Sri Lankan State Minister Cabraal says S&P ratings downgrading “extremely biased”

Ajith Nivard Cabraal (Ceylon Daily News)

By Peter Jaegeul Song
Head of Foreign Cooperation Department – AJA

COLOMBO: The Sri Lankan government criticized the international ratings agency Standard and Poor’s for being “extremely biased” in regard to the decision to downgrade Sri Lanka’s credit rating, Xinhua news of China and Bloomberg news of the U.S. have reported.

On December 11, S&P announced that it had downgraded Sri Lanka’s credit rating from B- to CCC+.

The Sri Lankan Ministry of Finance immediately issued a statement arguing “the decision of S&P is a result of failing to properly analyze our country’s economy” and “is an announcement made in a biased way without understanding Sri Lankan government’s long-term plan for economic development”.

“The financial situation and economic indicator of Sri Lanka are steadfast even in the Covid-19 crisis,” Ajith Nivard Cabraal, the State Minister of Money & Capital Market and State Enterprise Reforms, said at a press conference held following the announcement of the government’s statement.

“Sri Lankan economy will continue to draw foreign investors’ attention in the future”.

Regarding the decision S&P made, he said that the “American ratings agencies are scare mongering with rash judgements” and that “it is a result of failing to reflect the power of Sri Lankan citizens, who are dedicating every moment for the development of national economy at all.”

Cabraal is considered the best elite official of the nation who served as the governor of the Central Bank of Sri Lanka (2006-2015), representative of the Cabraal Consulting Group (2000-2005), president of St. Peter’s College (1996-1999) as well as holding many other positions.

Cabraal graduated from the most distinguished private middle high school, St. Peter’s College, built in 1922 during the British colonial rule years and St. Sebastian’s College built in 1854.

He has been serving as a financial minister as ‘the economist of Sri Lanka’ since Prime Minister Mahinda Rajapaksa came to power in 2019.

S&P is a ratings agency of the U.S. and is one of the top three ratings agencies of the world along with Moody’s and Fitch. The credit rating criteria of Standard and Poor’s are in the order of AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC-, CC, C, D, from the highest to lowest.

Ratings lower than BBB- are considered to be a junk bond, and countries that are currently maintaining credit ratings similar to Sri Lanka include Barbados and Vietnam. Korea is maintaining a credit rating of AA as of April 2020.