Social safety nets support governments; sub-sovereign governments face high social risks

Sovereigns – Emerging Markets: Social safety nets support credit quality by improving response to shocks, reducing social tensions - Well-targeted safety nets improve governments' response to shocks, mitigating the severity of economic disruption. The availability and effectiveness of these programs vary widely.

Regional and local governments: Emerging markets Infrastructure gap, inequality, weak labor markets underpin exposure to social risks - Given the scale of these challenges and the limited fiscal flexibility of emerging market RLGs, social considerations will continue to weigh on credit profiles for many years.

Sovereigns – Global Explanatory Comment: New scores depict varied and largely credit-negative impact of ESG factors - Considering exposure to environmental and social risk, governance strength, and financial and institutional buffers, ESG factors commonly have a negative impact on sovereign ratings.