The five-nation group of emerging economies BRICS has agreed to set up an independent BRICS Rating Agency in its efforts to challenge western hegemony in the world of finance.
It was announced during the 8th BRICS summit held in Goa, India. BRICS comprises five emerging economies — Brazil, Russia, India, China and South Africa.
- The BRICS Rating Agency will be based on market-oriented principles to strengthen the global governance architecture.
- It will be launched as per the shared vision of the BRICS nations for institution-building to transform global financial architecture based on the principles of fairness and equity.
- It will assist BRICS and other countries to rate infrastructure and sustainable projects in the emerging economies. Thus, it will further bridge the gap in global financial architecture
Why there is need to establish BRICS Rating Agency?
At present, western developed countries have hegemony in the world of finance. Three global agencies (S&P, Fitch, Moody’s) based in western countries account for 90% of the rating market. Emerging economies claim that western ratings firms are biased, pessimistic on the developing countries and optimistic on developed nations. They also have concerns over methodologies of the three global agencies. BRICS members Russia in particular and China have been perturbed by these western ratings firms. Russia alleges that the western firms had deliberately lowered its rating after the Ukraine (Crimean) crisis.