Sri Lanka has to manage economy well to retain rating outlook: Moody’s

Nov 16, 2012 (LBO) - Sri Lanka needs effective economic management to retain a positive outlook on its 'B1' rating Moody's Investors Services said in a credit analysis, also raising concerns over declining rule of law. Sri Lanka’s institutional strength score assesses governance strengths, a strong payments record and the government’s commitment to data transparency, Moody's said.

Rule of Law

World Bank's Governance Indicators (WGI) given strength to the assessment with score similar to India on government effectiveness and rule of law, though the indicators have started to slip.

"This is particularly evident in the Control of Corruption (where its score has fallen from the 40th percentile in 2008 to the 28th percentile in 2011) and the Rule of Law (from 44th percentile to 42nd percentile)," the report said.

Two head of Sri Lanka's Securities and Exchange Commission had been ousted.

"While the World Bank’s assessment of Sri Lanka’s regulatory quality is somewhat more favorable than its B-rated peers, turnover at the Securities and Exchange Commission (SEC) raises concerns over the effectiveness and independence of regulation in Sri Lanka’s capital market," Moody's said.