Chief Economic Adviser Calls For Transparency In World Bank Governance Indicators

Expressing reservations about the utilisation of the World Bank's Worldwide Governance Indicators in credit ratings evaluations by credit rating agencies, particularly for emerging economies, Chief Economic Adviser V Anantha Nageswaran emphasised the necessity for increased transparency and reduced subjectivity in the World Governance Index.

During a seminar on 'Multilateral Institutions for the 21st Century,' organised by the Department of Economic Affairs, Ministry of Finance, Nageswaran raised concerns about the World Governance Index's significant role in credit rating assessments by credit agencies. He pointed out that the index, a composite of various sub-indices, relies on subjective opinions from purported expert institutions lacking on-the-ground presence or a comprehensive understanding of the relevant contexts for member countries.

Nageswaran stressed the need for transparency in the World Governance Index, urging it to be less subjective and arbitrary. He highlighted that these indices, while influencing credit rating assessments, often lack disclosure regarding their implementation, weights and the qualitative overlays applied in the assessment process. The Chief Economic Adviser proposed that multilateral development banking systems can facilitate member countries' access to global capital by ensuring a more transparent, context-appropriate and participatory World Governance Index, with clear acknowledgment of its limitations by credit rating agencies.