Sajith: Rating downgrade will make borrowing more expensive

Cabraal: Opposition deriving perverse pleasure at the expense of people

By Saman Indrajith

Opposition Leader Sajith Premadasa in a special statement to Parliament yesterday, said the country was in the midst of a severe financial crisis.

“Moody’s Investors Service recently downgraded Sri Lanka’s sovereign credit rating by two notches, stating that our country would be hard-pressed to secure funding to service its huge foreign debt. On Sept 28, Moody’s downgraded Sri Lanka from “B2” (high credit risk) to “CAA1″ (very high credit risk). Now we are in the company of countries such as Angola, Mali, Barbados, Gabon and Iraq. This down grading would have a severe blow for the economy which needs to borrow around four billion US dollars from 2020 to 2025. As at August, our foreign reserves were at 7.4 billion US dollars. In that context, the Government repaid a billion US dollars due on international sovereign bond (ISB). That is not a move favourable for the country’s economy,” he said. 

 Premadasa said that the need of the hour was urgent economic reforms through collective efforts.

The Opposition leader said that the downgrading of Sri Lanka by Moody’s, which, he said, would make borrowing in the international market more expensive and harder to obtain for Sri Lanka.

He said owing to the downgrade interest rates Sri Lanka would have to pay for Bonds and loans would go up and it would be very hard for us to raise money to settle loans.

Responding to Opposition Leader Premadasa, State Minister of Money & Capital Market and State Enterprise Reforms Ajith Nivard Cabraal said: “When this issue was raised, my mind went back to 2007. We were trying to raise funds by issuing bonds. The then Opposition leader and his supporters did their utmost to prevent us raising funds. They surrounded HSBC and threatened not to buy the bonds which they would not honour under a future government of theirs. Later, when I travelled overseas to bring foreign investors, I saw each of them had a copy of a document sent from here telling them not to give funds to us. That was the time we were in a critical situation as a fierce war was raging. We somehow managed to win on both war and economic fronts. It seems that the Opposition is deriving perverse pleasure as the expense of people. that we are confronting challenges. They may be dreaming of that we will fail to manage the economy. Trust me we will deny the Opposition that pleasure. We shall prevail!”