Economic sanctions are a central tool of economic coercion, yet their effects on state- to-state lending remain largely unclear. This study argues that sanctions reduce bilateral official lending from sanctioning creditor states to sanctioned debtor states. It further argues that third-party lending reflects economic and political ties: third- party states more exposed to sanctioning states reduce lending, while those more exposed to the sanctioned state increase assistance. Using sanctions data from the Global Sanctions Database and official lending data from the World Bank, this study analyzes 120 emerging and developing countries since the end of the Cold War. Based on gravity and event study models, the analysis shows that economic sanctions significantly reduce direct bilateral official lending by up to one-third. In contrast, indirect effects are not driven by economic ties, but by political ties: The less politically aligned a third state is with the sanctioned state, the more it reduces bilateral official lending when another state imposes economic sanctions on that state. These findings contribute to broader debates on the growing use of economic sanctions and the rising geopolitical fragmentation of global capital flows.