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2. Navigating Debt Sustainability: An In-Depth Analysis of the IMF's Debt Sustainability Framework and Its Critique
- Author:
- Hasan Cömert, Güney Düzçay, and T. Sabri Öncü
- Publication Date:
- 01-2025
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- This paper evaluates the IMF's debt sustainability analyses (DSAs), delving into their methodologies and implications and highlighting their problems. Since 2002, the DSAs have been the cornerstone of the IMF programs, providing the primary analytical tool to justify and determine the paths and targets specified. Although the DSAs evolved significantly over time, they have severe foundational problems. They rely heavily on strong assumptions and staff judgments, and thereby, they are primarily non-transparent. Secondly, there are significant issues regarding the conduct of DSAs. They have grown excessively complex, hindering consensus on components without necessarily improving assessment quality. Thirdly, the IMF makes very high-stakes decisions with low precision, relying on persistent over-optimism in growth forecasting and paving the way for tighter fiscal policies. Fourthly, the debt dynamics equation of DSAs is inconsistent with stock flow dynamics because it focuses heavily on the primary balance as the main driver. Fifthly, the IMF's framework does not pay enough attention to the underlying reasons for accumulating external debt in developing nations. It often treats external borrowing as a substitute for domestic debt without accounting for the asymmetric international financial architecture.
- Topic:
- Debt, Fiscal Policy, Sustainability, and IMF
- Political Geography:
- Global Focus
3. Allocating international loss and damage finance through national climate funds: prospects for African LDCs
- Author:
- Mariya Aleksandrova, Washington Onyango Kanyangi, Assouhan Jonas Atchadé, Joanes Atela, and Charles Tonui
- Publication Date:
- 01-2025
- Content Type:
- Policy Brief
- Institution:
- German Institute of Development and Sustainability (IDOS)
- Abstract:
- The new loss and damage funding framework under the United Nations Framework Convention on Climate Change (UNFCCC) emphasises the importance of channelling support through national systems and mechanisms. This approach could prove particularly challenging for African least developed ountries (LDCs), which have been prioritised for support. These countries remain confronted with major challenges to access and utilise international climate finance, especially through direct access. National climate funds (NCFs) can have a potential role in delivering international loss and damage finance to African LDCs that is in line with their national priorities. NCFs can be defined as entities mandated to finance the implementation of national climate strategies and to manage and/or coordinate domestic and international sources of climate finance. NCFs can enhance the institutional capacities of countries by supporting the development of loss and damage strategies, facilitating access to international funding, aligning resource allocation with local priorities, and ensuring the effective tracking of loss and damage finance. This Policy Brief explores the role of NCFs in the evolving global loss and damage finance architecture with a focus on African LDCs. We examine the design features of five NCFs against criteria for assessing their relevance to support measures that address loss and damage. The studied NCFs are: the Benin National Fund for Environment and Climate, Ethiopia’s Climate-Resilient Green Economy Facility, Burkina Faso’s Intervention Fund for the Environment, the Mali Climate Fund and the Rwanda Green Climate Fund. Key policy messages • Despite that only a limited number of African LDCs have established NCFs, these demonstrate their potential to channel loss and damage funding, especially for environmental rehabilitation and climate-resilient recovery efforts. Particular strengths relate to their role in priority sectors for climate change adaptation and in relation to biodiversity loss, drought, land degradation and desertification. • Existing NCFs in African LDCs have inadequate mandates and capacities to manage the complex funding needed for loss and damage. An emerging issue is their presently limited role in linking climate and disaster risk finance. • The NCFs of African LDCs can be instrumental to promote coherence and complementarity with other funding sources at the national level. Countries must establish comprehensive legislative, policy and regulatory frameworks to define the institutional roles of NCFs in loss and damage response, supported by international funding to strengthen their institutional capacities.
- Topic:
- Climate Change, Development, Climate Finance, and Sustainability
- Political Geography:
- Africa
4. How to deal with the current debt crisis of developing countries?
- Author:
- Jürgen K. Zattler
- Publication Date:
- 01-2025
- Content Type:
- Working Paper
- Institution:
- German Institute of Development and Sustainability (IDOS)
- Abstract:
- Many countries are still struggling with high and rising debt levels. The economic impact of the pandemic, as well as some longer-term structural factors, explain this situation. The key problem is the high level of debt service relative to government revenues, which makes it difficult to address growing development, social and climate challenges. As this is a particular problem for low-income countries (LICs) and lower-middle-income countries (LMICs), the focus should be on these countries. But even within this group, the situation is not uniform. A differentiated approach with different components is therefore needed, depending on countries’ individual situations and their own priorities and choices. There have been many contributions to this debate and proposals on how to address the current problems. This paper builds on some of those contributions presenting a practical and coherent approach to address the current debt crisis which focuses as far as possible on incentives for debtor countries and private creditors. Importantly, a distinction should be made between countries with high debt levels that are at risk of debt distress and those with liquidity problems. Therefore, debt sustainability assessments (DSAs) are needed to decide which countries (a) are not in debt distress, (b) have an insolvency problem, and (c) have a liquidity problem. The International Monetary Fund (IMF) and World Bank should be asked to classify all LICs and LMICs accordingly, based on updated DSAs, using a prudent approach with conservative projections. These DSAs must emphasise debt service indicators. For countries with liquidity problems, they need to identify those countries where the problem is of a longer-term nature, with a risk that the liquidity squeeze will turn into acute debt distress. All LICs and LMICs facing insolvency or liquidity problems should be offered a moratorium similar to the Debt Service Suspension Initiative (DSSI) to give them breathing space (of 2-3 years). The expectation is that this would help countries with liquidity problems to maintain basic social and economic services until market conditions improve or debt relief is implemented. In cases where debt service remains high after the moratorium expires, the country would be expected to request debt relief. Countries at risk of default would be expected to use the period of the moratorium to engage promptly in restructuring discussions and to prepare negotiations with creditors on a debt relief programme. The IMF would make its resources conditional on a suspension of debt service payments. The question is whether private creditors, including sovereign bondholders, should be required to participate. It is suggested that a distinction be made between two categories of countries. For countries at risk of insolvency, including those with longer-term liquidity problems, the moratorium should be conditional on private participation on comparable terms, as their creditworthiness is likely to be affected anyway. In contrast, with countries facing short-term liquidity problems the approach should be more flexible. While pressure on private creditors to join a standstill should be maximised, this should be complemented by strong incentives. Countries with unsustainable debt would request treatment under a reformed G20 Common Framework for Debt Treatment (CF) with the option of a more comprehensive debt relief arrangement (“CF+”), including the following enhanced or new components: • At the beginning of the process, countries would have to present a “Just Green Transition Programme” (JGTP), monitored by the IMF and the World Bank. • The CF+ would be accompanied by more comprehensive debt relief, thus creating more fiscal space to allow the country to finance transformational and social investments. Debt service after rescheduling should be based on DSAs, which pay greater attention to Sustainable Development Goal (SDG) investments and countries’ particular circumstances, leaving countries with substantial room to absorb shocks. The objective would be to limit the debt burden to external creditors as a share of revenue after rescheduling to around 10-15 per cent. • For those countries where a large part of the debt service will be due to multilateral creditors, the involvement of multilateral institutions should be considered. This should be the case for those multilateral creditors which are not willing, or able, to provide positive net flows at highly concessional terms. • The issuance of “Brady-like” bonds could be considered for specific country cases. The issuance of Brady-like bonds could be an incentive to maximise private creditor participation in exchanging old debt for new bonds with a significant discount or “haircut”.
- Topic:
- Debt, Development, Sustainability, and COVID-19
- Political Geography:
- Global Focus
5. The Impact of Energy Security on Inter-Relations between the Gulf Cooperation Council Countries
- Author:
- Haila Al-Mekaimi
- Publication Date:
- 01-2025
- Content Type:
- Journal Article
- Journal:
- The Rest: Journal of Politics and Development
- Institution:
- Centre for Strategic Research and Analysis (CESRAN)
- Abstract:
- The concept of energy security in the Arabian Gulf region refers to the ability to meet the energy needs of countries in the region without interruption in a way that guarantees the economic, social, and political stability of these countries. The concept of energy security in the Arabian Gulf includes several aspects: Ensuring strategic supplies. This relates to ensuring the continuous availability of oil and gas to producing and consuming countries in the region and beyond, avoiding any disturbances in the global market, and ensuring price stability. Energy diversification means diversifying energy sources and relying on them. Diverse energy, such as renewable energy, reduces total dependence on oil and gas and provides future economic opportunities. Strengthening energy independence: This includes developing national capabilities in the energy sectors, including developing the infrastructure and technologies necessary to extract and refine oil and gas and generate renewable energy. Achieving environmental sustainability: This requires achieving a balance between meeting energy needs, protecting the environment, and reducing harmful emissions. Regional and international cooperation Energy security also consists of enhancing cooperation between countries in the region and other countries in the field of energy, whether in exchanging knowledge and technology or in developing joint projects for generating and transmitting energy. This paper adopts a comparative methodology between Gulf countries to measure their ability to confront energy security in light of climate change. This paper reaches the most prominent conclusion, which is that the Gulf countries’ varying capabilities in achieving future energy security will play a major role in reshaping the inter-relations between the Gulf countries.
- Topic:
- Climate Change, Diversification, Sustainability, Gulf Cooperation Council, Regional Politics, and Energy Security
- Political Geography:
- Middle East and Gulf Nations
6. Distinguishing Among Climate Change-Related Risks
- Author:
- Lisa Sachs, Denise Hearn, Matt Goldklang, and Perrine Toledano
- Publication Date:
- 02-2025
- Content Type:
- Special Report
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- Understanding the diverse types of climate change-related risks is crucial for developing effective strategies to address the global climate crisis. A holistic yet disaggregated approach allows for a comprehensive view of the challenges while enabling targeted responses from various stakeholders. This document outlines three main categories of climate-related risks: planetary, economic, and financial, detailing their relevance to various stakeholders, timeframes, and potential response strategies. This short brief aims to disentangle the complex nature of risk discussions for productive discourse and appropriate risk management approaches for different stakeholders. In practice, discussions related to assessing and responding to climate change risk have conflated categories of risk, confusing discussions and undermining the effectiveness of related strategies. We hope this brief can bring clarity and rigor to analyses of risk and support constructive discussion among policymakers, financial institutions, social sector actors, and the public. We plan to follow this short briefing with a longer report including more detailed analysis, integrating feedback to these initial ideas.
- Topic:
- Climate Change, Finance, Economy, Investment, Risk, and Sustainability
- Political Geography:
- Global Focus
7. Reforming Iran’s Energy Policy: Strategies for Sustainability, Subsidies, and Global Integration
- Author:
- Behdad Gilzad Kohan and Hamid Dahouei
- Publication Date:
- 04-2025
- Content Type:
- Journal Article
- Journal:
- Journal of Public and International Affairs (JPIA)
- Institution:
- School of Public and International Affairs (SPIA), Princeton University
- Abstract:
- Iran’s energy sector, rich in natural gifts and brimming with potential, struggles to realize its promise due to systemic inefficiencies, heavy dependence on fossil fuels, outdated infrastructure, and the weight of international sanctions. These challenges plague Iran with recurring energy crises, including seasonal energy shortages, environmental degradation, and socio-economic discontent. This article investigates the root causes of Iran’s energy challenges and offers a comprehensive analysis of the critical deficiencies of Iranian energy policies. Based on these insights, the article proposes a strategic roadmap with immediate, medium-term, and long-term policy recommendations to stabilize the sector, most critical of which include subsidy reforms, ambitious renewable energy integration, and energy efficiency improvements. The proposed reforms emphasize the importance of transparent governance, targeted investments, and stakeholder engagement to achieve meaningful change. By aligning its energy policies with global sustainability trends and addressing domestic inefficiencies, Iran can transform its energy sector into a model of innovation and equity.
- Topic:
- Sanctions, Reform, Fossil Fuels, Sustainability, Subsidies, and Energy Sector
- Political Geography:
- Iran and Middle East
8. Europe’s next watershed – how liberal Europe should react to Trump 2.0
- Author:
- Fabian Zuleeg
- Publication Date:
- 01-2025
- Content Type:
- Working Paper
- Institution:
- European Policy Centre (EPC)
- Abstract:
- The return of Donald Trump to the White House and his “America first” doctrine inevitably poses a fundamental challenge for the EU. Trump’s second presidency represents a new watershed moment: the policies of the next US administration are not just likely to put Europe at a global disadvantage, they will threaten its core objectives of prosperity, sustainability, security, and democracy. This is why European countries will have to act decisively to safeguard the bloc’s unity and strengthen its autonomy in a changed world. Assuming that a second Trump administration will resemble the first would be a serious error. Trump has become more extreme in his policy positions, while facing fewer constraints and operating in a more favourable international environment. As a result, preparing for a worst-case scenario may be a wise approach. Trump’s adversarial, zero-sum approach to international trade is likely to undermine the structures and processes of multilateral economic governance. Measures such as tariffs also threaten the EU’s growth and competitiveness and risk deepening divisions within the bloc. Global progress towards greater sustainability is certain to suffer. A disengagement on behalf of the US from its leadership role in environmental and climate governance will be a significant setback in these efforts. Should the US turn away from its climate goals, this would send a strong signal to other countries that these objectives are no longer a priority. On security, any potential benefit that a Trump presidency might produce in terms of strengthening EU unity is strongly undermined by his stance on Ukraine, which is set to increase the threat facing Europe from Russia. A US-imposed ceasefire would be no guarantee of lasting peace or security for Ukraine or for Europe. In response, the EU and its members will have to take a much bolder and more proactive role, sharply increasing Europe’s own military capabilities and spending. Policies that signal a tolerance for the use of open and covert force, in violation of international law, will also have profound consequences for global security. Far-right and anti-democratic forces within Europe are likely to be emboldened by an incoming Trump government. His actions to exploit Europe’s political divides are set to put significant pressure on European integration – a project Trump will have no qualms in undermining. The entrenchment and normalisation of Trump’s style of populistic, divisive politics and ‘us against them’ rhetoric risks eroding democratic debate more broadly. His amplification of falsehoods and disinformation will undermine public trust in the US and beyond, and could also boost political figures adopting similar strategies in Europe. There is strong potential for Trump’s anti-establishment narrative to gain further ground in Europe, and Europe’s illiberal, regressive and new-nativist forces will no doubt seek to harness this to increase their power. Should they be successful, there is a very real risk of the EU becoming hollowed-out and ineffectual. In this context, achieving consensus and acting with unity will be a greater challenge than ever for the EU27. Those within the EU who are prepared to take the necessary steps to rise to the challenge posed by Trump may have to explore unconventional forms of cooperation to act effectively. Moving forward in this way poses its own legal and political risks. But with European democracy at stake, it may be the only path to achieving the necessary level of ambition and unity to mount a strong response to Trump 2.0.
- Topic:
- Security, Foreign Policy, European Union, Donald Trump, Sustainability, and Democratic Backsliding
- Political Geography:
- Europe
9. Navigating Malaysia’s National Shipping Carbon Accounting Framework towards Alignment with the IMO GHG Reduction Strategy
- Author:
- Egbert Adolf Naintin, Syuhaida Ismail, and Datuk Hj. Dickson Dollah
- Publication Date:
- 03-2025
- Content Type:
- Working Paper
- Institution:
- Maritime Institute of Malaysia
- Abstract:
- Malaysia is taking significant strides in modernising how it accounts for carbon emissions in the shipping sector, aligning with its ongoing International Maritime Organization (IMO) lobbying strategy and reinforcing its commitment to global maritime sustainability. Nonetheless, this progress is not just about keeping up with international standards, yet also about ensuring that Malaysia plays a proactive role in climate action for future generations. By shifting from an outdated method of self-regulated individual ships to establishing a proactive national initiative, Malaysia is paving the way for a more sustainable shipping sector.
- Topic:
- Climate Change, Maritime, Sustainability, Carbon Emissions, Shipping, and International Maritime Organization (IMO)
- Political Geography:
- Malaysia and Indo-Pacific
10. Rethinking development finance in Tajikistan: Towards more sustainable and inclusive fiscal pathways
- Author:
- Jovid Ikromi
- Publication Date:
- 05-2025
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- This paper rethinks development finance in Tajikistan through the lens of fiscal sociology, arguing that sustained reliance on foreign aid and external borrowing may weaken state-society trust and erode institutional legitimacy. Anchored in the political economy of development finance, the paper explores how alternative financing strategies, such as tax reform, diaspora bonds, thematic bonds, and blended finance, interact with domestic institutions, investor confidence, and citizen perceptions of fiscal fairness. While external flows have financed essential infrastructure and social programmes, they have also limited incentives for domestic resource mobilization and weakened public accountability. Issues of debt sustainability increasingly constrain long-term planning, while climate finance is emerging as both a challenge and an opportunity for diversifying development funding. Drawing on policy analysis and secondary data, the paper shows that financial instruments succeed not only through technical design but through their ability to reinforce the fiscal social contract. Tajikistan’s case illustrates that without improvements in governance, transparency, and citizen engagement, even well-structured innovations in development finance may fail to gain traction. The findings offer practical insights for low-income countries seeking to reduce aid dependency while building more credible and inclusive systems of public finance.
- Topic:
- Development, Foreign Aid, Finance, Climate Finance, and Sustainability
- Political Geography:
- Central Asia and Tajikistan