Oxford University Press, 2024

“‘How Governments Borrow’ provides an illuminating journey into unexplored realms of sovereign debt in emerging markets. It brilliantly combines quantitative and qualitative evidence to unveil how governments strategically shape borrowing decisions, shifting the lens from the supply to the demand side. A must-read for academics and practitioners alike, Cormier skillfully challenges conventional notions, providing a nuanced understanding of how political forces influence economic governance in the realm of sovereign debt.”

-Axel Dreher, Chair of International and Development Politics, Heidelberg University

"The eco­nomic devastation of debt crises is only surpassed by major wars and pan­demics. Two key drivers of debt crises are the amount and composition of debt. We know that foreign currency debt is a substantial source of vulnerabilities. One question that is less studied and that is at the center of this important book is why some countries borrow more from official creditors such as the World Bank and the various regional development banks and others borrow more from the private sector. Cormier shows that political incentives matter and that left leaning governments are less likely to borrow from official creditors even though official creditors offer cheaper and more stable finance with respect to private lenders. This is surprising because one would expect that left-leaning governments should be less likely to use market instruments. The explanation is that official lending comes with conditionality that is politically costly for a left-leaning government. This is an intriguing result and this book is a must read for both scholars and practitioners interested in the economics and politics of sovereign debt."

 -Ugo Panizza, Pictet Chair in Finance and Development, Geneva Graduate Institute; Vice President, Centre for Economic and Policy Research

“When emerging market governments need financing, where do they turn -- and how do domestic politics and institutions constrain their choices? Cormier provides a rigorous account of the short- and long-term tradeoffs that governments face, particularly when they must appease working-class constituents. Theoretically concise, empirically sophisticated, and with rich detail from important and understudied cases in the global South, this book is an indispensable account of the changing landscape of sovereign finance in the world's most dynamic and volatile markets.” 

-Julia Gray, Professor of Political Science, University of Pennsylvania

“Sovereign borrowing is a central feature of modern states: taking on debt allows governments to finance their activities, while avoiding unpopular or difficult to implement taxation. The ways in which governments borrow, as well as the amounts they borrow, also affect countries’ financial stability. How Governments Borrow draws attention to the domestic political determinants of sovereign finance. Its multi-method empirical approach allows scholars and policymakers to better understand the life cycle of sovereign debt, as well as debt’s potential opportunities and risks.”

-Layna Mosley, Professor of Politics and International Affairs, Princeton University


How Governments Borrow shows how government borrowing choices are informed by domestic politics. It traces the fiscal policymaking process in Emerging Markets (EMs) to reveal how government partisan policy preferences help determine annual external borrowing decisions and thus patterns of debt accumulation over time. That sovereign debt composition has partisan political roots highlights the need to take demand side decisions seriously in models of sovereign debt. Borrowing governments have autonomy, their use of this autonomy is informed by partisan politics, and these politics affect the trajectory of sovereign debt in EMs.

EM governments borrow from different external sources each year, leading them to build different debt structures over time. Some prioritize cheap but conditional official credit, which constrains policy autonomy yet enhances debt sustainability. Others prioritize comparatively expensive bond markets, which enhances policy autonomy but brings more expensive repayment obligations on to national balance sheets. As countries accumulate debt, the borrowing choices they make come to have important effects on fiscal space, debt sustainability, and development. That sovereign debt composition has partisan political roots provides insights for scholars in political science, international relations, economics, sociology, and public administration that work on sovereign debt.

Table of Contents

1: Introduction
2: Partisan Politics and Constrained Institutions: A Model of Sovereign Debt Accumulation in Emerging Markets
3: Testing the Partisan Model
4: South Africa & Botswana
5: Peru
6: Thailand
7: Conclusion