Sri Lanka's Central Bank says Moody's downgrade decision 'unwarranted'

<p>Sri Lanka's Central Bank (CBSL) today criticised the downgrading of the country by Moody's Investors Service as "unwarranted".&nbsp;</p> <p>The decision "did not properly reflect the country's macroeconomic fundamentals" the CBSL added in a statement.&nbsp;</p> <p>"Such an action only on the premise of heightened political uncertainty, with no evidence of slippages in macroeconomic policies, cannot be justified."</p> <p>Moody's yesterday downgraded Sri Lanka from B1 negative to B2 stable.&nbsp;</p> <p>The move, which is a significant blow to the Sri Lankan government’s economic policy, comes as both former president Mahinda Rajapaksa and Ranil Wickremesinghe claim to be Sri Lanka’s prime minister in a political crisis that has endured for several weeks.</p> <p>“The decision to downgrade the rating to B2 is driven by Moody's view that ongoing tightening in external and domestic financing conditions and low reserve adequacy, exacerbated most recently by a political crisis which seems likely to have a lasting impact on policy even if ostensibly resolved quickly, have heightened refinancing risks beyond levels anticipated,” said the ratings agency.</p>