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 You are in: Secretary of State Condoleezza Rice > Former Secretaries of State > Former Secretary of State Colin L. Powell > Speeches and Remarks > 2002 > April

Remarks at Sovereign Credit Rating Conference

Secretary Colin L. Powell
Washington, DC
April 23, 2002

SECRETARY POWELL: Thank you very much, Walter. I am very pleased to be here this morning and to welcome all of you to the State Department. I am so pleased that we had such a good turnout on the heels of the meetings over the weekend, and no protestors out in front of the State Department. They love the State Department. (Laughter.) Not entirely true, but I wanted to make sure you had the most hospitable welcome possible. And I am pleased that the turnout was so good because it expresses to me the interest that you have in what I believe is a very, very important subject.

And so ministers, ambassadors, distinguished guests, once again welcome to the State Department. And I also applaud Walter for his leadership in putting together this day of activity for you.

The topic that you will be discussing today of sovereign credit ratings may sound obscure; it may sound rather strange. In fact, I had to ask Walter once or twice, "What does it mean? What are we talking about?" And he said to me, "Well, Mr. Secretary, you have a Visa card, and when you use the Visa card, it is accepted." I said, "Yes, yes, usually." (Laughter.) He said, "The reason for that is you have a sovereign credit rating." I said, "I now understand."

And what we want to talk to you today about is sovereign credit ratings and how you can do a better job for your country, how you can do a better job for your people, how we can work with you in a more effective way, if we can explain the concept in greater detail, if we explain to you the importance of participating in this process. Because it is essential to the ability of African governments to lead their peoples to development and prosperity, and that is why it is so important for you to be here this morning.

President Bush and his administration gives high priority to helping developing countries to help themselves, and one of the best ways to do so is to encourage and help countries to follow the type of sound policies that attract investment. What we want for you, and what you want for yourself and your countries, is to attract investment; make yourself a place where people want to send their money, knowing that it will be safe, that there has been a credit basis floor established that will protect their investment. Because the facts show that development funds, both official assistance and private capital, are most effective when they go to governments that rule justly, invest in their people, and encourage economic freedom and have transparency in their systems so that the money is protected.

That was the principle animating President Bush's remarks and my remarks to the AGOA forum that we held here last October. That is the principle behind the new partnership for Africa's development launched by African leaders. That is the principle behind President Bush's new compact for development, which he unveiled last month, just before the Monterrey conference. And that is the principle behind today's first ever State Department meeting on private capital markets and credit ratings for African countries.

Under President Bush's initiative, nations that adopt sound policies will receive more assistance development -- development assistance from the United States. But even more important, these same sound policies will help attract private sector investment, and it is private capital that offers the greatest hope for development.

In 1999, for example, private sector capital flows accounted for 82 percent of the $291 billion in long-term resource flows to developing countries. The countries that attract these funds and use them wisely will enjoy faster growth and lower poverty. Attracting this money isn't easy; countries have to compete with each other for investment against other countries in the same region, and against the rest of the world. Money, capital, is a coward; it will go nowhere where it is put in fear. Money will fly and go away from corruption and bad policies. It does not want to be around conflicts. It does not want to be around political unpredictability or instability. It goes where it is welcome and where investors can be confident of a return on the resources they have put at risk.

And very often, the resources that an investor puts at risk is not just that investor's money; shareholders, stockholders, average citizens across developed nations who have invested in a particular company expect that company to make good use of the money entrusted to it. And so it's not just the big conglomerate that is taking the risk; they are taking the risk for all of the investors in that company, in that conglomerate. And when you pull it all up, you'll find it's just an average American citizen or citizen of some other developed country who has put their hard-earned dollars into an investment fund, hoping that that investment fund, that company, that conglomerate, that organization, will make a sound investment overseas in order to help the overseas investee, where the money went, to help lift that country and its people out of poverty, to put it on a road to success. But never forget that the ultimate source of the money is not some big, faceless company; it's an average citizen who just wants to make a return on their money.

In the competition for investment, sovereign credit ratings give your country an important role, an important edge. They provide an impartial baseline for investors to use in evaluating the economic environment in which they may or may not choose to make an investment. Countries without ratings are more mysterious, and therefore more risky. Why would I go to this country that does not have a rating, as opposed to some other country that does have a rating, where a baseline has been established? Why would somebody take my Visa card when it blanks out and says, no, don't take this, as opposed to another one of my Visa cards where it says this guy is good, give him whatever he wants.

It's simple. It's straightforward. It is not rocket science. By attaining a sovereign credit rating, your country will help reduce risk and encourage investment. A sovereign credit rating gives courage to capital. Four Sub-Saharan African countries already have a sovereign credit rating -- Botswana, Mauritius, Senegal and South Africa. Representatives from some of them are here today to share their experiences with you and explain how a good rating has helped their economies, helped their people, helped their country. I won't tell you their stories, I won't steal their thunder, but I think you'll find their ratings have been very important to their economies.

Ladies and gentlemen, a sovereign credit rating can be your country's ticket to the benefits of the global economy and to the capital flows that exist in the global economy, and we are here today to help you earn that ticket. By your very presence here today, you are showing an understanding of this issue; you are showing an interest in this issue. And I hope as a result of the briefings you will receive today, as the result of the experience you will have of sharing ideas with each other and listening to the four countries who have moved down this path, I hope all of you will be inspired and encouraged to go back home and see what you can do to put your country on this path by getting a sovereign credit rating.

So I wish you a good day, and I thank you so very, very much for coming out and joining us. Thank you very much.

Released on April 23, 2002

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