Moody's expresses concern on Sri Lanka crisis

Credit rating agency Moody's on Monday expressed concern that the ongoing political crisis in Sri Lanka has caused the 'credit negative' to the island nation as the sudden appointment of a new Prime Minister has heightened the policy uncertainty.

On October 26, Sri Lankan President Maithripala Sirisena sacked Ranil Wickremesinghe from the post of Prime Minister and replaced him with his (Sirisena) predecessor Mahinda Rajapaksa.

Matthew Circosta, Analyst, Sovereign Risk Group, Moody's Investors Service said, "The current political crisis in Sri Lanka is credit negative for the sovereign. The President's sudden appointment of Rajapaksa as Prime Minister significantly heightens policy uncertainty."

The agency also claimed that additionally, the possible social tensions that may unfold in the next few weeks would have a negative impact on the economy.

"At a time when global financial markets are turbulent, uncertainty about the direction of future policy could have a large and lasting negative impact on international investor confidence. Such a development would undermine Sri Lanka's ability to refinance forthcoming external debt in early 2019 at affordable costs," Circosta added.