A credit rating assesses a borrower’s likelihood of repaying debt, with sovereign ratings influencing the cost of borrowing in international markets—the lower the rating, the higher the perceived risk and interest costs. Deputy UN Secretary-General Amina Mohammed highlighted that the current system often relies on outdated and incomplete information, leaving developing countries unfairly penalized. She noted that nearly $1.4 trillion in annual debt servicing costs burden these countries, with over 3.4 billion people living in nations that spend more on interest payments than on health or education.
Global instability, including rising fuel and raw material costs and climate-related disasters, is worsening fiscal pressures and slowing growth in vulnerable countries. Mohammed linked the credit ratings issue to broader debt reform efforts, including the development of a borrowers’ platform, principles for responsible sovereign borrowing, and a UN-led process uniting debtor and creditor nations, private lenders, and civil society. She also highlighted the planned African Credit Rating Agency as an effort to improve transparency, data quality, and risk assessment.
Mohammed called for a major reimagining of sovereign ratings, advocating for methodologies that capture both vulnerabilities and opportunities, shift focus from speculation to long-term investment, and support affordable borrowing for development. She emphasized that investing in health, education, infrastructure, climate resilience, and renewable energy strengthens future solvency, generates prosperity, and reduces economic risk. She also urged greater accountability from governments, investors, and rating agencies, arguing that credit ratings should become tools for enabling sustainable development rather than barriers.
