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Crisis-hit Sri Lanka suffers credit rating cuts

AFP  |  Colombo 

Two international downgraded by one notch on Tuesday following almost six weeks of political crisis.

said it believed Sri Lanka's political upheaval, which began with the sacking of its in October and has disrupted the functioning of parliament, exacerbates the nation's external financing risks.

Along with Standard and Poor's, it warned that was heading for tougher times with politics complicating the effects of a challenging external environment.

"Investor confidence has been undermined, as evident from large outflows from the local bond market and a depreciating exchange rate," said.

downgraded from B plus to B, while also cut its rating from B plus to B.

The crisis began on October 26 when removed Ranil Wickremesinghe as and replaced him with the flamboyant but controversial Mahinda Rajapakse.

However with Wickremesinghe's supporters still controlling a majority in parliament Rajapakse has lost two votes of confidence.

On Monday the denied Rajapakse the authority to act as and stripped his cabinet of their powers, giving Rajapakse until next Wednesday to prove his legitimacy.

Last month also lowered Sri Lanka's rating from B1 to B2.

Sri Lanka has already abandoned plans after the downgrade to raise money through sovereign bonds and will pursue badly-needed revenue elsewhere.

Sirisena's said last month that "alternative finance" raised locally would service much of Sri Lanka's $4.5 billion in foreign debt repayments due in 2019.

He said Sri Lanka would seek to extend a $1-billion loan from by an additional $500 million, but would only turn to international markets for cash "as a last resort".

Sri Lanka's unrest has also prompted the to suspend a tranche of a $1.5-billion bailout loan agreed to in 2016.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, December 04 2018. 18:40 IST