Better reporting of data could help improve the creditworthiness of emerging market and developing economies (EMDE), Moody’s has argued.
EMDE countries often have lower credit ratings than their developed world peers, which can inhibit the flow of capital to them.
Matt Robinson, an associate managing director in Moody’s Ratings’ sovereign risk group, told Environmental Finance that a lack of high-quality reported data from EMDE countries can weigh on their rating. The provision of data feeds into how Moody’s scores a sovereign’s governance.
He pointed to Moody’s research that showed that “access to wide-ranging, detailed and consistent data bolsters the effectiveness of a sovereign's policymaking, as it facilitates informed decision-making on spending, taxation and funding”.
A robust reporting framework that ensures data integrity helps deter corruption, and better data transparency would boost credit quality in these countries, it argued.
Robinson told Environmental Finance: “We benefit from greater data, and it is reflected in our governance assessments. Sovereigns could see credit positive developments over time, as a result.
“Better data allows for better policy decision-making. It improves the way governments are functioning – integrity helps reduce corruption and [helps] the decisions they make.”
“When a market is confident this data has integrity and there’s not blatant corruption or fraud”, it shows governments “are better at doing their job from a policy development perspective and investors are more willing to engage”.
For example, in the Middle East and Africa, “there is a lot of deficiencies from a data perspective, and that weighs on our assessment of institutions’ governance.
“Budget data is often lacking, particularly in Sub-Saharan Africa. Some provide good macro-economic data but poor fiscal and debt execution data.That which is reported has diminished confidence because the rigour and timeliness of reporting is insufficient.”
When asked whether more technical assistance is needed to help EMDEs with data reporting, he said: “We look favourably on those [countries] that look to seek technical assistance”.
“There’s plenty of initiatives in that space it’s well known that that need is there.”
He also added that the Global Emerging Markets Risk (GEMS) Database could be made available with more granular data to allow investors to better appreciate country-, sector- and transaction-level risk
Robinson will be speaking at a conference being organised by the OECD and Environmental Finance in Paris on 4 to 5 February. See the agenda here: CoP-PF4SD Conference 2025: Mobilising private finance towards 2030 and beyond.
Companies:Moody's
