Over the past decade, public debt has risen significantly worldwide following adverse shocks – namely the global financial crisis and the pandemic – and against the backdrop of accommodative monetary policies in advanced economies that enabled governments to borrow at a low cost. However, recent interest rates hikes, coupled with ongoing high inflation, pose new challenges to debt sustainability and fiscal policy. Moreover, continued weak growth by historical standards may make it more difficult in some cases to achieve fiscal consolidation and stabilization. Meanwhile, longer-term trends such as climate change and aging populations add further pressure on budgets, including due to higher investment needs, and can negatively affect growth. This underscores the need to have balance between tax revenues and public expenditures to safeguard long-term fiscal sustainability.

This seminar addresses debt sustainability and fiscal policy issues from three viewpoints. The first session will consist of a dialogue between officials from regional institutions with a prominent academic expert on the implications of inter alia higher interest rates and inflation for debt sustainability analysis. The second session will aim at obtaining a deeper understanding of debt and fiscal challenges and policy priorities going forward, globally and across different regions. The last session will examine how the international community and regional partners can help countries navigate such challenges and advance reforms that reduce debt vulnerabilities and make economies greener, more resilient, and inclusive.

Over the past decade, public debt has risen significantly worldwide following adverse shocks – namely the global financial crisis and the pandemic – and against the backdrop of accommodative monetary policies in advanced economies that enabled governments to borrow at a low cost. However, recent interest rates hikes, coupled with ongoing high inflation, pose new challenges to debt sustainability and fiscal policy. Moreover, continued weak growth by historical standards may make it more difficult in some cases to achieve fiscal consolidation and stabilization. Meanwhile, longer-term trends such as climate change and aging populations add further pressure on budgets, including due to higher investment needs, and can negatively affect growth. This underscores the need to have balance between tax revenues and public expenditures to safeguard long-term fiscal sustainability.

This seminar addresses debt sustainability and fiscal policy issues from three viewpoints. The first session will consist of a dialogue between officials from regional institutions with a prominent academic expert on the implications of inter alia higher interest rates and inflation for debt sustainability analysis. The second session will aim at obtaining a deeper understanding of debt and fiscal challenges and policy priorities going forward, globally and across different regions. The last session will examine how the international community and regional partners can help countries navigate such challenges and advance reforms that reduce debt vulnerabilities and make economies greener, more resilient, and inclusive.