Persistently wide fiscal deficits due to the government's very narrow revenue base compound this challenge by keeping gross borrowing needs high and removing fiscal flexibility," it added. Meanwhile, the rating agency said stable outlook reflects its view that the pressures that Sri Lanka's government faces are consistent with a Caa2 rating level. "Downside risks to foreign exchange reserves adequacy remain without comprehensive financing and narrow funding options. Should foreign exchange inflows disappoint, default risk would rise further. However, non-debt generating inflows particularly from tourism and foreign direct investment (FDI) may accelerate beyond Moody's current expectations, which, coupled with the track record of the authorities to put together continued, though partial, financing, may support government's commitment and ability to repay its debt for some time," Moody's pointed out.