Macroeconomic Policy for Debt Sustainability and Climate Resilience

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The proposed multiregional technical assistance (TA) aims to address significant challenges affecting macroeconomic growth and fiscal sustainability in the Asia-Pacific region, including high public debt levels, elevated interest rates, slow revenue growth and increasing exposure to the impacts of climate change. These macroeconomic challenges are exacerbated by the following development constraints: (i) persistent debt vulnerability and low domestic resource mobilization; (ii) poorly regulated quasi-public institutions, such as state-owned enterprises (SOEs), that increase the government's fiscal exposure; (iii) subnational entities that lack the necessary regulatory, legal, and investment frameworks and institutional capacities for effective public debt management and climate action; (iv) lack of robust and well-developed capital markets which impedes increased use of sovereign bonds and transition finance; and (v) limited regional cooperation to promote policy dialogue and knowledge exchange.