By Toby McIntosh
The World Bank has provided a smidgen of new information about the probable disclosure of the “GEMs” database, but also left many questions unanswered.
The nonpublic Global Emerging Markets Risk Database (GEMs) was created in 2009 by the Bank and other international financial institutions (IFIs) to house information on loans and what happens to them. GEMs is used only by the IFIs for their own decision-making. GEMs is overseen by representatives from the 24 participating IFIs and administered by the European Investment Bank.
The private sector has lobbied for release of the data, especially on loan defaults, saying that it would provide them with a more accurate picture of risks than is now available and thus would increase private lending in the developing world.
The World Bank and others in the GEMs consortium appears inclined to go along. Signals were given earlier this year that more GEMs transparency is coming. (See EYE articles on GEMs in March, April and June.)
The new hints about the future of GEMs are contained in Ending Poverty on a Livable Planet: Report to Governors on World Bank Evolution, a report to be discussed at the annual meetings of the World Bank Group and the International Monetary Fund, to be held from October 9-15 in Marrakech, Morocco.
However, the relevant single paragraph (seven sentences) on GEMs in the “evolution” report has raised additional questions about when GEMs transparency will occur, who will administer the database and what exactly will be disclosed.
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Bank Reports Provides Cryptic Update
The limited but intriguing information on the future of GEMs is just a tiny part in a broad strategy document dated Sept. 28. The seven sentences are part of Section 17, which summarizes an overall goal of encouraging private sector investment. It states: “The World Bank will increase its engagement to enable private sector solutions, mobilize private capital, and strengthen private sector development to achieve impact at scale.”
Continuing to send pro-disclosure signals about GEMs, the Bank’s statement confirms, “The Consortium is working towards releasing more private sector statistics and is also evolving into GEMs 2.0.”
The paragraph continues with a few new bits of information, some of which prompted questions from observers.
The Bank said that GEMs is being expanded and improved. GEMS currently has 33 years worth of data.
The document states: “The World Bank is also reconstructing historical sovereign data spanning a longer time period. This effort will translate in GEMs comprising more meaningful statistics for rating agencies and other stakeholders interested in sovereign data.”
The phrase “sovereign data” caught the attention of one observer who questioned its value, commenting that “we have sovereign default data from public capital markets for the sovereigns who issue bonds.”
In another tidbit, the Bank document hints that the administration of GEMs may be moved.
The Bank summary states: “A Request for Proposals is in the process of being sent to the G20 International Financial Architecture Working Group Secretariat and countries that have expressed an interest in hosting GEMs.”
EYE has requested a copy of the RFP from the EIB through its access to information policy.
The last sentence of the Bank document suggests that what information will be disclosed is still under discussion.
The Bank says, “A market survey is also being conducted to get a better sense of the types of metrics and data the private sector investors would be interested in.”
EIB officials have not yet responded to questions posed by EYE.
The Full Text of the GEMs Paragraph (Page 7 of Bank report)
Enabling public access to the default and recovery data of the Global Emerging Markets Risk Database (GEMs) Consortium, to increase investment risks transparency and overcome a key constraint to private investment in developing economies. The Consortium is currently engaging with potential users such as institutional investors, fund managers, commercial banks, and rating agencies to inform the best approach to broadening access to this data in a way that meets investor requirements. The Consortium is working towards releasing more private sector statistics and is also evolving into GEMs 2.0. The World Bank is also reconstructing historical sovereign data spanning a longer time period. This effort will translate in GEMs comprising more meaningful statistics for rating agencies and other stakeholders interested in sovereign data. A Request for Proposals is in the process of being sent to the G20 International Financial Architecture Working Group Secretariat and countries that have expressed an interest in hosting GEMs. A market survey is also being conducted to get a better sense of the types of metrics and data the private sector investors would be interested in.
