Reconceptualising sovereign debt in international law

In: Law, Democracy & Development, Band 26, S. 1-37

Abstract

Recurring debt crises and innovations in the sovereign debt landscape over the past couple of decades have rekindled interest in the nature and forms of sovereign debt. There are multiple outlets for contracting loans, all with different policies, principles and procedures. For instance, resource-backed loans have provided an additional option for resource-rich countries in Africa and Latin America to support their quest for infrastructural development. However, these and other innovations in sovereign financing may affect the dominant understanding and dynamics of sovereign debt governance. The silence of the literature on the place of development in the conceptualisation of sovereign debt is striking. Therefore, using doctrinal methodology, this article proposes a reconceptualization of sovereign debt to reflect these innovations, gaps, and emerging trends. It is argued that sovereign financing needs a theoretical underpinning linked to the objective of development. This article proposes a distinction between development-driven and non-development-driven sovereign debt. It is argued that a development-based conception of sovereign debt would make the recurring legitimacy issues surrounding the character of the sovereign relevant and more reflective of contemporary changes in the practice of sovereign financing.