing in Colombo today (30).

He further added that; “In 2009, when the Sri Lankan credit was downgraded, markets reacted in another way. Markets didn’t react in a way that Sri Lanka was downgraded, they reacted in the way that Sri Lanka was upgraded. They were directly opposite to the position that was taken by the rating agency. It is the reputation that is at risk for them, but for us, it is our economy."

Moody's Investors Service ("Moody's") on Monday (28) downgraded the Government of Sri Lanka's long-term foreign-currency issuer and senior unsecured ratings to Caa1 from B2 and changed the outlook to stable. This concludes the review for downgrade initiated on 17 April 2020.

Meanwhile, responding to a query on Sri Lanka's challenging debt outlook Cabraal expressed the following;

“Debt is a dynamic position. Debt doesn’t standstill. It will change. There will be new inflows and there will be new outflows. We have shown clearly what our outflows will be next year. Our outflows next year would be about $ 4.5 billion. Now there would be ample inflows that would come into the country and Sri Lanka will also take steps to add new inflows into the country.  There will be new FDI inflows, there will be new SWAP inflows, and there will be new loan inflows and there would be inflows through the way of the port city, and so on. All those inflows will be able to match these outflows that we have to meet. That is why sometimes when you look at the outflow figure and then think what are the reserves that you have, then sometimes people might not get the right picture."