"The Sri Lankan government has maintained a default-free debt repayment record on both official and private creditor debt, even throughout the long civil war," Moody's said in a report on Sri Lanka's debt profile.
"Sri Lanka’s debt profile has some strong points, such as still-high low-interest concessional borrowing, relatively long tenors and a captive investor base that reduces rollover risk , but overall debt affordability is weak."
Debt was now 589 percent of revenues, exceeded only by Japan (rated Aa3) at 767.7 percent and Lebanon 623.7 (rated B1).
Interest payments were 38.5 percent in 2013, which above the peer median of 8.8 percent and was only second to Lebanon at 40.2 percent.
As a percentage of gross domestic product, interest payments peaked at 6.5 percent and has moderated to 5.1 percent in 2013.
In Sri Lanka there questions have been raised over the actual GDP number, with concerns that it may be overstated, which some analysts say may indicate that revenues as a share of GDP is understated.
As a share of GDP the budget deficit has now fallen to around 5.9 percent from 9.9 percent in 2009. Revenues measured at 13.3 percent of GDP, was low compared to other countries.
Sri Lanka's external debt was now 59 percent of GDP, highest in Asia Pacific after Mongolia (rated B2, negative) and Papua New Guinea. It was higher than 43.6 percent for B-rated peers.
About 55 percent of the external debt was by the central government. But authorities encouraging private borrowers to go abroad.
Total government debt has fallen from 105.6 percent of GDP in 2002 and has remained around 78.3 percent in 2013. It was higher than peer median of 43.8 percent.
Some analysts have said that Sri Lanka's key problem is a large state, coupled state enterprises in key sectors not paying taxes but are a drain on other tax-paying entities through subsidies.
The Treasury has made some headway in keeping expenditures in check, though current spending still exceeds revenues.
Meanwhile Moody's said state enterprise performance had improved over the past year especially with Ceylon Petroleum Corporation and Ceylon Electricity Board. SriLankan Airlines was now the biggest loss making state enterprise.