Work on BRICS Credit Ratings Agency Underway

NDB President K.V.Kamath says India and other developing countries need to make a strong pitch for a credit ratings upgrade, while also simultaneously working on a BRICS credit rating agency to make global financial governance more broad-based.

New Delhi (Sputnik)- The work on establishing an alternative credit rating agency led by the BRICS bloc of countries is underway, Shanghai-based New Development Bank President K V Kamath said during the second annual meeting of the multilateral agency in New Delhi recently.

“India should make a strong case for ratings upgrade. The developing countries will have to make a strong case for where they are and how they should be looked at. In our context, BRICS needs to ensure that our voice is heard,” PTI quoted Kamath as saying.

India has been critical of global rating agencies like Moody’s, S&P, and Fitch for pegging its sovereign credit rating at a much lower BBB- level despite recent economic growth and stable macroeconomic indicators.

Global rating agencies, however, point at India’s high public debt levels and bank non-performing assets as the reason for status quo.

This year’s Economic Survey, presented a day before the Union Budget, raised the issue and talked about contrasting experiences over ratings assigned by these agencies in relation to India and China in the last two years. The Modi government has maintained that the agencies have ignored the steady decline in India’s debt burden and fiscal strength in recent years.

India’s concerns over the methodology adopted by ratings agencies have been shared by other BRICS member countries, including Russia, China, South Africa and Brazil, prompting the multilateral body to set up an independent ratings agency based on market-oriented principles.

The idea of a BRICS ratings agency emerged during the 2015 BRICS summit in Ufa and was affirmed by the Goa Declaration at the eighth BRICS Summit.

BRICS has started engaging financial experts on a business model for the new ratings agency as well as what methodology it would adopt to rate itself and others.