Need for World Bank’s governance indicators to be transparent: CEA

• Chief Economic Adviser expresses concerns over the use of the World Bank's Worldwide Governance Indicators in credit ratings assessment, particularly for emerging economies.
• He calls for increased transparency in the World Governance Index to enhance objectivity in credit rating assessments.

Transparency in World Governance Index

• A more transparent, less subjective, and contextually relevant World Governance Index was advocated.
• the World Bank should ensure the involvement of developing countries in the index's formulation, making it more suited to diverse contexts.
• IImproved credit ratings could lead to significant cost savings in global capital markets for these economies.

Worldwide Governance Indicators Overview

• The World Bank's Worldwide Governance Indicators assess 215 countries based on six governance dimensions.
• Dimensions:
  • Voice and Accountability
  • Political Stability and Absence of Violence
  • Government Effectiveness
  • Regulatory Quality
  • Rule of Law
  • Control of Corruption.'
• Addressing transparency issues in the World Governance Index can potentially revolutionize credit rating assessments for emerging economies
• It will lead to substantial financial benefits and better allocation of resources for development.

Prelims Takeaway

• World Governance Index