What do rating agencies expect from governments to maintain a high credit rating?

Rating agencies expect governments to have a written investment policy as part of their criteria for maintaining a high credit rating. A well-defined investment policy provides a framework for sound financial management by outlining guidelines for investment objectives, risk management, asset allocation, and compliance with legal and regulatory requirements. This demonstrates to rating agencies that the government is committed to prudent financial practices and is taking steps to manage its investments responsibly.

Having a written investment policy is crucial because it helps ensure transparency and accountability in investment decisions. It also enables governments to have clear targets and evaluate their performance against set metrics, which can bolster confidence among investors and stakeholders, thereby positively influencing credit ratings.

In contrast, the other options may not specifically align with the core expectations of rating agencies. Maintaining a fund balance, avoiding derivative securities, or actively issuing bonds may reflect certain financial practices, but they do not encapsulate the comprehensive approach to governance and financial strategy signaled by having a structured and formal investment policy.