The BRICS want to claim their credit rating agency – The World

The emerging powers believe that such an institution would be a counterweight to the West and to consolidate a ” global financial architecture “.

World | 17.10.2016 at 00h20 • updated 17.10.2016 to 00h36 | By Marie de Verges

The BRICS (Brazil, Russia, India, China, South Africa) want to consolidate a ” global financial architecture “. Their solution ? the ” to Speed up the establishment of a rating agency “ joint in this club of emerging powers, said the indian prime minister Narendra Modi after meeting their partners for two days, Saturday 15 and Sunday 16 October, a summit in Benaulim, on the west coast of India.

Widely promoted by New Delhi, the idea was to ride for some time. For the BRICS, the challenge is little doubt : it is to fly in the face of the monopoly of the United States on the rating market. It remains in effect to 90 % at the hands of an american trio composed by Standard and Poor’s (S&P), Moody’s and Fitch. A western domination, which, according to the leaders of the BRICS, is reflected in the assessments unfairly unfavorable in emerging economies.

India has regularly complained about. Despite a growth rate that exceeds 7 % for the past two years, S&P and Moody’s – the two heavy weights of the sector – assign it the lowest rating in the investment category (BBB–).

For the BRICS, the creation of such an agency would be a further step in the construction of financial institutions alternatives. In the summer of 2015, the group has already launched the New development Bank (NDB). Featuring officially with a capital of 100 billion euros, this facility will be competitive – to the extent of its means – to the world Bank. Its objective is to finance infrastructure projects in member countries. Over the past year, five loans were granted for a little more than $ 900 million (820 million euros).

Read also : BRICS break over the house

Not the first to want to do counterweight

The boss of the NDB, the Indian K. V. Kamath, is one of the flatterers of the draft credit rating agency ” made in BRICS “. The methodologies of S&P, Moody’s and Fitch contributed to limiting the growth in emerging countries, he accused Saturday, at the summit of Benaulim. the ” The big challenge is the view that international rating agencies adopt when they focus on the developing countries (…) no-one dialogue with these agencies. Our countries need to consider this as a very important issue “, he insisted.

The question is all the more sensitive as the bank of the BRICS need to turn out to be noted. Without a ” triple A “, it is indeed difficult to expect to raise money on the markets at cost-effective rates. But none of the five countries that share its control does not hold the precious sesame, etc.

The BBRICS are not the first to want to be a counterweight to the United States in the area of the rating. The agency chinese Dagong had made a big noise unveiling, in 2010, its first list of rating by country. But due to the lack of be found to be really credible, she had still that 1 % of the european market at the end of 2015.

The BRICS are unaware of much of the difficulties of such a project. They have set no timetable. the ” The leaders were truly convinced, but we couldn’t sign a formal agreement right now because it is necessary that experts examine this more carefully “, a summary Amar Sinha, a senior official in charge of economic relations to the indian ministry of foreign affairs.

also Read : Brics to Ticks, the Lépine contest of emerging