The “polycrisis” and global development finance: options and dilemmas

With a worsening hunger crisis spurred by food and fuel inflation, war in Europe, slowing global growth and rising debt distress, ongoing COVID-related supply chain disruptions, an unfolding climate change reckoning, and intensifying geopolitical fracturing, the notion of a “polycrisis” has well and truly entered the global lexicon. Popularised by the economic historian Adam Tooze, the term refers to “not just a situation where you face multiple crises, [but] a situation…where the whole is even more dangerous than the sum of the parts”.

Figure 1: A schematic of the polycrisis

Source: A Tooze, Chartbook #130: Defining polycrisis – from crisis pictures to the crisis matrix.

In response, the last six months have seen an intensified focus on a range of proposals to reform the international development finance architecture in ways that might alleviate some of the worst effects of the multiple global shocks for low- and middle-income countries (LMICs). This blog canvasses several of the more prominent proposals, including the dilemmas and trade-offs they raise. As I have discussed official development assistance in a recent blog, the focus here is on debt, global reserves and the multilateral development banks (MDBs).

The first group of proposals concerns efforts to reform the global debt architecture in the face of the growing debt distress facing many developing countries, and rising risks of multiple sovereign debt defaults.

With the expiration of the Debt…