The U.S. has temporarily lifted economic sanctions on Venezuela, leading to a sharp resurgence of investor interest. Heightened tensions over the Guyana Essequibo region and the recent order to arrest opposition members in Venezuela seem to undermine Venezuela’s negotiated position to end sanctions and raise the possibility of the reimposition of “snapback sanctions.”

Rising global tensions and political divides could hinder multilateral efforts to achieve sustainable development goals. Global economic performance remains subdued, with significant regional disparities; a contributing factor has been the prolonged stagnation in global capital flows over the past 15 years amid post-financial crisis regulatory initiatives.

Sovereign debt vulnerabilities in emerging markets and developing economies—already worrying—are expected to intensify in the face of higher borrowing costs.

Our New York Climate Week events last week—which included an IIF Transition Finance Workshop, an IIF/TCW Blended Finance Roundtable, and the launch of the IIF Global Debt Monitor—focused on the changing landscape for net-zero transition planning and addressing the challenges of mobilizing capital for climate action.

Over the past 15 years, EM government debt levels have soared, with domestic debt accounting for much of the increase. Debt issued under foreign law now constitutes only about 10% of total borrowing by EM governments.

Emerging market sovereign borrowers have raised some $85 billion from international debt markets to date this year, up from over $60 billion during the same period last year. However, this pace is still significantly weaker than it was pre-pandemic ($150 billion per year on average from 2016-2019).