This research compares the global debt trends in the aftermath of the COVID-19 pandemic, focusing on economies that frame the North and South divide. The research centers on debt ratios, which serve as indicators of countries’ ability to finance recovery and development projects. The study period runs from 2015 to 2022 and follows the IMF’s country classification, which divides the world into advanced economies (AE) and emerging market and developing economies (EMDE). The research employs panel data regressions to assess three key debt ratios—external debt to Gross Domestic Product (GDP), external debt to exports, and public debt to GDP—against various pandemic-related indicators and control variables. The analysis provides three major contributions. Firstly, an examination of external and public debt burdens is conducted, showing that escalated external and public debt burdens in EMDE contrast with increasing public debt in AE, primarily due to fiscal stimulus. Secondly, it is argued that the ongoing pandemic has intensified the widening economic gap between the North (AE) and the south (EMDE). Thirdly, a review is presented of both orthodox and heterodox policies identified in existing literature that are considered capable of mitigating external vulnerabilities in EMDE. Findings highlight the critical need for multifaceted measures to address debt vulnerability and promote sustainable economic recovery in a post-pandemic world.

Sovereign debt crises can be self-fulfilling, as borrowing rates rise in expectation of default, thereby increasing the likelihood of default. To determine whether the Portuguese sovereign debt crisis of 2010–2013 was primarily driven by self-fulfilling expectations or macroeconomic fundamentals, this paper brings to the data a multiple equilibria model in which default expectations can influence the probability of default independently of fundamentals. To do this, we estimate the probability of default for the period 2000–2020, covering both tranquil and crisis episodes, using a Markov-switching regime framework, following the Jeanne and Masson (J Int Econ 50(2):327–350, 2000. https://doi.org/10.1016/S0022-1996(99)00007-0 ) approach. The results reveal: (i) the presence of two distinct regimes—tranquil and crisis—with significantly different default probabilities; (ii) the transition from a low to a high default probability regime is unrelated to macroeconomic fundamentals, highlighting the role of expectations, and suggesting that the debt crisis was partially self-fulfilling; and (iii) the default probability is jointly determined by fundamentals (debt-to-GDP, growth, international risk aversion), and market expectations, with their relative influence depending on whether the economy is in a tranquil or crisis regime.

This article explores the relationship between polycrises, the weaknesses of neoliberal models, and the evolving role of the State in managing uncertainty and promoting resilience. It argues that neoliberal policies, marked by deregulation and reduced State intervention, have deepened structural vulnerabilities, making societies more susceptible to systemic shocks. In response to interconnected crises, the State must be repositioned to play a more active role in market regulation, global coordination, and social protection. This shift calls for adaptive governance, and enhanced international cooperation, rather than a return to traditional interventionism. The study employs a qualitative methodology, using descriptive, explanatory, and interpretative approaches to analyse political dynamics in the twenty-first century.