Too much of a good thing? China, the IMF, and Sovereign Debt Crises

About this event

Abstract: How effective are international institutions in light of the diverging preferences of major economies? The landscape of official finance has changed dramatically over the last two decades. Whereas the advanced economies of the OECD once dominated state-to-state lending, China has rapidly expanded its loan portfolio, occupying an ever-greater share of borrowing countries’ debt stocks. We argue that because China has different preferences on official lending and debt restructuring than other bilateral creditors, it has disrupted the IMF’s operations in responding to sovereign debt crises. We collect original data on the timing and intensity of IMF negotiations to investigate whether countries’ exposure to Chinese debt leads to longer, drawn-out negotiations during debt crises. We find that countries in debt crisis with larger shares of official debt owed to China undergo more rounds of negotiation with the IMF before they receive an IMF program. Once an IMF program has been negotiated, however, borrowers with larger debts to China receive more rapid approval of their programs. Our findings shed light on how the international architecture for sovereign debt is functioning in an era of more diversified official debt.

Co-author: Lauren L. Ferry, University of Mississippi

Alexandra Zeitz is Assistant Professor of Political Science at Concordia University in Montréal, Canada. Her work focuses on international political economy, particularly developing countries’ position in the international financial system. Her research has appeared in the British Journal of Political Science, International Studies Quarterly, the Review of International Organizations, and the Review of International Political Economy. In 2019-2020, Zeitz was a Max Weber Fellow at the European University Institute. She received her doctorate in International Relations from the University of Oxford in 2019.

*Please note that this is a hybrid-format meeting. In-person meeting will take place in Leacock Building #429, McGill University and will be broadcast on Zoom. Please register if you wish to attend the talk in either of these formats.