The drive toward disclosure of the “GEMs” database, seems to be perking along, still with many questions unanswered and limited information.
EYE has received a few tidbits of additional information that expand on hints dropped recently by the World Bank.
What’s under discussion is the future of the now nonpublic Global Emerging Markets Risk Database (GEMs), created in 2009 by the World Bank and other multilateral development institutions to house their information on loans. GEMs is used by the institutions 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 is seeking access to the data, especially on loan defaults, saying that the data would provide a more accurate picture of risks, incentivizing lenders to increase private lending in the developing world.
The World Bank and others in the GEMs consortium appear inclined to go along. This was most recently confirmed in a World Bank report prepared for the annual meetings of the World Bank and the International Monetary Fund held from October 9-15 in Morocco. (See EYE article.) Signals were given earlier this year that more GEMs transparency is coming. (See EYE articles on GEMs in March, April and June.)
Still, many questions remain about the potential change.
Possibly more decisions will be made later this month at the GEMs General Assembly Annual Meeting.
This is the body composed of representatives from the 24 institutions making up the GEMs consortium. The GEMs Working Group Annual Meeting 2023 was held in March. The GEMs website shows the seven members of the Working Group.
However, the meetings are closed and no agendas, documents or minutes are made public.
Future Administration One Issue
Making GEMs “a stand-alone legal entity” with a new host is likely will be one topic on the agenda.
The World Bank paper suggested this was in the works, saying, “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.”
This statement seems to have been a slight exaggeration.
The RFP “has not yet been disseminated as the related documentation has not yet been completed,” the EIB communications office told EYE.
“There are drafts of such documentation, but they are still being discussed and subject to change,” the EIB said in response to EYE’s request for the RFP.
The EIB gave a list of reasons for not disclosing the draft.
Elaborating on the planned changes, the EIB told EYE:
The 2022 G20 Independent Review of Multilateral Development Banks’ Capital Adequacy Frameworks (CAF) report recommended that GEMs be transformed into a standalone entity with strong governance, management, etc. The GEMs Steering Committee is currently working to implement this recommendation. Indeed, this means that in due course GEMs will likely become a stand-alone legal entity able to curate and disseminate regularly supplied MDB statistics and analysis, and decisions will need to be taken as to where it will be based and how it will be operationalised.
Market Survey Also Kept Confidential
It remains unclear what data would be made available and to whom.
The Bank said, “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.”
The EIB declined to disclose the results of the market survey.
According to the EIB press office, the survey is “aimed at assessing the market perception of GEMs value, with a view to utilise such insights in the decision-making process related to the possible establishment of the stand-alone legal entity and its products.”
The survey is “an internal document meant for internal use of the GEM members,” the EIB press office said.
The EIB cited the same reasons for asserting confidentiality for both documents.
They cannot be disclosed as their disclosure would undermine the protection of the public interest as regards international relations and the financial, monetary or economic policy of the European Union, as well as the commercial interests of the parties concerned. In addition, disclosure of said document at this stage would interfere with the capacity of the EIB services and, potentially, of the EIB governing bodies to assess and develop this initiative with the necessary space to think and without undue external pressure from the public. Ultimately, this would seriously undermine the decision-making process of the Bank. At this stage there is no precise timing for the process above, so there is no further information on this aspect that we can share.
The reply includes footnotes referencing the EIB’s transparency policy.
EYE has filed a request for the market survey with the International Finance Corporation (IFC), the World Bank’s private sector lending arm, which conducted the survey.
In addition, EYE is considering an appeal through the EIB Complaints Mechanism for the results of the survey, although the process is a long one.
EIB Delays Reply to EYE Access Appeal
The EIB appeals process is protracted, EYE has learned.
On April 13, 2023, EYE requested a copy of the document embodying the 2019 GEMs data-sharing agreement between the EIB and ILX, a Dutch investment company.
ILX is the only private company granted use the GEMs data to inform its investment fund decisions.
In reply, the EIB sent EYE a copy of the contract on June 7, but with key portions blacked out, including sections of the financial arrangements and ILX’s use of the data. (See EYE article.)
EYE on July 20 appealed the redactions through the EIB Complaints Mechanism, arguing that the redactions violate the EIB Transparency Policy.
The EIB initially predicted that it could provide an answer by Oct. 2, But citing “the current workload of the EIB-CM,” the EIB recently booted the projected reply date to Feb. 22, 2024.
