Beyond a Blueprint: Reconciling Sovereign Debt Reform Proposals with Impact and Reality

Many developing countries are experiencing high debt and debt service burdens, built up through repeated shocks, large fiscal deficits, and tighter external financing conditions. Despite these trends, the policy response remains fragmented. This is partly because there is not a single debt problem, but rather a set of overlapping liquidity and solvency pressures that affect countries differently. It is also due to rising geopolitical and financial constraints, including shrinking donor budgets, that make the conditions for ambitious debt reform especially difficult. Recent reports have advanced a wide range of creative reform proposals, but these have not always been sufficiently differentiated by country circumstances or reconciled with current political and financial constraints. This paper seeks to organize and reconcile these proposals to identify what is both needed and achievable in 2026. It does so by identifying groups of countries that face similar issues based on their macroeconomic and financial positions, providing a taxonomy of existing debt proposals, and discussing underlying assumptions based on the current geopolitical landscape that will need to be factored into the feasibility and design of any proposal.