⚠️ Sri Lanka Faces Most Material Disaster Impact, Warns Moody's Ratings

Moody's Ratings highlights that recent tropical cyclones and heavy monsoon rains have severely impacted South and Southeast Asia. • The economic, fiscal, and credit impact of these disasters is expected to be most material for Sri Lanka (Caa1 stable). • While other affected governments (Indonesia Baa2 stable, Philippines Baa2 stable, Vietnam Ba2 stable) also face high credit exposure to physical climate risks, Sri Lanka has significantly weaker fiscal capacity to enhance its resilience. • Moody's also points to governance risks, with both Sri Lanka and Vietnam scoring 4 for governance issuer profile, indicating high credit exposure despite recent reforms. • The severity of flooding underscores broader, long-term credit vulnerabilities to physical climate risks across the region, compounded by limited natural catastrophe insurance coverage.