Foreign aid flows from the United States Agency for International Development (USAID) to emerging markets totaled more than forty billion dollars in fiscal year 2023, a sum often portrayed as a lifeline for growth and stability, and one that has drawn intense attention since the agency’s official shutdown on July 1. But here’s what has gotten almost no attention: the $3.5 trillion in commercial sovereign debt of emerging markets that can be destabilized overnight as global financial uncertainty increases. In recent months, emerging markets’ sovereign and corporate bonds have been under constant strain, largely driven by erratic fiscal and trade policy signals in the United States.

While the halting of foreign aid is a serious mid- and long-term discussion, the disruption caused by rapid

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