Modi pitches for BRICS credit rating agency to counter western institutions

The Indian Prime Minister, Narendra Modi continues his campaign for the establishment of a credit rating agency for the BRICS to counter ratings by three of the west’s largest credit rating agencies that hold about 90 per cent of the global sovereign market. These are Fitch, Moody’s and S&P.

Mr. Modi reiterated the call at the ongoing BRICS Summit in Xiamen, China. Last year at the Goa Summit, Modi said “In order to further bridge the gap in the global financial architecture, we agreed to fast track the setting up of a BRICS Rating Agency.”

He believes that the BRICS agencies will counter western rating agencies and cater to the financial needs of sovereign and corporate entities of developing nations.

Credit rating agencies evaluate the credit worthiness of entities that issue debts in the public market, such as governments and corporations.

They rate on a descending scale from the highest, AAA to AA, A, BBB, BB, B and these can be either positive or negative.

The ratings of developing countries by these agencies have often been challenged, even though, they say they arrive at their conclusions after consultations with the governments and corporations.

By Emmanuel K. Dogbevi