Developing countries are being priced out, in struggle for affordable finance

A credit rating is an assessment of how likely a borrower, such as a government, is to repay its debt on time and in full. For sovereign states, ratings influence how much countries pay to borrow in international markets: the lower the rating, the higher the perceived risk and usually the higher the interest costs.

The current system too often relies on “outdated and incomplete information”, leaving countries unfairly penalised in global capital markets, the deputy UN chief Amina Mohammed told the opening of the UN’s Economic and Social Council, ECOSOC, Special Meeting on Credit Ratings, delivering remarks on behalf of Secretary-General António Guterres.  

“Adequate and timely finance is the fuel that drives sustainable development,” the Deputy Secretary-General said, warning that “today that fuel is running perilously low, and it’s getting more costly.”

She pointed to nearly $1.4 trillion in annual debt servicing costs across 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

Ms. 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,” Ms. Mohammed said.

Debt reform efforts broaden

Ms. Mohammed also linked the credit ratings debate to wider efforts to reform the global debt architecture and pointed to new steps aimed at giving developing countries a stronger voice in debt discussions.

These include a borrowers’ platform, work on principles for responsible sovereign borrowing and lending, and a UN-led process bringing together debtor and creditor countries, private creditors, international financial institutions, academics and civil society.

She also cited the planned African Credit Rating Agency as an example of efforts to improve data, transparency and risk assessment.

Call to reimagine ratings

Ms. Mohammed urged a major shift in how sovereign ratings are designed, arguing that assessments should capture not only vulnerability, but also opportunity.

“We must transform the mindsets from long-term speculation to long-term investment,” she said, calling for broader, more transparent and forward-looking methodologies that better reflect countries’ real prospects.

Ms. Mohammed stressed that affordable borrowing for development can strengthen a country’s future solvency. 

Investment in health, education, infrastructure, climate resilience and renewable energy, she said, can generate prosperity, reduce risk and improve economic stability over time.

She also criticised 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, alongside stronger data and fairer methodologies.

“It’s time to turn credit ratings from barriers into contributors to long-term finance and sustainable development,” Ms. Mohammed said, urging a new approach that helps developing countries secure the financing they need.