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Sri Lanka’s Central Bank slams credit agencies for ‘unwarranted’ downgrades

The Central Bank of Sri Lanka (CBSL) has hit back at global credit agencies for their decision to downgrade Sri Lanka’s ratings amidst a deepening political crisis on the island.

In a statement released after both by Fitch Ratings and Standard and Poor’s (S&P Global Ratings) announced they were downgrading Sri Lanka, the CBSL lashed out at the agencies’ assessment of the island.

The CBSL said it was “of the view that the decisions… are based on uncorroborated facts on the country’s macroeconomic fundamentals”.

It went on to state that the “operating environment is challenging” but claimed that the banking sector is “subject to a stringent supervisory and regulatory framework”.

“The CBSL is of the view that the recent rating actions by Fitch Ratings and S&P Global Ratings are unwarranted,” it concluded, adding that the downgrades “cannot be justified”.

The downgrades come as the political crisis, which started last month, continued in Colombo, with Sri Lankan president Maithripala Sirisena pledging to end it within seven days. The turmoil, which started when he appointed Mahinda Rajapaksa as prime minster, has led to several international figures calling for talks on sanctions, the withdrawal of trade benefits and loans to Sri Lanka put on hold.