NOTRE DAME, Ind. — As developing nations face an unprecedented economic bottleneck, international policymakers, financial experts, and leading scholars gathered at the University of Notre Dame on May 8–9, 2026, for a high-level colloquium titled "Debt Relief in the Global South." Hosted by the BIG Lab within the Pulte Institute for Global Development, part of the Keough School of Global Affairs, and sponsored by the Gates Foundation, the two-day event focused on dismantling the systemic failures of the current international debt architecture to forge a path toward global financial equity, human dignity, and sustainable growth.
The Weight of Converging Global Challenges
Michael Pries, Notre Dame's Associate Dean for the Social Sciences, opened the event by framing the high stakes of modern sovereign debt. Participants emphasized that a modern "poly-crisis" driven by compounding world shocks—including the lingering effects of the COVID-19 pandemic, escalating trade tariffs, geopolitical wars, soaring interest rates, and severe climate crises —has severely worsened extreme poverty, which currently impacts 700 million individuals worldwide.
Today, a staggering 3.3 billion people reside in countries forced to allocate more national funds to debt servicing than to vital public sectors like healthcare and education. Annual debt servicing consumes approximately 4.4 percent of gross domestic product (GDP) in affected areas. This fiscal strain is further exacerbated by an unsustainable global surge in short-term, high-interest bond-holder debt paired with rigid, highly inefficient domestic tax collection systems. Consequently, net financial flows to the Global South have turned negative, plummeting back to the restrictive levels seen before the last major international debt Jubilee.
Reforming a Fractured Financial Architecture
A central theme of the discussions was the fracturing of the traditional sovereign creditor base. Opening panelists Ana María Ibáñez (Inter-American Development Bank), Kevin Gallagher (Boston University), and Joshua Eisenman (Keough School of Global Affairs) evaluated how geopolitical shifts complicate international debt restructuring. Eisenman outlined China's multifaceted, strategic role as a primary bilateral lender, categorizing its borrowers into three distinct tiers: countries facing profound economic problems (such as Nigeria, where repayments are managed to preserve vital oil partnerships), nations receiving extended short-term debt relief, and critical strategic hubs like Pakistan and Laos. Laos currently owes 20 percent of its debt to China, which has directly taken over ownership of its key railroad infrastructure, while Pakistan owes $15 billion in energy-related debt alone. Eisenman noted that this fragmented multi-polar landscape risks creating a modern "Kindleberger trap" reminiscent of the 1930s, where a lack of singular global leadership leaves the international community unable to enforce systemic stability.
In his keynote addressmReza Baqir, former Governor of the State Bank of Pakistan and current Managing Director at Alvarez & Marsal, delivered a candid critique of structural institutional failures. Baqir highlighted that 54 countries currently sit in debt distress or at high risk , noting that nations like Pakistan spend 15 to 20 percent of their entire budget merely servicing debt. He warned that the international community's response to the post-pandemic crisis has been "too little, too late," taking far longer to coordinate restructuring relief than in previous historical windows.
Critiquing the G20’s "Common Framework" as a deeply flawed mechanism due to inadequate debt relief levels, limited country coverage, and a lack of fair, uniform treatment among private bond-holders, Baqir proposed a radical overhaul. He argued that the Paris Club and official creditors must abandon strict unanimity requirements in favor of majority voting. Drawing a parallel to the World Trade Organization's 1995 transition from consensus-based to majority-rule decision-making, Baqir maintained that majority rules could break institutional gridlock. Furthermore, he advocated for proactive "pre-program monitoring" by international bodies to incentivize domestic policymakers to address structural fiscal flaws before a full-blown sovereign default erupts.
Historical Lessons and Legal Realities
The second day of the colloquium turned to historical and legal precedents. Mark Wright (Federal Reserve Bank of St. Louis) observed that while official government-to-government debt historically dominated the global landscape at roughly 80 percent, the modern market has shifted drastically toward uncoordinated private sector bonds. Anna Gelpern (Georgetown University Law School) emphasized the unique legal gridlock of sovereign debt, noting that while contracts matter, they are notoriously difficult to enforce across borders. Gelpern observed that defaulting on public debt serves as a double-edged sword, functioning as both an asset and a liability that ultimately deprives entire citizenries of baseline public services. Along with World Bank Chief Economist Aart Kraay, the panelists assessed the legacy of the 2000 Highly Indebted Poor Countries (HIPC) initiative, acknowledging the historical challenges macro models face in accurately predicting sovereign debt crises.
A Moral Imperative: Faith, Solidarity, and Agency
The colloquium concluded with a forward-looking panel examining the ethical dimensions of debt relief. Gerald Powers, Director of Catholic Peacebuilding Studies at Notre Dame, reminded attendees of the historical power of faith-based advocacy. Powers recalled the late 1990s and early 2000s Jubilee movement, where the U.S. Conference of Catholic Bishops successfully bridged deep partisan divides, working across the aisle with leaders like Senator Jesse Helms and Condoleezza Rice to pass historic debt relief. In today's deeply polarized geopolitical environment, Powers noted that Pope Francis and now Pope Leo continue to serve as a vital global counter-weight to intense nationalism.
Msgr. Martin Schlag (University of St. Thomas) expanded on the Catholic ethical perspective, highlighting that past debt relief initiatives failed to create lasting macro-economic stability because the underlying global industry continues to require the poor to remain poor. Echoing principles of Catholic social teaching, Schlag asserted that future loans must strictly serve productive, human-centric development rather than foster cycles of financial dependency.
The conversation wrapped up with an emphasizing call for systemic justice from Serah Makka, Africa Executive Director of the ONE Campaign. Pointing to the recent launch of a new "Borrower's Club" in April 2026 designed to help distressed nations share contract information and build collective legal leverage , Makka urged a structural shift toward treating developing nations as equal partners rather than dependents. Noting that Africa faces the highest interest rates in the world, she framed the issue as one of fundamental human rights.
"The antidote to hopelessness is agency," Makka concluded, challenging the international community to transform academic insights into immediate policy reforms. "Knowledge is power only when it is applied."
Originally published by at biglab.nd.edu on May 11, 2026.