Governance: Think systems, not wealth.

A mindset change that can bolster creditworthiness.

Emerging markets often point to wealth disparity as the dominant factor separating high-rated and low-rated sovereigns, but a recent political deadlock in the United States revealed the more important truth that governance can serve as a significant shock absorber in modern economies.

The US government’s recent 43-day shutdown shows that even wealthy nations are vulnerable to governance failures, but it also highlights why strong systems, not just income, determine a country’s resilience.

For emerging markets, the key lesson is that governance is a powerful and often underestimated driver of sovereign credit ratings. Shutdowns and budget impasses occur worldwide, but their impact depends on the quality of a country’s systems, how predictable its processes are, how effectively institutions coordinate, and how well political actors adhere to rules.

The US withstands shutdowns because of deep markets, transparent data, strong legal structures, and established fiscal procedures. In contrast, thinner buffers in developing economies make governance shocks far more damaging for ratings.

The article argues that governance is one ratings pillar countries can strengthen quickly, through predictable budgeting, credible fiscal frameworks, transparency, and disciplined processes, and that this mindset shift from “wealth” to “systems” can meaningfully bolster creditworthiness at any income level

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