A credit rating A measure of how likely a borrower, such as a government, is to repay its loan on time and in full. For sovereign states, the rating affects how much countries pay to borrow in international markets: the lower the rating, the higher the perceived risk and typically the higher the interest costs.
The current system too often “depends on”Outdated and incomplete information”, Unfairly punishing countries in global capital markets UN Deputy Chief Amina Mohammed Told about the inauguration of the United Nations Economic and Social CouncilECOSOC, Special Meeting on Credit Ratings, delivering remarks on behalf of Secretary-General Antonio Guterres.
“Adequate and timely finance is the fuel that drives sustainable development,” the Deputy Secretary-General warned, adding that “today that fuel is running dangerously low, and it is becoming more expensive.”
He pointed to annual debt service costs of about $1.4 trillion in developing countries, while even more 3.4 billion people live in countries that spend more on debt interest payments than on health or education.
global instability
Ms Mohammed also said The crisis is deepening due to global instability. Rising costs of fuel and raw materials linked to conflict and economic instability are exacerbating fiscal pressures and slowing growth, while climate-sensitive countries are facing disaster losses without access to affordable recovery financing.
“This is a very important matter,” Ms Mohammed said.
Credit reform efforts expanded
Ms Mohammed also linked the credit ratings debate to broader efforts to reform the global debt architecture and pointed to new steps aimed at giving developing countries a stronger voice in debt discussions.
These include a borrower forum, working on the principles of responsible sovereign lending and borrowing, and a UN-led process bringing together debtor and creditor countries, private creditors, international financial institutions, academia and civil society.
He also cited the planned African Credit Rating Agency as an example of efforts to improve data, transparency and risk assessment.
Call for reimagining ratings
Ms Mohammed urges a major change in how sovereign ratings are designed, arguing the assessment Must seize not only insecurity, but also opportunity.
“We must change the mindset from long-term speculation to long-term investment,” he said, calling for a broader, more transparent and forward-looking methodology that better reflects countries’ real prospects.
Ms Mohammed stressed that affordable lending for development can strengthen the country’s future solvency.
He said investments in health, education, infrastructure, climate resilience and renewable energy can create prosperity, reduce risks and improve economic stability over time.
He also criticized narrow measures of progress and emphasized that “GDP tells us the price of everything and very little“
Ms Mohammed called for stronger data and unbiased methodology, as well as greater accountability from governments, investors and rating providers alike.
“Now is the time to transform credit ratings from constraints to contributors to long-term finance and sustainable development“Ms Mohammed urged a new approach that helps developing countries secure the financing they need.
