How are governments of Global South countries likely to navigate the current financial environment -- facing fuel and food price shocks, cuts in foreign aid and ongoing development needs? What does the case of Senegal tell us about the domestic politics of crisis and adjustment, as well as about the politics of debt transparency? How has China’s role in overseas lending and in international financial institutions evolved over time, and what are the implications of these shifts for development and governance? And what are the prospects for the future role of the dollar, especially given concerns about U.S. fiscal policy and U.S. foreign policy?
On the sidelines of the spring meetings of the International Monetary Fund and World Bank, Princeton Sovereign Finance Lab’s annual conference, organized by Layna Mosley, featured academic research and policy discussions related to these and other issues. Our two-day meeting, held at Princeton SPIA’s Washington, DC location, featured twenty-six speakers and moderators over five sessions, as well as many opportunities for informal conversations during meals and breaks. Approximately eighty individuals, from academic institutions, intergovernmental organizations, national governments, civil society groups and the private sector, participated in the event.
While the overarching focus of the conference was on how domestic and international politics affect government decisions over borrowing, debt servicing and default, as well as the international financial architecture, the conversations were wide-ranging. They occurred against a backdrop of great uncertainty in the international financial system, given dramatic shifts in U.S. foreign policy as well as (in the words of one panelist) “more questioning of the dollar and of U.S. Treasuries than ever before.” As always, recent events – including regime change in Venezuela; the gradual expansion of the offshore renminbi bond market; the increased market demand for supranational and agency debt; and the launch of the UNCTAD-based Borrowers’ Platform – provided useful focal points for linking academic research with ongoing challenges.
We discussed the growth in domestic (versus external) debt in low- and middle-income countries, and the vulnerabilities this might create, especially for domestic financial sectors. Domestic debt also presents challenges for the existing framework for evaluating debt sustainability, which is currently under review by the IMF and World Bank. We also debated the conditions under which debt restructuring, once agreed, allows countries to achieve economic recovery and growth. We considered the preferred creditor status of international financial institutions and multilateral development banks. Others turned their attention to climate finance, noting the gap between the needs especially of countries in the Global South and the supply from investors and creditors in the Global North.
And no gathering of “debt geeks” is complete, it seems, without a discussion of transparency. Participants discussed not only how better to encourage borrowing governments as well as creditors to disclose the amounts and terms of their loans, but also how political considerations may interfere with broader efforts toward debt transparency and fiscal accountability.
The Third Annual Politics of Sovereign Finance conference was sponsored by the Princeton Sovereign Finance Lab, the Niehaus Center for Globalization and Governance, the Julis-Rabinowitz Center for Public Policy and Finance, the Princeton School of Public and International Affairs, and the NYU Sovereign Debt Network. We look forward to gathering again in Spring 2027.