UN Transcripts — https://transcripts.un.org/en/ecosoc/2026/13
(Opening, Panel 1) Special Meeting on Credit Ratings - Economic and Social Council, 13th meeting, 2026 session — Economic and Social Council — 30 March 2026
Language: en
Automatically generated transcript — may contain errors. Not an official United Nations record.

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ECOSOC · Vice-President [0:00]:

Thank you for having me. I think we could start Dear Colleagues, I call to order the 13th meeting of the Economic and Social Council.

Excellencies, Distinguished Delegates, Madam Deputy Secretary General, I invite the Economic and Social Council to resume its consideration of sub item A of agenda item 11 entitled follow up to the International Conferences on Financing for Development in order to hold a special meeting of the Council on Credit Ratings.

Excellencies, Distinguished Delegates, I'll start with my statement.

This meeting is convenient pursuant to the mandate contained in the Sevilla Commitment in which Member States called for a dedicated ECASOC platform to foster dialogue on accurate, objective and long term oriented credit ratings and their role in the international financial system. Dear colleagues, ECASOC serves as an inclusive platform entrusted with advancing international economic and social cooperation and development. In today's complex and interconnected global economy, this mandate is more relevant than ever. This inclusive space is essential when addressing topics such as credit ratings which sit at the intersection of public policy and financial markets and have significant implications for countries, cost of capital, market access and fiscal space. This is not the first time ECA SOK has convened on this issue.

Over a Decade ago in 2014, the council already recognized the importance of credit rating agencies in shaping countries success to finance and the cost of capital. Today's meeting builds on that earlier discussion. While reflecting a rapidly evolving global context. We have structured our dialogue around three key the role of credit ratings in shaping the cost of capital, the methodologies and time horizons used in sovereign assessments and ways to strengthen country level capacity and engagement. Our discussion also takes place under this year's EGASOC theme Transformative, Equitable, Innovative and Coordinated actions for the 2030 Agenda for Sustainable Development and its Sustainable Development Goals for a Sustainable Future for All.

Credit ratings are directly relevant to this agenda. They influence investment decisions, capital flows and ultimately countries ability to finance sustainable development. I believe this program already illustrates how progress on credit ratings must be a two way street, grounded in a mutual understanding and involving a wide variety of actors and stakeholders. Dear friends, Credit rating agencies can further strengthen how they engage with developing countries, especially given the impact ratings can have on their cost of capital. They can also deepen their treatment of longer term risks and investments, including those related to climate resilience, as well as better reflect the effects of debt restructurings, notably their long term benefits.

At the same time, country authorities can strengthen how they prepare and present data, communicate and engage with credit rating agencies and also discuss policy reforms, investments and efforts with a wide array of investors and market participants, including by strengthening statistical Capacity and investor relations frameworks. Investors and other users of ratings can reduce mechanistic reliance on ratings in their decisions and public institutions preparing credit and depth assessments can also prepare more forward looking and sustainability oriented assessments. Assessments. And with that, I encourage all participants to engage openly and constructively. This is an opportunity to deepen mutual understanding and to explore how existing practices can better support sustainable development outcomes, particularly for countries facing structural vulnerabilities.

I thank you and look forward to a rich and productive discussion.

So again we will continue with our agenda. And now I invite the Deputy Secretary General of the United Nations, Her Excellency Amina Mohammed, to deliver a statement. Madam Secretary General, you have the floor.


UN Secretariat · DSG · Amina Mohammed [4:51]:

Thank you very much, Excellency. Our Vice President of ecosoc, the Permanent Representative of Armenia.

Excellencies, our esteemed partners. Ladies and gentlemen. Welcome everyone to this special meeting on credit ratings. Thank you for coming together to focus on what is a global problem that demands a global response. In the pact of the future, Member States expressed support for our efforts to engage with credit rating agencies and to see how their work could better contribute to sustainable development.

This was reinforced at the International Conference on the Financing for Development in Sevilla last year. And now for the first time, we have a dedicated space that brings together member states, credit rating agencies, investors and other key partners to face this challenge together in addressing countries that are often being priced out of the financing they need, not based on their long term growth prospects, but because of short term assessment of risk, often relying on outdated and incomplete information. Thank you for being part of this important effort, Excellencies, Ladies and gentlemen. Adequate and timely finance is the fuel that drives sustainable development. But today that fuel is running perilously low and it's getting more costly.

Developing countries are crushed by unsustainable debt Service nearly at 1.4 trillion every year. More than 3.4 billion people live in countries that spend more on debt interest payments than on health or education. At the same time, the volatile situation in the Middle east is sending shock waves through the globe economy. The increased costs of fuel and raw materials are intensifying fiscal pressures and slowing economic growth while borrowing costs again spiral exacerbating the already dire debt burdens faced by developing countries. Meanwhile, countries on the front line of climate change the are suffering devastating loss and damage while lacking affordable financing to recover from disaster and strengthen resilience.

Making matters worse, credit ratings and assessments paint a harsher picture of developing countries than their economic reality warrants. These ratings and assessments systematically overstate risk while often not reflecting the underlying fundamentals progress and long term potential of these countries. And this is a matter of profound importance. As investment needs increasingly outstrip available public finance, more developing countries are turning to private markets for financing. Credit ratings should help open the door to longer term financing aligned with sustainable development.

But too often these ratings are static and short term oriented and based on often incomplete information, limiting a country's ability to access financing at rates that they can afford. It's why addressing the gaps in the work of sovereign credit rating agencies are critical of our efforts to make broader changes to the global financial architecture. Building on the bold reforms in the Pact for the future, the Sevilla commitment launched new steps to help unlock financing and deliver bold debt action for developing countries. It included a borrower's platform to give developing countries a stronger voice in the debt architecture, new efforts to develop principles for responsible and sovereign borrowing and lending and a UN process to convene all stakeholders, borrowers and creditor countries, private creditors, international financial institutions, our academics and civil society organizations, all to work towards a development oriented debt architecture. In Sevilla, member States also issued a global call to reimagine the credit rating system.

And as you begin your discussions today, I would like to highlight three guiding principles for change. First, we must transform the mindsets from long term speculation to longer term investment. Credit assessments must reflect the full reality of a country's risk and its potential. That means broader, more transparent and forward thinking methodologies. In today's world, single point forecasts are not sufficient.

Risk analyses should incorporate scenarios, ranges and probabilities, capturing not only the vulnerability but the opportunity. Second, ratings and investors must recognize that borrowing at reasonable cost to invest in development can help generate prosperity, strengthens stability and ultimately make countries more solvent. Progress in education, health systems and infrastructure can deliver long term growth. Progress in climate resilience can mitigate risk and progress in renewable energy infrastructure can strengthen energy security. Progress through both national policy action and international support can help to improve debt and liquidity management, including the debt swap and debt pause clauses.

So it is time to revise the sovereign ceiling which can unfairly limit the credit rating of private sector debt, distorting risk and deterring investment. And assessments need to look beyond GDP as the sole measure of economic progress. GDP tells us cost of everything and the value of very little. Financial decisions including credit ratings should look beyond the profit and loss and also measure human and environmental progress and well being. And third, accountability.

Accountability for all parties. Governments must be transparent and accountable in their finances supported by robust and well regulated fiscal systems that can improve the domestic credit market environment. Providers of ratings and assessments, like all actors in financial markets, must work with regulators to ensure transparency and accountability and consistency in their methodologies and decision making. Investors should be accountable for the quality and the development impact of their investments, abiding by law, being transparent and strengthening their impact management. It's time to turn credit ratings from barriers into contributors to long term finance and sustainable development.

Validating new financial instruments such as guarantees and securitized debt, strengthening dialogue and by working together to plug the data gaps that are critical to better informed assessments. The proposed African credit rating agency being launched this year is one example of how regions can develop new data to inform assessments of risks while improving transparency. Colleagues, Excellencies, ladies and gentlemen. Credit ratings are about information, but at the core, deployed the right way, they can also be about contributing to a country's sustainable development and progress. Thank you.

Being part of this important global dialogue to develop a new approach to credit ratings, together, let's work to ensure that developing countries gain access to affordable finance that they need for their development. Thank you.


ECOSOC · Vice-President [11:57]:

I thank the Deputy Secretary General. I now invite Mr. Abinash Bersaud, Special Advisor on Climate Change, to the President of the Inter American Development bank to deliver a keynote address. Mr. Persaut has over 30 years of experience in finance, public policy and academia. And in his role as the Special Climate Envoy to the Prime Minister of Barbados, was an architect of the Bridgetown Initiative on International Financial Reform. Mr. Persaut, you have the floor.


IADB · Special Adviser on Climate Change to the President · Mr. Persaut [12:29]:

30 Years. Gosh, I'm old. Thank you. DSG President. Good morning, everyone.

It's a great pleasure to be here to share with you some thoughts on this very critical subject of cost of capital and the bearing and relationship with credit rating agencies. I want to offer you today a systemic perspective on the challenge we're facing to give you a framework for thinking about this problem. I think where there are system failures, and I think what we are witnessing today is a system failure, sometimes problems are actually symptoms of something we need to address and solving the problem itself will not do that. And in thinking about a systemic approach, I want to, as an entry point, talk to you about two traditions in economic policy that I've come across in my 30 years. The first one is that implicitly, explicitly is a belief that markets will function, can provide solutions to our myriad of challenges and that when they don't, it's because of a lack of information, it's a lack of transparency, it's a lack of certainty.

I call this the information deficiency school. And there are those within that school who will also Argue that markets sometimes need nudging, sometimes need better incentives to align themselves with the social objectives. We wish to see whether that's through taxes and subsidies. But by and large, there's the information, the deficiency school, who says that if we see a problem, it's partly because of a lack of transparency, a lack of information. We're seeing that in the focus on the GEMS database that we, the multilateral development banks are producing in the hope that showing that in fact the micro credit risks of investments is small will change the investment profile.

We see that in some of the approaches to. To the cost of capital problem, that if only there was more information, people will see this as perceived risks rather than real risks, and the cost of capital will fall. And we see that in our thinking about credit rating agencies that if only that they had better information, they used the information better, which I think is perhaps even more important, then that will also help to reduce the blockages and obstacles to the flow, the critical flow of capital to development and developing countries.

But I think that the information school gets one thing right, but also misses something big. And the other tradition in economic policy is the institutional school. That the world we face has institutional constraints, that these pools of capital we talk about, the billions to trillions, are driven by institutional investors. And they are subject to external regulation, internal regulation. They use credit ratings when they could use other things.

But that's the institutional approach. And that is why credit ratings have this disproportionate impact on the flow of capital. But this institutional approach also helps to explain why only 2% of institutional investors money is invested in developing countries. Only 2%. A fundamental problem.

Only 2% of the world's savings, international savings, are going to where 60% of the growth is. This is not just development problem, it's an economic investment problem. But here's another institutional thing, and maybe I'll get to it by this observation. If you look at credit ratings and compare them to domestic economic fundamentals, you see a significant bias. Developing countries, most developing countries have lower debt to GDP ratios than most of our European friend countries.

Most developing countries have lower deficit to GDP ratios than many developed countries. And so you see a stark bias between ratings and domestic fundamentals. But if you compare ratings and outcomes, that bias is largely diminished. What that is saying to us is that what is driving the credit challenges of developing countries is not their domestic fundamentals, or at least not alone, or not even chiefly. It is an international financial system that the credit ratings are capturing.

As we know, the world is divided between those Countries that have reserve currencies and those countries that do not, those with reserve currencies, export safety, they have safety. When they're in crisis, they can act in a quick way to deal with a crisis. They can lower interest rates, they can expand their fiscal policy, spend more, deal with the crisis, mop it up, absorb it. Most developing countries, all developing countries are importers of safety. They do not have reserve currencies.

When they're in a crisis, they have to act contra cyclically. They have to raise interest rates to defend their currency. They have to cut back on spending and social programs to defend their currency and their fiscal position. They make the crisis worse. They're forced to make the crisis worse.

And that is what the credit ratings are showing. They are a symptom of a broken system. They're a symptom of the fact that although many African countries have lower debt to GDP ratios than say our friends in Italy or in Greece, when Italy or Greece gets into trouble, the ECB might buy their bonds. When Botswana and Kenya get into trouble, perhaps caused externally by the largest economy in the world raising interest rates, not internally. When they get into trouble, there's no one to buy their bonds and it's that that the credit ratings are picking up in a substantial way.

So let that not distract from the fact that credit ratings play a disproportionate impact on the flow of capital. We must make sure that these ratings are as accurate as possible, that they use up to date information. In my own experience coming from a developing country, they don't always put the sharpest person on your country's issues. They if your country is not generating the kind of income flow that they, because they're a commercial organization and so you have people of different abilities, different expertise having a disproportionate impact. But whilst these ratings are not always accurate, whilst they're not always efficient, by and large they're reflecting an international system that is very, very much biased against developing countries.

And we need to change that system. We need to change that system with better safety nets, automatic SDR release. When countries get into natural disasters, we need pause clauses in all of our debt. We need to change the debt architecture so that it is absorbing of crashes and that will change the international system and get us better credit ratings because we've leveled up the system. So we need to do two things.

Yes, we need to improve the accuracy of these ratings, but we also need to observe the signal they're sending. The symptom of a bigger problem, of the unfairness and iniquity of the international financial system. And we can do something about that. We can create better safety nets, we can create better absorbing ability in our bond instruments. And let's do that.

Thank you very much indeed.


ECOSOC · Vice-President [21:16]:

I thank the Special Advisor on Climate Change to the President of the Inter American Development Bank. Distinguished delegates. That concludes the opening segment. I now briefly pause the meeting to allow the podium to be rearranged and I invite the panelists for the first panel discussion to take their seats on the podium.


Speaker 6 [21:56]:

That.

Sa.


ECOSOC · Vice-President [22:52]:

I now invite the Council to begin its discussion on credit ratings and the cost of the capital. The first panel will examine the role of information and analysis provided by credit rating agencies in determining the cost of capital for developing countries for both sovereign and private sector borrowers, the information needed to support long term stable investment and the provision of finance at affordable rates, and how developing countries can better cope with the high cost of capital given the high sustainable development investment needs. I'm pleased to welcome the distinguished presenters for this discussion. I also welcome Mr. Daniel, Cash reader in Law at Aston University, to moderate the panel discussion. I look forward to an open, constructive and productive exchange of views.

Mr. Kaj, you have the floor.


Aston University · Moderator · Daniel Cash [23:55]:

Thank you, Excellency, Excellencies, distinguished delegates and colleagues, this first session focuses on a relationship between sovereign credit ratings and the cost of capital and how rating decisions shape borrowing costs. In practice, this is not only a technical question, it has direct implications for how countries access financing, the terms on which they borrow, and ultimately the policy choices available to them. At the same time, this relationship is not always straightforward.

Borrowing costs are influenced by a range of factors, including market conditions, investor perceptions, and also underlying economic fundamentals. Credit ratings sit within that wider landscape, but they also play a distinct role in shaping how countries are assessed and how they are compared to so. One of the questions we will explore today in this session is how these different elements interact in practice. Also, we will ask questions such as how rating decisions relate to what is already happening in markets and also how these dynamics play out across different countries and across different contexts. These are issues that are often discussed from different perspectives, and today's panel reflects that range.

We have a panel today that brings together a sovereign issuer, a major credit rating agency, and representatives of the African peer review mechanism, and also from UN Trade and Development. I will start by inviting initial remarks from each of the panelists. And I will start today with introducing to you Mr. James Wimkin, the Executive Managing Director and Head of Global Rating Services at S and P Global Ratings. Jim oversees a group of more than 2,200 analysts and support staff across 28 countries. That covers more than 1 million outstanding ratings on entities and securities across a wide range of sectors.

The question I have for you today, Jim, is that from a credit rating agency perspective, how do you assess the real world transmission mechanism between sovereign rating actions that includes outlooks and rating watches and also borrowing costs, particularly in relation to developing countries as markets may react more sharply to announcements regarding their ratings. Jim, you have the floor.


S&P Global Ratings · Head of Global Rating Services · Jim Wimkin [26:45]:

Thank you, Daniel. Mr. President, Excellencies, distinguished delegates, ladies and gentlemen. Thank you for the opportunity to address this room on this special day on credit ratings.

As Daniel mentioned, I'm Jim Wimkin. I'm the global head of rating services for S and P Global Ratings. This means I have oversight of all the functions that are involved in the production of ratings. That includes ratings analysts, those who develop our criteria models, our research and development teams, as well as our sustainable finance teams. Following the fourth Financing for Development conference last year at which our president Jan Lepelic presented remarks, SP Global has remained committed to allocating resources towards these questions.

In October of last year, we finalized our method methodology update to our Multilateral Lending institutions criteria or MLI criteria. So far, that's resulted in three MLIs being upgraded due to stronger capital ratios. We estimate that subject to other constraints beyond these rating changes, stronger capital positions could result in an additional 600 to 800 billion in lending capacity. Still, fiscal space and addressing debt levels remain central barriers to public investments into sustainable development. So, Daniel, to address your question, I'd make three initial points.

The first we've already mentioned. Credit ratings are only one among multiple factors driving investment decisions and ultimately the cost of capital. Two, Credit ratings serve the function of resolving information asymmetries not because of our mere existence, but because of what we seek to provide, namely, transparent, rigorous, comparable and independent opinions of credit risk. And then finally, innovation is happening to mobilize private capital and scale development finance, which I think is a great opportunity. We seek to reduce information asymmetries in various ways.

Our dedicated teams of sector and country experts seek to ensure that every rating is based on the most complete and current set of information available. That's both quantitative and qualitative. For example, seven of our sovereign upgrades in Africa last year were driven primarily by improving growth prospects and reform momentum. These upgrades had a ripple effect, leading us to take positive rating actions on financial and corporate entities in countries including Egypt, Morocco and South Africa. In addition to publishing ratings as well as outlooks, our ratings analysts published thorough reports that include all key assumptions underpinning each rating decision which both issuers and investors have access to.

We also publish annual performance studies of our ratings, known as default and rating transition studies. These reports are utilized internally and externally to verify that our ratings remain consistent and comparable across various geographies and sectors. And finally, as a standard discipline, we also seek to collect and review any new relevant information and if appropriate, incorporate it into our credit rating methodologies and assumptions. The MLI criteria update is one example, but we could point to more the incorporation of climate resilient debt clauses into our ratings analysis in 2023, as well as updates we made to our Project Finance backed collateralized loan obligation criteria following the receipt of new data on recovery levels in emerging markets. But if we really want to focus on borrowing costs, then as we've said, we need to focus and recognize the fact that credit ratings are only one of multiple factors driving investment decisions and the cost of capital.

Fundamentally, the cost of capital is driven by the supply and demand for credit. Credit ratings primarily focus on the assessment of an entity's ability to make full and timely payments and avoid default. Those are their purpose. Other factors which can influence investor decisions include their own views of the strength of an institutional framework and the degree of transparency and predictability of the operating environment. Other concerns can include foreign exchange risks, market liquidity and their own regulators views on different asset classes and regions.

As an example, a study by The IMF from 2023 found that even after controlling for sovereign credit ratings and bond characteristics, sub Saharan African sovereigns pay significantly higher coupons at issuance than peers from other regions, indicating additional drivers beyond ratings. But financing structures can also play a role, which brings me to my third and final point. Innovation is gradually happening to enable capital mobilization, which we view as necessary considering the size of the financing gap. As two examples, we note the move of MLIs towards originate to distribute models and the development of structured fund finance. A gradual shift of MLI towards an originate and distribute approach can free up balance sheet capacity and enable the private sector sector to leverage MLI and development banks underwriting expertise.

These transactions remain rare, but we're seeing some reach the market such as the one done by the IFC in September last year. Innovative structures are also emerging, including structured fund financing with blended finance characteristics which provide scale diversity and credit enhancements that address institutional investors needs. Your Excellencies, distinguished delegates, ladies and gentlemen, if the objective is to meet the sustainable development goals, then improving transparency and quality of information seems to be an immediate priority alongside the scaling of blended finance transactions and funds and sustained efforts on economic and fiscal reforms. We remain committed to reviewing and incorporating any additional information and maintaining our role as a regulated credit rating agency in this process. Thank you.


Aston University · Moderator · Daniel Cash [33:27]:

Thank you, James.

Moving forward, hopefully he's online. I'd like to move forward to our next contributor. That is Mr. Luis Molina Chacon. He is the Vice Minister of Finance for Costa Rica and hopefully we have them with us. My question for Mr. Molina Shekhani is turning now to the perspective of a sovereign issuer.

How have credit ratings affected Costa Rica's approach to raising resources and accessing financing? Based on your experience, what changes would most improve outcomes for countries? You have the floor.


Costa Rica · Deputy Minister of Finance · Luis Munina [34:10]:

Thank you, Chairman. Hello everybody. My name is Luis Munina, Deputy Minister of Finance of Costa Rica. I'm very happy to be here and share the floor with you. Greetings from sunny Costa Rica.

We have holidays here, so I took a time from my holidays to be with you on this Monday. From our perspective, I believe that it has been said quite a few times, the information is the key for sovereign issuers like us. As James was saying and Mr. Pessoa was saying before, the asymmetries of information are the whole the credit agencies are trying to fill with the investors. For us it's very important and for us, I mean as issuers, for us, it's very important that the investors around the world has the confidence of the same information as the local investors. What we have seen, at least in the last three years that we have been in government, we have had a significant improvement in the ratings.

We've been a country that in the single year we have an improve of three notches. That's not very common in the history of credit agencies. And that was because we had delivered strong fiscal results on a process of fiscal consolidation. And that has been seen in our local market because we have a lot of more confidence from institutional investors in our local market, but also have a. The seal of the credit agencies to bring foreign investors to our.

To our market or even international market is very important. I believe that there are three main issues that I would like to address today. And I believe at the beginning it was said very eloquent. The cost and the value are different things that need to be measured. And the gdp, it only give us the cost of things and the value of nothing.

I just love that quote at the beginning of this meeting because that was one of the big questions of Sevilla last year. Going beyond gdp, but knowing that we have to go beyond GDP is a really hard question. We've Been measuring the economy with the GDP for the last 100 years, and I don't have the answer. I believe that we don't have the answer in this floor. The person who has the answer, how to measure the value of things in the future, of course it will have the Nobel Prize, because it's a really hard question to answer.

But we have to start to making this kind of hard questions because there are a lot of other things that need to be measured in countries, for example, in my country, we have very transparent information about the environmental accounts and how much the nature cost and how much the nature can deliver as an active and as an asset in our country, in our country. And that can be measured and it has to be. And we have to figure out some alternative to transmit those natural assets that countries like Costa Rica or tropical countries have to give more value to the assets that we have. And we can. And we can transfer to the rating agencies the other things.

And I already begin with that we need to speak the same language. And in this matter, the credit agencies are the dictionary that allowed us to translate the same languages between investors and the issuers like us. This language needs to be branded somewhere. I believe that in Sevilla last year we started to see some ideas of how can we measure and how will be the milestones that a country needs to have. I remember last year in Sevilla, at the beginning, in the first day, everybody was talking about the reform of the multilaterals of the cost of the money.

And on the last day, in the closing remarks, it was stressed that three main things that need to be done is raise the revenue of the state to at least 15% of the GDP, having control of expenses and having control of the debt. I believe those three key milestones in the macroeconomic numbers that a country needs to have needs to be measured somehow. The credit agencies are the way to measure it. But we need to find new methodologies to address transparently to these three key issues. In Costa Rica, we have delivered the numbers in the last three years and the credit agencies have shown that.

But as it was said before, we need to find new methodologies to see this in the medium and long term and try to consolidate those numbers to the welfare of the people. In Costa Rica, we expend around 20% of our budget in paying interest and only 10% in pensions. So we spend double of the amount of money in paying interest and in pensions and with aging populations. This is a matter that needs to be fixed. That is my opening remarks, at least for now.

The three most important Thing we need to go beyond the GDP is a really hard question, but we need to speak second, we need to speak the same language. And speaking the same language is to deliver new methodologies. I'll leave it there and be happy to further questions. Thank you.


Aston University · Moderator · Daniel Cash [39:53]:

Thank you, Louise. You're definitely in a nicer place than the rest of us. So this is fantastic. Moving forward to my next panelist, I'd like to introduce to you Ms. Ejigayo Tafera. She's a senior researcher on credit ratings and she's here representing both the African Peer Review Mechanism and the forthcoming African Credit Rating Agency.

My question to Educayo is to what extent do current sovereign rating methodologies adequately capture the realities of African and also other developing economies? What additional information or alternative approaches do you think are needed? And how will the new African credit rating agency approach these critical questions? Jageyeh, you have the floor.


APRM · Senior Researcher · Ejigayo Tafera [40:42]:

Thank you. Thank you, Daniel. And thank you for inviting the African Peer Review Mechanism and the African Union to this August gathering. Mr. President, I have an honor to join this esteemed panel on behalf of the African Peer Review Mechanism, which is the organ of the African Union, established to support African Union member states in the area of good governance, promoting good governance, and one area of work that the African Peer Review Mechanism has been interested by the African Union member states is the issue of supporting Africa member states on the area of credit ratings. And APRM is also in charge of spearheading the initiative of establishing an African Credit Rating agency Chair.

The question of whether the current sovereign rating methodologies adequately capture the realities of African and other developing countries and economies is a question that had dominated the policy debate both in Africa and beyond. And let me be open and candid here. The current methodologies that are provided by the big three rating agencies, they provide a baseline, but they are not fully adequate enough to cover and to reflect the credit risk in the continent. There are reasons why there is this general sentiment and consensus in Africa. In many developing countries, the current rating methodologies, they rely in a combination of both qualitative and quantitative indicators.

And if you look at the very definition of credit ratings, there is ability and willingness of borrowers, ability to pay back the borrowed fund. So when you look at the ability, mainly you're looking at the qualitative aspect of these statistics, you know, the GDP figures and the like. But the willingness to pay highly is a very subjective assessment. And it assess the institutional and governance matter, which can be merely subjective judgment by the analyst. From the African perspective, there are three gaps that stand out.

When you look at the credit rating methodologies, one is insufficient recognition of the structural characteristics of African economies. Many African economies have undergone transformation with large informal sector. There is a demographic dynamics and evolving physical frameworks and these realities are not often fully captured in standardized models designed around advanced economies. Second, there is the issue of information asymmetry. Limited and even and lack data can lead to a very conservative assumption.

In such context, ratings tend to default to question and sometimes amplify risk perception beyond financial fundamentals. Third is the narrative effect. Perception around governance. Political risk and vulnerabilities can disproportionately influence ratings. As we have seen from the different research that were undertaken by the United nations itself.

Sovereign ratings involve inherently subjective elements which can shape outcomes beyond purely economic indicators. So what needs to change One is transparency, greater transparency in terms of the methodological clarity, countries need to understand how ratings are derived and particularly the weight of the qualitative factors. Second, broader data set and also forward looking indicators. Rating methodologies need to include the structural transformation metrics, resilience indicators, the informal sector dynamics and the quality of an institution beyond just perception based proxies. Third, context sensitive analysis methodology must better reflect country specific developments and pathways rather than applying uniform benchmarks.

This is precisely where the African credits were. Rating Agency comes in the African Credit rating agency AFCRA is not being established to replace the global agencies but to complement and enrich the credit rating ecosystem in Africa. And it is anchored in this three principle which is context sensitive and proximity. With deeper regional presence, the African credit rating agency will incorporate local local knowledge, real time policy development and nuanced understanding of African economies and address the long standing gap where external assessment may overlook the domestic realities. Second, transparency and credibility.

AFCRA aims to adopt clear publicly articulated methodologies, reduce uncertainties and strengthen market confidence. Third, correcting information asymmetry here, let me emphasize that this is not about inflating ratings. You know the African credit rating is not being established to provide favorable ratings for African countries. It's about ensuring that Africa's risk is assessed accurately and not excessively. By providing additional credible signal to the markets, African credit rating agency can help reduce the narrative premium that contributes to elevated borrowing costs.

Let me conclude by saying that the issue is not about the current methodologies are entirely flawed, but they are incomplete. A more inclusive, transparent and context aware rating ecosystem will benefit not only Africa, but the global financial system as a whole. And African credit rating agency represent an important step in that direction. I thank you.


Aston University · Moderator · Daniel Cash [47:12]:

Thank you Eji. I think the whole credit rating Ecosystem is really excited to see what happens with the African credit rating agency and we look forward to it launching. Before I hand over to our lead discussant, just capturing a few of the threads that have emanated from these observations. I think it's clear that information is critical, but how that information is collated and how it is portrayed is really the next frontier for development. It's obvious that credit rating agencies are just one component of a large ecosystem, but it does need to be reminded that they are a critical component and they are for most of the time at the front of the interface of that ecosystem.

Other trends included looking for ways to transmit non traditional economic indicators, which is obviously of critical importance to the developing world. But I also love the intervention from Luis about speaking the same language. I really do think that's the next stage of development in the credit rating ecosystem is how to frame and develop that infrastructure. So not only is the complicated language that has dominated the space removed and we move forward to simplified shared language that we build infrastructure so that everybody in the ecosystem can understand it. Some questions were raised about countries needing to understand better rating approach approaches, but for our debate, the reality is to look at questions about how that looks in practice and also internal dynamics within countries need to be articulated and communicated better.

But again, the real important question is how does that look in practice? So before I go to the second round of questions to the panelists, I'd like to introduce to you the lead discussant. She is Ms. Penelope Hawkins. She is the head officer in charge of the Debt and Development Finance Branch at UN Trade and Development unctad. There she directs the research and analysis of the branch, including most recently an analysis of the cost of external capital in developing countries, managing one of UNCTAD's most important technical assistance programs, the Debt Management and Financial Analysis System program.

My question to Penelope is where do you see the biggest mismatches between how credit risk is assessed and the development financing needs of countries? And how could the international financial architecture evolve to close that gap? Penelope, you have the floor.


UNCTAD · OIC, Debt & Development Finance Branch · Penelope Hawkins [50:01]:

President and Excellencies and dear colleagues. So for a start, as I think has been recognized here, here we need to know that development finance consists far more than only debt. In 2024, close to the US$1.5 trillion in external non resident finance that flowed into developing countries. Roughly half of that was in the form of equity instruments. It's also important to recognize that the credit risk assessment as reflected in our sovereign credit ratings is applicable to 62 developing countries.

That's 29 emerging market countries and 33 frontier market economies. These are the countries that are integrated into global capital markets and and issue bonds to private and commercial investors. It means that the majority of 118 other developing countries and self governing territories tend to have very low levels of integration and are dependent on official lenders who are typically senior creditors. So while sovereign credit ratings do influence marketplaces perceptions of default risk, and commercial and private investors take into account their views very seriously, it's clear that something more is at work. Our research found that the yield spreads for developing countries with the same credit ratings at the same point in time can differ very widely.

And they can also differ for different developing countries in different developing regions. It is very clear, it's indisputable in fact that developing countries face higher risk premia. And we found that over the past decade, developing countries on average have paid more than twice the interest rates faced by developed economies economies on their bond issues. For African countries, this premium has been even higher, reaching up to three times benchmark rates. So if we are to close the roughly 4.3 trillion financing gap, then both external and domestic sources of financing need to increase by around a third of their current levels.

Addressing this requires looking beyond a narrow focus on sovereign ratings. And it's of course also important that we do not reinforce the regulatory licensing power that the credit rating agencies already have. So what can be done? We believe it's important for multilateral and regional development banks to provide more concessional finance grants, guarantees and local currency loans. But if they do so, they need to clearly define the development purposes with matching risk appetites and regular recapitalization.

We also see significant scope for scaling up technical assistance in diverse fields such as debt management and communication with with financial market actors, including credit rating agencies to help countries reduce their risk premia and borrowing costs. Thirdly, most of you in this room have received an invitation to a briefing on the borrowers platform this week. Ultimately, the aim of the platform will be to send a positive market signal by strengthening debt sustainability practices and improving debt transparency of its members. And this should help reduce this risk premium that I mentioned before. And finally, since we are repeatedly told that most of the countries deemed to be in high risk of debt distress are rarely faced with liquidity rather than solvency issues, it's important that we increase the scale and improve the quality of access to the global financial safety net for developing countries.

As mentioned by Mr. Pursal, central bank swap lines, IMF liquidity facilities and regional financial arrangements that can be accessed rapidly and without Excessive conditionality would enable developing countries to. To address temporary liquidity pressures before they escalate into economically damaging solvency crises. I rest here. Thank you, Chair.


Aston University · Moderator · Daniel Cash [55:07]:

Thank you, Penelope. I'm really keen to allow Excellencies from member states to discuss. So in the next round, if we could keep our answers brief. But I think the question I would like to ask is, is, within the current system, where does the relationship between sovereign borrowers and credit rating agencies work least well in practice, and what is one practical change that would make the biggest difference? As we move from Seville to today and move forward with the momentum to try to seek for practical change, it'd be fantastic if my panelists could really focus on practical moves forward.

So if we could start with James, give it to you.

Happy to repeat. So the question is, within the current system, where does the relationship between sovereign borrowers and credit rating agencies work least well in practice, and what is one practical change that would make the biggest difference?


S&P Global Ratings · Head of Global Rating Services · Jim Wimkin [56:12]:

Great, thank you.

I would start with information. I know information does not solve everything, but the more information we have, the more comfortable our analysts can be with a lack of information that just increases uncertainty. And therefore, it's more often the case that you can, you can take a conservative assumption from that point. It's for this reason that, you know, we actually welcome the development of the African credit rating agency. We think the market benefits from a variety of perspectives and to the extent that, you know, that their involvement could also bring about additional data, additional perspectives, additional understanding, understanding which we would, you know, seek to learn from as well, if that represented new information, then I think that would benefit everyone.

What's working? Well, I think, you know, as I mentioned, we do attempt to be as transparent and public as, you know, we can be with our methodologies, with our reports. We publish sovereign scorecards which not only list ratings, but every single underlying subscore, if you will, and including describing, you know, how many notches of flexibility analysts have used. So I do think we're on a good path to improving the relationship, deepening understanding and improving the environment, information quality.


Aston University · Moderator · Daniel Cash [58:00]:

Thank you, Jim. If we still have Luis online. So the same question to Luis is, where does the relationship between borrowers and agencies work least well in practice? And what is one practical change that would make the biggest difference? Luis, you have the floor.


Costa Rica · Deputy Minister of Finance · Luis Munina [58:16]:

Yes. I'll continue with the idea of James about information. Information is the key in this, in this matter. Mr. Pursol said it at the beginning. The asymmetries of information in this matter are the key because there are information that the government has, there's information that the investor has.

And let's remember something, please. There always has to be profit. The investor need to see some profit because it's their private money. And the credit agencies are the most important part in, in the, in this, in this puzzle because they are the ones who give the information to the investor. But going to the, to the key question for us, for us is important and something that we have seen in Costa Rica.

And I believe Jane said in the first intervention, we have quantitative and qualitative indicators, right? On the quantitative, we believe that, we believe that is very, we believe that is very, that is very transparent. We have issues in fiscal policy, primary superpluses, the control of the debt, the revenue of the state. The quantitative part is strong and is solid. But the qualitative part is where the analysts can give some of their own remarks in the rating.

For example, in Costa Rica, all the quantitatives set that we already have the investment grade on the quantitative side.

On the quantitative side, we already have the investment grade. But on the qualitative side, the analysts that have Costa Rica under the review, they always said that the political fragmentation in our country doesn't allow us to go to the international market to get euro bonds, for example. And that's one of the main issues that the analysts in the different credit ratings agencies already, they always stress you have a political problem to get the approval of Congress to end up yourself in the international market. And I believe it's fair to say that for the analyst, but it's not fair to say that we don't have the access to the, that we don't have the access to the international market because on the last six months we, we issue 2 billion euros in the local market with a GDN. So we don't need the access to the international market to get the liquidity because investors are seeing that even, even the transactional cost of, of issuing a GDN and going to the local market in Costa Rica and that transactional cost has a cost and they see a confidence in Costa Rica and they go to the local market and give us the money in the local market without going to issue Euro months.

So the qualitative side, on the analysts of Costa Rica, that fountain is already gone. We don't need the approval of Congress to go to the international market to get the money because we are seeing the investors that they are internalizing the transactional cost of going to issue in the local market in Costa Rica. So I believe on the quantitative side, he's very transparent about what the model said. But on the qualitative side, I believe that there needs to be a review of methodologies on how the analysts make their own mind on putting the notches on the qualitative side. And I'll leave it there for the moment.


Aston University · Moderator · Daniel Cash [1:01:58]:

Thank you. Thank you. Luis, the same question to you, please.


APRM · Senior Researcher · Ejigayo Tafera [1:02:06]:

Thank you, Daniel. I will actually start off where James left it. He mentioned that there should be deeper engagements and data availability. I also believe that those are the two important aspects of improving relationship between sovereigns and credit rating agencies when it comes to deeper engagement. African peer review mechanism has been at the forefront of asking the rating agencies to have more local presence.

I don't know how many of you know that out of the 55 African Union member states, the rating agencies, in fact it's only Moody's and SNP has got one office and it's based in Johannesburg. And we have been vocally advocating for more presence to be able to understand the market better and be able to provide a more nuanced rating than flying in for one week when it is the credits review time and flying out and making conclusions based on that. And from the countries and from the sovereign side, we have also been working very closely, including with our partner undp, UNECA and some other partners, to support countries to ensure that they made available the required information in the formats and in the structure that is required. In some instances, it might be very trivial to tell you that some information may be available, but they may provide it in a PDF format that cannot be easily analyzed, easily interpreted and the like. So we have been supporting countries in creating that awareness that there is a need to provide information and the data has to be readily available when countries are due for rating assessments.

So those two points, I believe will make a difference. Thank you.


Aston University · Moderator · Daniel Cash [1:04:09]:

Thank you. Edgy. Penelope, my apologies for giving you just a moment to respond.

But the same question for you about a practical change that you feel might make a biggest difference. Thank you.


UNCTAD · OIC, Debt & Development Finance Branch · Penelope Hawkins [1:04:27]:

The first, I think, is that when we talk of transparency, we often put the onus on the countries.

I think that there's also scope for the credit rating agencies to be more transparent. It's true that they do conduct many, many more analyses of corporates within countries than they do of countries themselves. And I would challenge the credit rating agencies to say in the case of sovereigns, why do they not make those reports transparent? Then they can be read not only by the countries, but other analysts and other market players. And I think that that might be one way of analyzing this process going forward.

The second thing I would say is that when one looks at countries and the way in which they have to deal with credit rating agencies, it's really important that the narrative that they present to the credit rating agencies is really consistent with with what is happening to their fundamentals. And so to the point that our colleague from Costa Rica raised, it's really important that you can link your narrative to a story that talks about success. And when we think about these longer term views that we are pressuring the credit rating agencies to take, it's really that it's Are they convinced that your narrative really points to a successful future? And for that to happen, there needs to be consistency and credibility in the data. Thank you.


Aston University · Moderator · Daniel Cash [1:06:14]:

Thank you, Penelope. That concludes this section of the panel and your Excellency, I pass it back to you. Thank you.


ECOSOC · Vice-President [1:06:24]:

I thank the moderator for conducting the panel and the presenters for for the substantive contribution to the discussion. I now invite delegations to engage the presenters in an interactive discussion. Request for the floor should be made by pressing the microphone button. The time limit is five minutes for statements on behalf of groups and three minutes for individual interventions that will be implemented through the muting of microphones. In order to enable the interpreters to do their best job possible.

Please deliver your statements at a normal speaking speed and I will give the floor to the Uruguay on behalf of the group of 77 and China to be followed by Angola on behalf of African group.


Uruguay · G77 + China [1:07:18]:

Thank you, Mr. President, Excellencies, Distinguished delegates. I'm honored to deliver this statement on behalf of the G77 and China. At the outset, the Group wishes to express its appreciation to the President of the Economic and Social Council for convening this special meeting on credit ratings. And thank the panelists for their insightful contributions to this interactive Dialogue. For the G77, sovereign credit ratings are not merely technical benchmarks.

They are systemic determinants of development. And rather than helping to address great challenges such as debit, climate change, unilaterally coercive measures and trade barriers, they actually exacerbate their impact. A single ratings downgrade can translate into hundreds of millions of dollars in additional debt cells service directly crowding out investment in health, education and climate action. This is not a marginal inefficiency. It is a structural barrier to the implementation of development priorities.

As a group composed of developing countries, we have consistently advocated for several priorities which I would like to highlight next. First, the issue of methodological bias. We remain concerned that prevailing rate rating agencies methodologies integrate structural biases that systemically disadvantage developing countries. Assessments that overweight short term fiscal indicators and institutional indicators taken from advanced economies fail to capture the underlying productive capacity, demographic trajectories and natural resources of our Member States. This results in a mispricing of sovereign risk that is self reinforcing, higher borrowing cost constraint, fiscal space, which in turn validates the negative rating.

Second, it is important to emphasize that SEVILLA commitment calls explicitly for greater risk transparency in sovereign credit rating methodologies. The integration of longer time horizons that better reflect structural development trajectories and enhanced engagement between CRAs and developing country governments to ensure assessment are grounded in accurate, contextually informed data. The Group regards this not as aspirational language but as actionable commitments that CRA's member states and the UN system are collectively expected to implement. Thirdly, many of our members lack dedicated sovereign debt management offices with technical expertise to challenge assessments or present forward looking reform narratives. This distorts the quality of information on which ratings are based.

We support expanded technical assistance through the UN system, regional and development banks and bilateral partners to strengthen this capacity and encourage CRAs to deepen their country level engagement, particularly in low income and structurally vulnerable economies. As an outcome of this meeting, we expect to move beyond diagnosis and towards substantive, time bound, non binding recommendations across its three priority areas, the impact of ratings on cost of capital, the case for lengthening rating time horizons and the capacity of developing countries to engage more effectively with rating processes. In conclusion, the G77 and China do not seek to completely displace existing institutions as we recognize that investor confidence relies on on established frameworks. However, we insist that reform be genuine and substantive rather than cosmetic. Methodology reviews must involve meaningful stakeholder input, including from developing country governments and the transition to longer time horizons must reflect a fundamental shift in how risk is conceptualized rather than a mere rebranding of extreme.

We look forward to both the Sevilla commitment and this special meeting resulting in tangible progress. I thank you,


Speaker 27 [1:11:54]:

I thank the distinguished representative of Uruguay and I give the floor to the distinguished representative of Angola, to be followed by Palau on behalf of the Aussies and Trindato and Tobago on behalf of Caribbean Community.


Angola · Africa Group [1:12:10]:

Mr. President, distinguished colleagues, I have the honor to discuss deliver this statement on behalf of the Afghan Group. The Afghan Group welcomes the convening of this ECOSOC special meeting on credit ratings as mandated in the civilian commitment and commands the continual efforts to strengthen dialogue between Member States, credit rating agencies and other stakeholders in the international financing system for Africa. This discussion is of systemic importance.

Credit ratings play a decisive role in shaping access to finance, influencing borrowing costs and determining the scale and direction of investment flows. And for many African countries, these ratings continue to contribute to excessively high cost of capital, limiting fissile space and constraint on ability to invest in sustainable development. In response to guiding questions before us, the Afghan group wished to highlight three key considerations. First, while credit rating agencies provide important information to markets, their methodology do not always fully reflect the economic fundamentals, growth potential and reform trajectories of developing countries. The reliance of subject elements, including perceptions of political risks and the willingness to pay, may introduce biases that do not directly capture the country's specific realities.

Moreover, pro cyclic nature of rating actions can exacerbate financing vulnerabilities. Downgrades in times of stress tend to amplify markets reactions, increasing borrowing costs precisely when countries require greater access to affordable finance. Second, we underscore the importance of advancing more transparent, inclusive and forwarding looking methodologies as also highlighted in the civilian commitment, there is a need to better integrate long term development prospects and resilience factors, including climate and systemic risks and investment in sustainable development into credit assessments. Moving beyond an excessive reliance on short terms macroeconomic indicators, we also stress the importance of ensuring a fair and balanced treatment of sovereigning debts restructuring in order to avoid the timely and orderly resolutions on debt distress. Third, capacity constraints remain a critical challenge.

Many developed countries lack the technical and institutional capacity to effectively engage with rating agencies, manage data flows and shape the narrative around their creditworthiness. In this regard, strengthening the international support in statistical systems, data transparency, analytical tools and sovereign debt management is essential. Mr. Chair and Mr. President, it's equally important to recognize ongoing efforts at the continental level. Under the framework of the African Union and its Agenda 2063, Africa countries are advancing structural transformation, strengthen economic governance and enhance domestic resource mobilization.

Mechanisms such as the African Peer Review Mechanism provide credible and context specific assessments of governments and risk which should be more adequately reflected in the global credit ratings methodology. Furthermore, institutions such as the African Development bank have highlighted the structural drivers of Africa high costs of capital and we are actually contributing to the solutions in these contexts. Ongoing discussions of developing of African credit rating agency represents a constructive step towards more balanced, transparent and developer oriented credit assessments. Mr. President, the Afghan Group also supports the efforts to reduce excessive reliance on credit ratings in regulatory frameworks and investment decisions and to promote complementary resources of credit assessments including those provided by the international financial institutions. To conclude, we reiterate that the issues under discussion today are closely linked to the broader reform of the ifa.

A more fair, inclusive and develop oriented system is essential to ensure that credit ratings practice support to achieve the Sustainable Development Goals. I thank you.


Chair [1:16:38]:

I thank the distinguished representative of Angola. I now give the floor to the distinguished representative of Palau, to be followed by Trinidad and Tobago and Virginia Gilders, Leaf International Fund.


Palau · AOSIS [1:16:55]:

Chair. I have the honor to deliver the following statement on behalf of the alliance of Small Island States. AOC for Small Island Developing States, credit ratings are among one of the most significant external determinants of our development prospects. They directly influence not only sovereign borrowing costs but also private sector financing, foreign investment flows and overall economic confidence. Yet the evidence clearly show that the current system of rating is not working equally for SIDS.

Only 13 SIDS currently have sovereign credit ratings reflecting significant barriers to entry, including high costs and administrative burdens. For those that are rated, the outcomes have steadily deteriorated. Between 2000 and 2022, the average credit rating for SIDS declined from 9.94 to 6.87, a drop of over 3 points. This decline is significantly sharper than those observed in other developing countries. This trend is not driven by weak policy frameworks.

Rather, it is closely linked to the intensifying impacts of climate change which is not of our own making. The annual losses from climate related disasters and other economic shocks translate directly into worsening fiscal and debt indicators which are key inputs into credit ratings. For example, sids account for two thirds of countries experiencing the highest relative disaster losses globally. During the same period, external debt in SIDS rose from an average of 45% of GDP GDP to 58%. Fiscal deficits also deepen from under 3% to an average of 5%.

As a result, our climate vulnerability is effectively being priced into sovereign risk, creating a self reinforcing cycle. Climate shocks drive downgrades, downgrades increase borrowing costs and higher costs constraint investment in resilience. To break this cycle, AOC calls for the following first, credit rating agencies must better distinguish between structural vulnerability and a policy performance. Today, the impacts of climate shocks often lead to immediate downgrades. A hurricane or a cyclone can depress few fiscal indicators and push SIDS below investment grade regardless of sound economic management.

For example, in 2004 Grenada's credit rating fell sharply from 8.22 to 1.60 in a single year following Hurricane Ivan, even though the government's fiscal management remained stable. Therefore, methodologies ought to adjust for exogenous rates risks and recognize a proactive risk management measures so that countries investing in resilience are not penalized. Second, investment in resilience, building climate adaptation, renewable energy and sustainable infrastructure should not be considered a credit should be considered a credit positive. Current frameworks treat these expenditures as cost rather than long term investments that reduce our future risk risks. By factoring these measures into ratings, rating agencies would provide a more accurate assessment of long term sustainability and enhance market confidence and crucially lowering borrowing costs.

Lastly, in addition to reforms of existing methodologies, there is also a need for more long term nuanced approaches tailored to the realities of cities. Sids. Such an approach alongside conventional ratings could provide investors with a clearer understanding of risks. This would enable markets and investors to make informed decision without penalizing highly vulnerable countries, improve market access and stabilize investment flows. Through these interlinked measures, the international credit rating system can align risk and and resilience so that it supports rather than hinders sustainable development in sids.

I thank you.


ECOSOC · Vice-President [1:21:34]:

I thank the Distinguished Representative of Palau. I now give the floor to the distinguished Permanent Representative of Trinidad on Tobacco, to be followed by Virginia Gilder, Sleeve International Fund and Algeria. You have the floor, Ambassador thank you.


Trinidad and Tobago · CARICOM · Permanent Representative [1:21:50]:

Chair Chair, Excellencies, colleagues and participants, I have the honor to deliver this statement on behalf of the 14 member states of the Caribbean Community. CARICOM at the outset, CARICOM aligns itself with the statement delivered by the distinguished representatives of Uruguay on behalf of the G77 and China and Palau on behalf of EOSIS.

Our discussion today is timely as we move to translate the commitments made in Sevilla into concrete actions. The current credit rating system, which plays a central role in countries abilities to access international finance, has not met the needs of some of the most vulnerable. CARICOM has consistently called for credit rating agencies to improve transparency and consistency in their methodologies to ensure that small vulnerable economies are not fairly disadvantaged. Today we reiterate this call. Chair Credit ratings play a critical role in determining borrowing costs and access to finance, yet their heavy reliance on debt and fiscal indicators often overlooks other factors that disproportionately affect small island developing States, including structural vulnerabilities, climate exposure and external shocks.

Chair Between 2020 22, the average credit rating of 13 rated SIDS fell from 9.94 to 6.87, a decline of over 3 points, while developed countries saw little change. 14 Of the 20 countries with the highest disaster losses relative to GDP are SIDS, with weather related damages reaching US US 153 billion between 1970 and 2020 over 11 times average annual GDP. Private debt burdens have exploded in many SIDS, rising from an average of 6.5% of GDP in the 2000s to a substantial 35.9% in the 2000s for the 18 SIDS with available data. Chair this analysis does not yet capture the severe environmental events of 2025 and 2026. At this point, Chair let me express our continued solidarity with the people of Jamaica following the devastation of Hurricane Melissa, another stark reminder of the external shocks that continue to undermine the region's financial stability and development prospects.

And I'm grateful to my colleague from EOSIS who mentioned Hurricane Ivan in Grenada, another good example. In the Caribbean Community, frequent extreme weather events can erase years of progress, reinforcing cycles of debt. Despite strong commitments to fiscal discipline, current methodologies therefore do not fully capture our realities. We reiterate the need to incorporate the Multidimensional Vulnerability Index as a complementary measure to enable a more accurate and forward looking assessment of risk and to support the vulnerability aligned financing and concessionality, including for CARICOM and high income SIDS excellencies for small and vulnerable economies. Sustainable development depends on investments in climate resilience, infrastructure diversification and institutional reform efforts that may raise debt in the short term but strengthen long term growth and reduce fiscal shocks.

In the Caribbean, significant renewable energy potential and high returns on investment underscore this opportunity. Yet short term assessments often penalize such spending. Credit rating agencies should therefore adopt more forward looking approaches that recognize resilience and adaptation investments as credit positive. At the same time, scaling innovative financing instruments such as parametric insurance, green and blue bonds and disaster linked debt relief mechanisms can further support stability and sustainable growth. Finally, Mr. President, many developing countries still face capacity constraints in engaging effectively with credit rating agencies affecting how their risk is assessed and priced.

Addressing this requires stronger data transparencies and institutional framework for debt management, fiscal analysis and macroeconomic forecasting. CUICA Member States have made steady progress in these areas and continue to strengthen real time analysis and decision making. In this context, expanded capacity building, particularly through south, south and Triangular cooperation, remains essential to build technical expertise and institutional resilience.


ECOSOC · Vice-President [1:26:52]:

I thank the distinguished Permanent representative of Trindat and Tobago. I now give the floor to the distinguished representative of Virginia Guildersleeve International Fund, to be followed by Algeria and France.


VGIF [1:27:12]:

I represent the Virginia Guildersleeve International Fund and chair the NGO Committee on Financing for Development in New York, a substitute committee of the conference of NGOs. I share this statement on behalf of both entities. Credit ratings play an important role in shaping countries access to finance with significant implications of fiscal space and development pathways, particularly for countries facing high debt burdens alongside climate vulnerability. When external or climate related shocks occur, shifts in perceived risk can increase borrowing costs and constrain access to finance, in turn limiting the ability to invest in recovery, resilience and long term priorities. Under such pressures, spending on climate adaptation, human development and essential public goods such as health, education, social protection and digital public infrastructure is often delayed.

Despite their critical role in supporting inclusive growth, service delivery and domestic resource mobilization, foundational systems such as connectivity, data platforms and inclusive financial technologies are critical for economic participation and resilience of communities. In this context, several considerations are important. First, credit assessments should more fully reflect long term drivers of resilience and including investments in human capital, climate adaptation and sustainable and digital infrastructure. Second, greater transparency in methodologies is essential, particularly regarding assumptions, data sources and the role of qualitative judgment. Third, rating approaches should distinguish more clearly between structural risk and external shocks to avoid reinforcing cycles that constrain recovery during periods of stress.

Fourth, broadening the range of analytical perspectives and reducing over reliance on a narrow set of rating frameworks can contribute to more balanced outcomes. Fifth, strengthening accountability and reviewing underlying incentive structures within the rating process can enhance credibility and trust. Finally, investing in country level data and analytical capacity remains critical so that national realities and long term strategies are more fully reflected. Ultimately, aligning risk assessments with sustainability and inclusive growth is critical for resilient economies and global financial stability. Thank you.


ECOSOC · Vice-President [1:29:36]:

I thank the representative of Virginia Guilderslieve International Fund. I now give the floor to the distinguished representative of Algeria, to be followed by France and China.


Algeria [1:29:50]:

Thank you Mr. President. Allow me first of all to thank you for convening this timely and highly important meeting. Algeria aligns itself with the statements made by Uruguay on behalf of G77 and China and by Angola on behalf of the African group. Mr. President, I would like today to make three points. First, credit ratings are not mere assessments.

They constitute powerful market signals that determine access to financing, influence investor decision making and ultimately limit the fiscal space available for development. In this regard, we cannot stress enough the need to reduce the unjustifiable burden borne by the countries most in need. Second, in Africa, despite significant reforms undertaken across the continent, many countries continue to receive ratings that are systematically clustered in the non investment grade category. This raises legitimate concerns about methodological bias and disproportionate consideration given to subjective political risks and the limited recognition of long term strategic reforms and resilience building efforts. Third, it is important to encourage long term affordable investment flows.

To this end, markets require more comprehensive and forward looking information that reflects countries structural reforms, resilience building efforts and development trajectories. Greater transparency in rating methodologies, more consistent treatment of comparable risks and the integration of development relevant indicators would help reduce information asymmetries. Finally, Algeria believes that innovation is needed both in institutions and in markets. This includes expanding the role of multilateral development banks in providing guarantees and risk mitigation instruments, strengthening regional credit rating alternatives such as the African Credit Rating Agency Project, and advancing reforms of the international financial system. I thank you.


ECOSOC · Vice-President [1:32:14]:

I thank distinguished representative of Algeria.

I now give the floor to the representative of France, followed by China and Zambia.


France [1:32:25]:

Thank you, Mr. Vice Chair. Your Excellencies. We live in an interconnected world where crises have a global impact. Just recently, the war in the Middle east has had an impact on the borrowing costs of countries in the region, but also in developed economies.

However, these countries have an unequal access to liquidity. France is playing a key role in trying to correct these inequalities. During COVID the initiative of suspending debt servicing of the Paris club and the G20 was a necessary response to the need for financing for health care and social expenditures generated by the senator crisis. Between May 2020 and December 2021, the initiative made it possible to suspend some US$12.9 billion of debt servicing for 48 developing countries. Beneficiary countries of this initiative saw their borrowing costs drop.

We also support suspension debt clauses in case of climate shocks. France is also involved in capacity building to better mobilize domestic public resources. First of all, at the national level, France has an investment plan in terms of donations of 60 million euros for for the period 20242027 to finance bilateral projects and multilateral initiatives dedicated to strengthening mobilization of domestic resources in the least developed countries of Sub Saharan Africa. Then, during its G7 presidency, France made mobilization of domestic resources a joint priority of its development and finance policy area and seeks to have a ministerial declaration on the strategic topic. Lastly, France is funding the trust funds of the IMF and the World bank and fully supports three pillars to help developing countries in facing their liquidity problems.

First of all, structural reforms and mobilizing domestic resources two, supporting external financing, including from international financial institutions and three, reducing debt servicing when this is relevant. For France, enhancing transparency of the debt is essential so that citizens are informed and understand the economic situation and financial situation of the country and make informed decisions. Secondly, to ensure that stakeholders assume responsibility and ensure healthy management of public resources. Transparency of the debt is a recurrent feature theme of the Paris Forum which will be organized this year in June of 2026. It's an inclusive forum which brings together developing countries Debtors from creditors from the Paris club at the G20 as well as experts from the Academia.

Thank you very much.


ECOSOC · Vice-President [1:35:25]:

I now give the floor to the distinguished representative of China to be followed by Zambia and Canada.


China [1:35:33]:

Thank you, President. We express our appreciation to ECOSOC for organizing this meeting. China supports Uruguay on behalf of G77 China and the Non Alliance Movement Credit ratings play an important role in the functioning of international financial markets. An impartial and reasonable credit rating system is essential for developing countries to access financing for development and to advance the 2030 Agenda for Sustainable development. The current system still contains practices that are neither impartial nor responsible.

Its failure to objectively reflect the economic outlook of developing countries has become a major impediment to their access to financing and they suffer from high cost of financing on credit ratings and the cost of capital. China supports strengthening the positive role of credit ratings in cost of capital pricing. To this end, first, efforts should be made to improve the ratings quite quality and optimize methodologies and institutional frameworks so that ratings outcomes accurately reflect the underlying risks. Second, measures such as promoting the external credit assessments institution regime strengthening routine supervision and deepening international regulatory cooperation should be adopted to reinforce oversight of the CRAS and guide them towards higher level of quality. I thank you President.


ECOSOC · Vice-President [1:36:57]:

I thank the distinguished representative of China. I now give the floor to the distinguished representative of Zambia to be followed by Canada and Agora citizens changing Mexico.


Zambia [1:37:20]:

Thank you, Chair. We align ourselves with a statement made by Uruguay on behalf of the group of 77 and China and Angola on behalf of the African Group. I wish to thank the President of the Economic and Social Council for convening this special meeting on credit rating which was mandated in the Sevilla commitment. This meeting taking place eight months after 4th International Conference on Financing for Development is a demonstration of the commitment to sustain momentum towards implementation of the severe commitment. The work and rating of credit rating agencies invariably affect capital flows, particularly in two developing countries as investors take ratings into the risk profiling of investment destinations.

This has particularly had a negative effect on the risk profile and cost of capital for Africa. Therefore, this dialogue should result in further reforms to the work of the credit rating agencies in order to facilitate the desired large scale investment push towards the SDGs. Zambia recognizes efforts to make the methodologies of credit rating agencies more transparent, their calendars accessible and their processes more consultative. However, a lot more still needs to be done to make rating processes even more consultative and inclusive. Firstly, there's need for an effective appeal or review mechanism in rating processes to allow for correction of factual errors, clarify assumptions and respond to preliminary assessments which would enhance the credibility and legitimacy of ratings.

Transparent processes are particularly important where ratings materially affect market access, refinancing capacity, and the access of debt liability management operations. Secondly, there is need for more frequent and proactive engagement beyond annual rating reviews, particularly during periods of market stress or debt restructuring. Early communication of liability management, fiscal adjustment and reform trajectories can materially influence how rating agencies assess credit events. Thirdly, there is scope for credit rating agencies to play a more constructive advisory role, especially in frontier and developing markets by clearly communicating key rating sensitivities, reform thresholds and data expectations. The emergence of African and regional rating credit rating institutions, including the Africa Credit Rating Agency, offers an opportunity.


ECOSOC · Vice-President [1:40:25]:

I thank the distinguished Representative of Zambia. I now give the floor to the distinguished representative of Canada, to be followed by AGORA citizens, Changing Mexico and Armenia.


Canada [1:40:40]:

Thank you, Chair Excellencies. Canada welcomes the holding of this ECOSOC meeting and commends the President of ECOSOC for convening a diverse range of stakeholders. The very fact that this dialogue is taking place is meaningful as it reflects a concrete success of FFD4 implementation and a shared acknowledgement that credit ratings play a meaningful role in shaping countries access to finance, borrowing costs, fiscal flexibility and prospects for sustainable development. We welcome the participation of credit rating agencies in today's discussion because your engagement is essential. A constructive two way dialogue amongst Member States, multilateral institutions and credit rating agencies fosters mutual understanding.

This exchange can help ensure that credit assessments are well informed, credible and grounded in methodological rigor and integrity. In this respect, we would like to underscore the importance of high quality, timely and transparent data in informing credit assessments. Persistent data gaps, particularly in developing countries, can result in risk perceptions that do not fully capture underlying fundamentals, reform trajectories or resilience efforts. Strengthening national statistical systems and data governance can help enable fair and forward looking credit analysis. Building on this, Canada highlights the value of targeted technical assistance and capacity building supported and tailored to national circumstances.

Strengthening public debt management, fiscal transparency and macroeconomic frameworks and data production capacities can generate tangible benefits for policymakers and improve engagement with markets and credit ratings.

To this end, Canada is proud to support capacity building efforts, notably through the project that we have with ECLAC for the Regional Advancement of Statistics in the Caribbean which aims to improve the region's statistical system, including national accounting systems. Canada also contributes to these efforts through the World bank by providing funding to support transparency initiatives as well as capacity building programs that improve the availability and the quality of data. Chair Canada encourages continued reflection on how best practices and lessons learned from existing initiatives could be shared and adapted to different contexts. We also emphasize the importance of preserving the independence of credit rating processes. Efforts to influence or direct these assessments are unlikely to succeed since their credibility depends on maintaining this independence, which is essential for preserving market confidence and ensuring the perceived integrity of credit ratings.

In conclusion, Canada looks forward to continuing its commitment and collaboration as we move forward in implementing the severe commitment thank. You,.


Chair [1:43:39]:

Thank you, dear colleague, representative of AGORA Citizens Changing Mexico, followed by Armenia and Russian Federation.


AGORA Citizens Changing Mexico · Major Group of Children and Youth · Maya Rogers [1:43:51]:

Thank you. Chair My name is Maya Rogers and I take the floor on behalf of the Financing for Development, Children and Youth Commission constituency of the Major Group of Children and Youth and the DMUN Foundation. Mr. President, I speak on behalf of 1.8 billion young people who will bear the longest burden of decisions made in this room today. When credit rating agencies assign a country a risk score, they are not merely raiding governments, but the future of their citizens. Consider what happened when COVID 19 struck.

Developing countries contracted their economies by an average of 2.2%, far less than the 4.7% contraction in advanced economies. Yet developing countries received over 95% of all sovereign credit downgrades. This was a global pattern. Cameroon, Ethiopia, Pakistan were downgraded immediately after requesting relief under the Debt Service suspension initiative, penalized for asking for assistance. Across Latin America and the Caribbean, borrowing costs spiked as ratings fell as governments were spending to keep people alive.

This is a structural injustice that compounds real time across every region of the Global South. Climate shocks, pandemic debt and currency depreciation creates cascading crises that the CRA mythologies translate into downgrades, triggering capital flight, further fiscal tightening and cuts to education, health and climate investments that would reduce long term vulnerability. The systemic underrating of African sovereign borrowers alone cost the continent an estimated $74 billion in a single year, more than the total ODA to Africa. The story is the same in different numbers from Port au Prince to Colombia to Lusaka. The Seville commitment was a step and we welcome today's meeting as its direct fruit.

But let us be clear about what a step means. It is not in an arrival, but the cost of capital for the developing countries, whether in sub Saharan Africa, South Asia, small developing island nations or Central America remains structurally higher than their actual credit risk warrants. The rating cliff that locks countries out of international capital markets for years, not because their fundamentals collapse, but because a handful of private agencies views simultaneously is still intact. Mr. President, Excellencies and Distinguished colleagues, children and youth demand that ECOSOC address the cost of capital crisis as a developmental emergency. Transparency mythology is aggregated data on how social and climate resilience investments are scored and accountability mechanisms for pro cyclical rating behavior as minimum conditions for fair access to finance.

The bill for an action is being sent to us. We thank you. Thank you.


Chair [1:46:36]:

I give the floor now to the distinguished representative of Armenia, to be followed by Russian Federation and Brazil.


Armenia [1:46:44]:

Distinguished Chair Excellencies Dear colleagues, at the outset, allow me to highlight the importance of today's discussion in deepening our understanding of the role of credit ratings in the international financial system.

Credit ratings play an important role in shaping access to finance by reducing information asymmetric and signaling creditworthiness. In this sense, they are not merely technical assessments but also market signals that influence access to finance. At the same time, their impact on the cost of capital is not uniform and warrants careful consideration while they contribute to the pricing of sovereign risk. Borrowing costs are also influenced by broader factors including investor sentiment and global financial conditions. Armenia's experience reflects this dynamic.

Over the past years, Armenia has pursued proof macroeconomic policies, strengthen fiscal frameworks and maintain close engagement with international financial institutions. These efforts have contributed to improving investor confidence and recent positive rating outlooks which also reflects is reflected in increased non resident participation in Armenia's domestic government bond market. At the same time, Armenia, like many developing countries, continue to operate within global market conditions that influence borrowing costs and investors participation. This point to a broader structural dynamic, namely that the distinction between investment grade and non investment grade can have implications for capital flows including through the sovereign sailing effect on corporate borrowing. At the same time, it is important to recognize that credit ratings may in certain context interact with market cycles during periods of stress.

Rating signals can coincide with heightened market volatility and more constrained financing conditions. Conservatively, forward looking improvements including reforms and investments in resilience may take time to be fully reflected. In this context we would like to highlight three areas for further reflection. First, the need to strengthen the accuracy, objectivity and long term orientation of credit ratings in line with the compromise of the Sevilla. This includes better capturing reforms, trajectories, resilience and long term growing prospects.

Second, the importance of aligning rating methodologies with long term investment horizons including through greater use of scenario analysis and improved recognition of investments in sustainability and protective capacity. And thirdly, the need to reduce excessive resilience on mechanistic rating thresholds, avoiding cliff effects that can abruptly restrict access to finance and encouraging more diversified set of information inputs in investment decision making. Taken together, this underscores the importance of advancing a more balanced and develop oriented credit rating system. And thank you. I thank Armenia.


ECOSOC · Vice-President [1:49:22]:

I now give the floor to the distinguished representative of the Russian Federation, to be followed by Brazil and Peru.


Russian Federation [1:49:33]:

Thank you, Chairman. Colleagues, Credit ratings play key role in the international financial system. Their valuations play a decisive role on the cost of borrowing and the investment attractiveness of countries. In current conditions. It's more and more important to develop more just and diversified system of credit ratings, including development of national and regional agencies.

We expect that the the launch of the African agency will be an important step towards demonopolisation and to attracting investment to Africa. In developing our own national rating system, we base ourselves on international standards. In 2021, the World bank gave high marks to the work of the Russian Central bank giving our system the broadly implemented grade which confirms that were in line with the Iosco requirements. Today, the Central bank of Russia has in its register 4 credit ratings. Their evaluations are a key indicator of credit worthiness of issuers and reliability of financial instruments.

We have managed to ensure independence of rating agencies, transparency of procedures and build an effective system system of oversight. Credit ratings are broadly used in such economically and socially important spheres as government procurement, investment of pension contributions and issuance of federal and municipal securities.

Russian credit agencies are fully market based. The shareholders participate. Participation in each one of them does not exceed 10%, which reduces risks related to conflict of interest and politicization. We believe that development of national ratings agencies, which have extensive expertise, will contribute to diversifying the market and enhancing the sustainability of the global financial system. In this connection, we believe it is important to develop the international practice of the reciprocal use of credit ratings in regulating financial markets, using ratings not only of global agencies but also national rating agencies.

For this it's important to step up cooperation between regulators as well as exchange of experience and best practices. Thank you.


Chair [1:52:08]:

Thank the Russian Federation. The floor to the distinguished representative of Brazil to be followed by peroba.


Brazil [1:52:17]:

Thank you, Mr. Chair. I would like to thank you and the Secretariat, especially Ms. Sherry Spiegel and her team at the FSDO for convening this meeting and allowing for this long awaited debate. Brazil aligns itself with the statement delivered by Uruguay on behalf of the G77 China, but would like to make some specific comments on our national capacity. Let me congratulate Mr. Perso from the IADB and Ms. Hawkins from UNCTAD for their brilliant interventions on the fundamental causes of this kind of vicious circle in credit rating related to the biases and flaws of the international financial system.

Yet credit rating agencies play an important role in determining the access to financing and the cost of capital. Although credit REIT agencies are private entities, their decisions affect governments around the world. The lack of transparency regarding their methodologies is a chronic problem. Credit rate agencies publish only a portion of their methodologies, leaving ample room for their analysts subjective opinions to affect millions of people access to credit. There is also clearly a bias against poorer countries, especially those in Africa.

This has been documented by the undp. The report of UNDP estimates that the costs of Subjectivity amount to $25 billion per year in interest, in addition to blocking more than 46 billion billion per year in new loans. Improving credit ratings for developing countries requires enhancing transparency in rating methodologies, fostering better dialogue between agencies and governments, and updating models to accurately reflect economic realities rather than subjective biases. These improvements can lower borrowing costs, attract foreign investments and reduce the risk of unwranted downgrades, ultimately facilitating development. In financing, we favor supporting regional initiatives such as the African Union's African Credit Rates Agency, which can promote more accurate context aware assessments.

I welcome the representative of the Africa here who made interesting comments on how this initiative will complement the existing network of agencies. Finally, a case also could be made for the development of a public and multilateral rating agency which would offer a benchmark to compare with private ratings.


ECOSOC · Vice-President [1:55:19]:

I thank the distinguished representative of Brazil. I now give the floor to the distinguished representative of Peru to be followed by Zimbabwe and Maldives.


Peru [1:55:33]:

Chair, thank you very much for giving me the floor. Peru appreciates the convening of this forum for dialogue on a topic that is central to the international financial architecture and to the development prospects of developing countries. Credit ratings undoubtedly play an important role in reducing information asymmetries in financial markets. However, their impact on the cost of capital for developing countries is profound and in many cases disproportionate. Indeed, sovereign credit ratings influence not only access to public financing but but also the financing conditions of the private sector since they act as a ceiling for companies.

This directly affects productive investment and the capacity of states to move forwards towards sustainable development in line with their national interests. Likewise, middle income countries such as Peru, which still maintain investment grade status, face considerably higher financing costs than those of developed economies. This situation creates greater limitations in accessing concessional financing. It increases debt levels and raises the risk of becoming trapped in the so called middle income trap, thus highlighting the persistent asymmetries in the international financial architecture. In this context, it is essential that we move towards more transparent objective and Long term oriented rating methodologies.

This entails adequately reflecting not only risks, but also the structural capacities, resilience and growth potential of our economies, as well as external shocks, including climate change. In line with the severe commitment, we need to promote a more balanced treatment of debt restructuring processes. In this regard, we support reforms that include effective debt relief mechanisms, especially for middle income countries, in order to facilitate more sustainable and predictable access to financing.

Peru appreciates this forum and considers it a valuable opportunity to strengthen dialogue among member states and relevant stakeholders with a view to advancing towards a more inclusive financial architecture that is capable of providing timely solutions. Thank you very much, the distinguished representative of Peru. I now give the floor to the distinguished representative of Zimbabwe, to be followed by Maldives and South Africa.


Zimbabwe [1:58:17]:

Thank you, Mr. President. We welcome the convening of this timely discussion and appreciate the insights shared by the panelists. My delegation aligns itself with the statements delivered on behalf of the G77 in China and the African Group. Credit ratings are a central determinant of access to finance and are an important variable in the cost of capital for developing countries. They shape not only sovereign borrowing costs, but also private sector financing through sovereign ceilings.

In practice, this has created a persistent structural challenge. Developing countries often face borrowing costs that are on average three to five times higher than those of advanced economies, even where fundamentals may not fully justify such spreads. For Africa, the implications are stark, with losses of over $70 billion annually due to biased or overly conservative assessments, critical resources that could otherwise support sustainable development. This raises a key concern. Methodologies that are overly influenced by short term indicators or subjective risk assessments can amplify pro cyclic trends and reinforce constraints on development finance.

In the case of Zimbabwe, the absence of a sovereign credit rating further limits access to international capital markets and increases financing costs for both the public and private sectors. My delegation therefore supports greater transparency in methodologies as reflected in the Compromiso de Sevilla, more forward looking assessments that capture long term development trajectories, including investments in resilience and structural transformation and reforms to reduce poor cyclical bias, particularly during periods of economic stress. Without such reforms, countries undertaking necessary adjustments may continue to face high borrowing costs despite improving fundamentals. Mr. President, the African common position on debt reflects our shared call for a more equitable and development oriented financial architecture, including fairer credit rating practices. In this context, the establishment of the African Credit Rating Agency is a welcome step towards diversifying perspectives, improving coverage and addressing structural market concentration.

In conclusion, Zimbabwe remains committed to the advancement of reforms to the sovereign debt architecture by strengthening the ecosystem to better reflect the realities and the needs of developers developing countries. I thank you. I thank the distinguished representative of Zimbabwe. I now give the floor to the distinguished representatives of Maldives, to be followed by South Africa and namibia.


Maldives [2:01:14]:

Thank you, Mr. President. We thank the ECOSOC President and the ECOSOC Bureau for organizing this very important discussion. For many developing countries, especially sids, credit. Rating is where vulnerability is turned into a financing penalty. A rating does not stay on paper.

It enters the budget, narrows fiscal space. And raises the price of resilience. Research shows that from 2003 to 2023,. Seeds paid an average of 7.05% on. International bond markets against 3.09% for the G7.

Research on cost of capital also shows that this is no marginal inefficiency. From 2003 to 2023, 10 seeds could. Have saved nearly $34 billion had they. Borrowed at average G7 rates. That is an amount equal to more.

Than 78% of ODA these countries received over the same period. So we put two direct questions to the panel. First, if current methodologies keep capturing short. Term stress while missing long term capacity,. Structural vulnerability and resilience investment, when do.

We move from acknowledging that gap to. Actually changing the methodology? Second, if guarantees are already the clearest near term lever for lowering borrowing costs, what is stopping the system from scaling a dedicated guarantee mechanism for seeds Now I thank you.


ECOSOC · Vice-President [2:02:48]:

I thank the distinguished representatives of Maldives. I now give the floor to the distinguished representative of South Africa, to be followed by Namibia and Indonesia. The last speaker.


South Africa [2:03:09]:

Thank you, Mr. President. South Africa is pleased to participate in this inaugural ECOSOC Special meeting on credit ratings. We also thank the panelists for their informative presentations. At the onset, South Africa aligns with the statements delivered by the African group and the G77 in China. We recognize that credit rating agencies exert considerable influence over borrowing cost, investor confidence and fiscal flexibility.

Because they influence investor perception, their ratings impact on the country's ability to borrow money in the international financial markets. Although recent fiscal improvements have been recognized in many countries, ratings adjustments have always lacked underlying fundamentals, contributing to elevated borrowing cost. Rating changes can sometimes exacerbate economic challenges. For instance, a downgrade by these agencies can lead to a loss of investor confidence, resulting in capital outflows and currency depression. In South Africa, such decisions have in the past intensified economic instability, prompting debates about the CRA's influence over sovereign policymaking.

An example is a series of rating downgrades following COVID 19 pandemic, which further increased borrowing costs for South Africa and also made sourcing of funding challenging for most sovereigns. In our view, methodologies used by CRAs do not fully take into account the unique socio, economic, environmental and political factors affecting each country, including natural disasters, shocks such as the COVID 19 pandemic. This partisan approach, in our view, I think that can lead to assessments that are biased and that do not entirely reflect the realities on the ground. South Africa's experience with global global CRA illustrates persistent concerns regarding methodological opacity, pro cyclicality and the uniform treatment of developing economies despite differing risk profiles. It is for this reason that South Africa calls for closer scrutiny of CRI methodologies.

This undertaking will hopefully foster context specific risk assessment, enhanced transparency and the credibility of CRA's rating processes, leading hopefully to improved financial outcomes for developing countries. We also call for longer term rating horizons and improved engagement between the CRAs and developing countries. In this regard, we look forward to the operationalization of the Africa Credit Rating Agency which is a complementary regional effort to strengthen competition and facilitate a bespoke risk assessment for countries on the continent. We call upon the international national financial Community to support this agency. I thank you I thank the distinguished representative of South Africa.


ECOSOC · Vice-President [2:05:52]:

I give the floor now to the distinguished representative of Namibia to be followed by Indonesia.


Namibia [2:06:00]:

Thank you Chair. Namibia aligns with the statement delivered by Uruguay on behalf of the group of 77 in China and by Angola on behalf of of the African Group and thank the panelists for their insightful contributions to this interactive dialogue. I will now make the following remarks in my national capacity. Namibia underscores that the methodologies and practices of credit rating agencies significantly shape countries access to affordable financing and intend their ability to implement the 2030 Agenda for Sustainable Development. We reaffirm the commitments reflected in the Pact for the Future and the Sevilla Commitment which call for more transparent, fair and development oriented credit rating frameworks.

In this context, we stress the need to address structural biases that disproportionately raise borrowing costs for developing countries while promoting greater transparency, improved data use and the integration integration of long term sustainability and resilience factors into ratings. Namibia further encourage strengthened dialogue among member states, regulators, investors and rating agencies to ensure that sovereign credit assessments better reflect development realities. We also think that the African Union Credit Rating Agency can work constructively with three major global agencies through a cooperative rather than confrontational approach that strengthens credibility and improves ratings outcomes for African countries. Regular trilateral or multilateral consultations among the agencies can build trust, reduce perceived bias and gradually harmonize standards, ultimately leading to more balanced, accurate and development sensitive credit ratings that lower borrowing costs and support the continent's economic transformation. In conclusion, we must move beyond diagnosis towards substantive time bound recovery by implementing targeted reforms that reduce the impact of rating on the cost of capital, extended rating time horizons to better capture long resilience and development gains and and strengthen the capacity of developing countries to engage effectively and consistently with rating processes.

Thank you Chair. I thank the distinguished representative of Namibia and I'll give the floor to the distinguished representative of Indonesia.


Indonesia [2:08:36]:

Thank you Chair. Indonesia aligned itself with the statement delivered on behalf of the G77 in China and wishes to add the following and our national capacity we appreciate the convening of this meeting as a timely follow up to the SEVIA commitment on financing for development, particularly in examining the role of credit ratings within the international financial architecture. Credit rating agencies play a critical role in reducing information asymmetries and shaping investor perception. Their assessment influence the cost of capital for developing countries, affecting both sovereign borrowing and private sector financing through the country ceiling. At the same time, we often see that rating actions, including outlooks and reviews can significantly affect market sentiment in periods of uncertainty.

Such signals may amplify volatility, increasing borrowing costs and constraining fiscal space for development. Therefore, improving the quality and scope of information underpinning credit assessment is is essential to support long term investment at affordable rates. Greater transparency and objectivity in the methodology are important, including clearer treatment of political risks, forward looking indicators and underlying assumptions is key to enhancing credibility and reducing misinterpretation. Moreover, assessments should better reflect countries specific circumstances including structural reform, growth potential and resilience factors, especially since sovereign ratings can have broader spillover effects on private sector financing and investment that may have implications for national development including towards achieving SDGs. We also underscore the importance of strengthening engagement between credit rating agencies and developing countries and hence dialogue can help bridge existing gaps in understanding reduced policy potential bias and ensure that assessment are informed by a comprehensive view of domestic policy frameworks and reform paths.

Looking ahead we support the continued discussion on improving the global credit rating ecosystem, including through exploring complementary approaches and institutional innovation to help address persistently high costs of capital in developing countries. Thank you Chair. I think the distinguished presented of Indonesia we have heard from the last speaker in this discussion. I now give the floor to the moderator to invite brief responses from the panelists and to make his own closing remarks. Thank you Excellency.


Aston University · Moderator · Daniel Cash [2:11:10]:

I invite the panelists to reflect generally on the many insights and interventions from Member states. If a focus may be helpful, I would ask panellists to consider maybe One key takeaway we should remember when considering the impact of high cost of capital on development with respect to credit rating. So I'll follow the same order. And James, I'll start with you. You have the floor.


S&P Global Ratings · Head of Global Rating Services · Jim Wimkin [2:11:33]:

Thank you. We've heard a number of important questions asked today. For example, how will countries and companies meet climate challenges? How can a country reach its full development potential? How might a company or country make other needed investments?

Those are all important questions, but they are different from whether current debt holders and those who are considering investing in a country's debt are going to be paid on time and in full. If we take climate transition for example, companies wanted to demonstrate progress on their sustainability sustainability plans, but became frustrated when the credit rating process did not allow that to be fully apparent due to the many other factors impacting credit quality. So we created a climate transition assessment which did just that. It tracked a company's ability and willingness to make progress on its plan. So as I think about the topics we debated here today, I asked myself the question how many of these are opportunities to improve our processes at foreseeing and communicating the likelihood of default?

And how many of these are evidencing the potential need for other measures or other products with regard to the negative impacts that often are correlated with rating downgrades to effectively serve their purpose as forward looking opinions ratings take into account on an ongoing basis relevant changes in the economic environment as well as other events that could impact credit risk. Rating agencies are required by regulation to change their credit ratings when their assessment of credit risk changes in line with the published methodologies. We cannot choose to ignore changes that affect credit creditworthiness because of the potential effects a downgrade may have. In fact, ignoring these changes, delaying or not taking a credit rating action based on its potential effect is prohibited by the Iosco Code of Conduct for credit rating agencies. This code was written by securities regulators with the goal that credit ratings be independent and free from political or economic pressures and from conflicts of interest.

Finally, with regard to ratings looking longer term and at longer term trends, we agree, particularly given the impact of megatrends we're seeing like climate change and others. For that reason, we've actually published a white paper which spell out how and when we actually factors those into our ratings. Simply put, when the magnitude of the potential impact is high and we have good clarity on the transmission mechanism such that the likelihood is high, that's when you will expect to see rating impacts. When the magnitude is high. But we don't have good clarity or a good understanding of the likelihood or when the clarity is high but the magnitude is low, that is when you will see us.

And we've already started to produce scenario analyses and sensitivity analyses similar to what was asked for in many of the remarks today. Thank you.


Aston University · Moderator · Daniel Cash [2:14:57]:

Thank you. James Ejigaya, you have the floor. Same question to you. Thank you. Thank you, Chairperson.


APRM · Senior Researcher · Ejigayo Tafera [2:15:06]:

And once more, thank you for this discussion. And we also take note of the concerns that were raised by the Africa group as well as other developing nations. And I think the message is quite clear. High cost of capital in Africa and other developing countries. It's not just a mere reflection of risk, but it's a reflection of how risk is perceived and measured and communicated by the rating agencies.

And it's important to emphasize that rating agencies need to have a relook at the methodologies that they have adopted to assess developing countries and be able to provide a more accurate rating based on not just the short term fundamental, but also taking into account the long term potential of developing economies. I thank you. Thank you. Edgy. I'm not sure if we still have the Vice Minister on the line.


Aston University · Moderator · Daniel Cash [2:16:10]:

No. Okay, so I'll move forward to Penelope for your final observations and reflections. Thank you. Thank you so much. And thank you to the member states for their very valuable interventions as well as those from CSOs in the room.


UNCTAD · OIC, Debt & Development Finance Branch · Penelope Hawkins [2:16:28]:

For me, I bread that many member states lay down the gauntlets to the cras to it's around the methodologies, of course, and they've asked that the methodologies are clear and that they are transparent and that they are published. And of course the challenge is that indeed they are. They are available. But what is not published is, is what happens once the credit rating agencies have used the methodologies to come up with numbers that go into the credit committee. And what happens in the credit committee is not published.

And so I would continue to push for us to get dramatic. I know the World bank uses the term radical transparency. For us to get radical transparency from the CRAs, we need to have the full sovereign reports on countries published. Thank you.


Aston University · Moderator · Daniel Cash [2:17:28]:

Thank you, Penelope. So I'll take this opportunity to provide some final thoughts. For me, it is abundantly clear that information and informational infrastructure lay at the center of this next phase development in terms of this relationship between credit rating agencies and borrowing sovereign nations. However, there is a deeper underlying truth that is best demonstrated by reminding ourselves that when the first euro bond was issued in the mid-1950s, a lot of the countries that are struggling today technically didn't exist. That stark reminder should be the central tenet of our approach moving forward that levelling the playing field in terms of technical education and the capacity to participate so that accessing affordable credit is seen as not only possible, but becomes the core objective of the international financial architecture.

I believe it is that that must be the target. Essentially, what I've just described is a public good, and it will require us all to move in one direction to achieve it. So with that in mind, this panel concludes, and I hand it back to you, your Excellency. Thank you.


ECOSOC · Vice-President [2:18:46]:

I thank Mr. Cash for expertly guiding the discussion.

I also thank our distinguished panelists for their substantive contributions and delegations for participating in a productive exchange of views. We have thus concluded our program of work for this meeting. The Council will reconvene this afternoon at 3pm to continue with its program of work. More details on the program are available on the IGOV platform. The meeting is adjourned.