The current system is too often based on “outdated and incomplete information”, leaving countries unfairly penalized in global capital markets, said UN Deputy Chief Amina Mohammed at the opening of the Special Meeting on Credit Ratings of the UN Economic and Social Council, ECOSOC, delivering remarks on behalf of Secretary-General António Guterres.
“Adequate and timely financing is the fuel that drives sustainable development”said the Deputy Secretary General, warning that “today that fuel is running out dangerously and is becoming more expensive.”
It noted nearly $1.4 trillion in annual debt service costs in developing countries, while more than 3.4 billion people live in countries that spend more on debt interest payments than on health or education.
Global instability
Mrs. Mohammed added that Global instability is deepening the crisis.. Rising fuel and raw material costs linked to conflict and economic volatility are intensifying fiscal pressures and slowing growth, while climate-vulnerable countries continue to face disaster losses without access to affordable recovery financing.
“This is a matter of profound importance,” said Ms. Mohammed.
Debt reform efforts expand
Ms. Mohammed also linked the debate over credit ratings to broader efforts to reform the global debt architecture and flagged new steps aimed at giving developing countries a stronger voice in debt discussions.
These include a borrower platform, work on principles for responsible sovereign borrowing and lending, and a UN-led process that brings together debtor and creditor countries, private creditors, international financial institutions, academics and civil society.
He also cited the planned African Credit Rating Agency as an example of efforts to improve data, transparency and risk assessment.
Call to reinvent qualifications
Ms Mohammed urged a major change in the way sovereign ratings are designed, arguing that assessments It must capture not only vulnerability, but also opportunities..
“We must transform the mentality from long-term speculation to long-term investment,” he said, calling for broader, more transparent and forward-looking methodologies that better reflect countries’ real prospects.
Ms. Mohammed highlighted that affordable development borrowing can strengthen a country’s future creditworthiness.
He said investment in health, education, infrastructure, climate resilience and renewable energy can generate prosperity, reduce risk and improve economic stability over time.
He also criticized narrow measures of progress, insisting that “GDP tells us the cost of everything and the value of very little.”
Ms Mohammed called for greater accountability from governments, investors and ratings providers alike, along with stronger data and fairer methodologies.
“It is time for credit ratings to stop being barriers and become contributors to long-term finance and sustainable development.”said Ms. Mohammed, urging a new approach that helps developing countries get the financing they need.