A sovereign credit rating assesses a government’s ability to repay its debt and plays a crucial role in determining borrowing costs on international markets. Lower ratings typically translate into higher interest rates, increasing debt burdens for already constrained economies.
Speaking at the opening of the UN Economic and Social Council’s Special Meeting on Credit Ratings, Deputy Secretary‑General Amina Mohammed said the current system relies too heavily on outdated and incomplete data. Delivering remarks on behalf of Secretary‑General António Guterres, she warned that this approach is penalising developing countries and locking them out of critical capital.
“Adequate and timely finance is the fuel that drives sustainable development,” Mohammed said. “Today, that fuel is running perilously low, and it is getting more costly.”
She highlighted that developing countries now face nearly $1.4 trillion in annual debt‑servicing costs, while more than 3.4 billion people live in nations that spend more on interest payments than on health or education.
Mohammed said rising global instability has compounded the problem. Higher fuel and raw material prices linked to conflict, along with economic volatility and climate shocks, are intensifying fiscal pressure and slowing growth, particularly in climate‑vulnerable countries that lack access to affordable recovery finance.
“This is a matter of profound importance,” she said.
Mohammed linked the debate on credit ratings to broader efforts to reform the global debt system. She pointed to initiatives such as a borrowers’ platform, new principles for responsible sovereign lending and borrowing, and a UN‑led process bringing together debtor nations, creditors, financial institutions, researchers and civil society.
She also cited the planned African Credit Rating Agency as a step toward improving data quality, transparency and risk assessment from a developing country perspective.
Mohammed called for a fundamental shift in the design of credit ratings, urging agencies to assess not only vulnerability but also future opportunity.
“We must transform mindsets from short‑term speculation to long‑term investment,” she said.
She stressed that borrowing to invest in health, education, infrastructure and climate resilience can strengthen long‑term solvency. Narrow economic indicators, she argued, fail to capture real development potential. “Gross domestic product tells us the cost of everything and the value of very little,” she said.
Mohammed urged governments, investors and ratings agencies to work together to ensure credit ratings support sustainable development rather than act as barriers to growth.
–UN/ChannelAfrica–
