Colombo (News1st) - A report by the Moody’s investor service has ranked Sri Lanka among the most vulnerable economies exposed to 
interest rate shocks over the next four years, due to relatively short average debt maturities and weak debt affordability. The report comes 
ahead of the country’s bunched up external debt repayments from 2019 to 2022

Elisa Parisi-Capone, a Moody’s Vice President-Senior Analyst and co-author of the report says the sovereigns most vulnerable to an interest 
rate shock are generally low rated, with shorter maturities and weak debt affordability. According to Moody’s, Sri Lanka’s interest to revenue
ratio could increase by between 5.3% and 10.4% over the next four years, from the current 35 percent, in a potential moderate or severe
shock, compared with the 0.8 percent decline expected in the baseline.

It adds Sri Lanka also remained as one of the weakest economies in terms of fiscal strength, as the country is ranked among the nations 
which scored the lowest points on the 15-rung scale in Moody’s global sovereign rating methodology.

The rating agency highlighted that Pakistan, Mongolia, Sri Lanka and the Maldives are most exposed to higher cost of debt in the Asia 
Pacific that feeds mostly through weaker debt affordability. Most of China's investments have gone to these countries. Moody's notes 
that frontier markets such as Egypt, Pakistan, Mongolia, Sri Lanka, Belarus, the Maldives, Ghana, St. Vincent, the Grenadines and Kenya
which are rated Ba1 or lower, rely on concessional financing for more than 40 percent of their external government debt.