Dis­con­tent­ment arises

ChinAfrica - - Cover Story -

This his­tory shows that cur­rent dom­i­nat­ing rat­ing agen­cies un­avoid­ably have West­ern at­tributes. They rep­re­sent the un­chal­lenge­able im­pact West­ern na­tions ex­ert on the global econ­omy. Such a con­di­tion re­sults in a bi­ased ap­proach when the agen­cies as­sign rat­ings to bond is­suers from emerg­ing na­tions like BRICS mem­bers. Over the past decades, emerg­ing economies im­pressed the world with rapid eco­nomic progress.

With their GDP shares de­clin­ing from a global per­spec­tive, West­ern coun­tries’ en­dorse­ment has be­come less per­sua­sive to emerg­ing na­tions. While th­ese rat­ing agen­cies spare no ef­forts to main­tain their mo­nop­oly, emerg­ing BRICS na­tions look for fa­vor­able rat­ing as­sess­ments to bet­ter scale up eco­nomic growth. Con­flicts be­tween them have, there­fore, be­come un­avoid­able.

This can be seen from re­cent moves of down­grad­ing credit rat­ings of BRICS mem­ber na­tions. Fitch low­ered Brazil’s sovereignty credit rat­ing to BB+ from BBBIN De­cem­ber 2015, and fur­ther down­graded it in May 2016. Since 2016, only Fitch among the big three has as­signed an in­vest­ment-grade rat­ing to Rus­sia. In April, Stan­dard & Poor’s and Fitch suc­ces­sively la­beled South Africa’s state debt as junk fol­low­ing the na­tion’s do­mes­tic po­lit­i­cal reshuf­fle. Even China’s sta­ble outlook was changed to neg­a­tive by Moody’s and Stan­dard & Poor’s dur­ing the past year. In­dia’s rank­ing was even worse, re­sult­ing in its do­mes­tic me­dia’s wide­spread crit­i­cism on the rat­ing agen­cies bias against In­dia in as­sign­ing a rat­ing. In fact, all the five mem­bers of BRICS have ques­tioned the way in which the three agen­cies op­er­ate with dou­ble stan­dards and en­trenched po­lit­i­cal bias. rat­ing ap­proaches. For ex­am­ple, as they may not have full ac­cess to first-hand in­for­ma­tion on coun­tries they are rat­ing, the agen­cies may come up with to­tally dif­fer­ent rat­ing re­sults for the same coun­try. Dur­ing the Euro­pean debt cri­sis, the fi­nan­cial con­di­tion of some Euro­pean coun­tries was ev­i­dently worse than BRICS na­tions. How­ever, they still ob­tained pos­i­tive rat­ings. Sus­pi­ciously, such re­sults were reached with dou­ble stan­dards. Democ­racy or free elec­tion is also one of the key fac­tors in de­cid­ing the sovereignty credit rat­ing. This is an ev­i­dent ide­o­log­i­cal bias.

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