Description
After more than a decade of low interest rates and significantly expanded central bank balance sheets, the resurgence of inflation in 2021-2022 triggered a global turn toward monetary tightening. Rising government borrowing costs alongside secular increases in public debt have placed growing strains on government finances, reactivating forms of market discipline previously subdued in many countries in the post-2008 period. Even in wealthy countries, the scope of macroeconomic policy has been dramatically narrowed, sharpening political conflict over the costs of debt repayment.
This paper develops a comparative-historical framework to analyse the evolving global politics of sovereign debt repayment in the current conjuncture. It introduces the concept of fiscal-monetary regimes to examine how states mediate distributional conflicts over taxation, spending, and debt repayment at different positions within the global credit hierarchy. The paper situates this framework within historical configurations of sovereign debt and world order, from the era of British empire through US hegemony, to examine mounting tensions within the contemporary global political economy. Drawing on recent flashpoints, such as Liz Truss’s 2022 premiership in the UK and Kenya’s 2024 anti-austerity protests, the paper highlights growing tensions and uneven pressures within the global hierarchy of sovereign debt repayment across select OECD and Global South countries.
