2025 Public Sector Perspectives

What does the GEMs data show? From 1994 to 2022, the yearly default rate for private companies in emerging markets was 3.5%, while for sub-sovereigns, it was 2.4%. This is largely in line with the default rates for B/B3 credits globally as rated by Moody’s and S&P (see graph below). COVID-19 0% 2% 4% 6% 8% 10% 12% 14% 2000 2001 2002 2003 2004 2005 1994 1995 1996 1997 1998 1999 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 GEMs Private Sector counterparts Moody’s Global spec S&P Global spec Asian Financial Crisis South America Economic & Debt Crisis and Dot.com Bubble Global Financial Crisis Commodity Price Crisis Source: Gems market database Crucially, the recovery statistics help drive home the message that investment in infrastructure and emerging markets poses less risk than assumed by current risk models, meaning commercial banks should not have to lower their risk tolerance to finance MDB/DFI-backed projects. 10 Creating a NewCatalytic Asset Class