Sri Lanka's government has come under fire from the opposition after international rating agency Moody's downgraded the island's sovereign rating.

Moody's Investors Service on Tuesday changed the outlook on Sri Lanka's B1 foreign currency sovereign rating from positive to stable, and affirmed its B1 foreign currency government bond rating.

It said the action was prompted by the stabilization in the external payments position, following the sizable loss of foreign reserves in 2011, but without enough improvement to support a positive rating action at this time.

The agency also noted the pause in the decline in the government's very high debt burden, as ongoing large deficits impede a reduction that would be credit positive.

The first driver underlying Moody's decision to affirm Sri Lanka's B1 rating and revise its outlook from positive to stable is a decline in the strength of the external payments position in the past two years, it said in a statement.

According to the latest figures released from the Finance Ministry, Sri Lanka's external debt has reached over 20 billion U. S. dollars.

In response to Moody's revision, Sri Lanka's main opposition, the United National Party (UNP), severely criticized the government's economic policies.

"It comes as no surprise that the international investor community is losing confidence in Sri Lanka. To cut the outlook from 'positive' to 'stable' is a huge indictment on the government 's current economic management and the validity of the purported development story in the coming years," said Harsha de Silva, economist and UNP Parliament Member.

"The recent sell down of foreign-held Government paper seemed only the beginning of an emerging crisis of confidence," he said in a statement.

He called for more financial transparency and stressed that the infrastructure development taking place around the country was not strengthening the economy as claimed by the government.