EU leniency on Germany’s fiscal plan highlights rule rigidity and the need for reform to support investment. Germany’s July 2025 medium-term fiscal-structural plan exposes the tension between raising public investment in a low-risk country and the requirement in European Union fiscal rules for member state debt to comply with the 60 percent of GDP public […]
They aim to tackle supply gap. Saudi Arabia has completed a study about the optimal options to address the supply shortage in the domestic steel market, the Kingdom’s Minister of Industry and Mineral Resources Bandar Alkhorayef has said. Options involve manufacturing 7 steel and iron products, potentially opening up investment opportunities worth 60 billion Saudi […]
Corporate climate risk disclosures are costly and often a mere box-ticking exercise. In November 2024, the Omnibus Environmental, Social and Governance Regulation was announced in Europe to consolidate and simplify the phasing-in of corporate sustainability reporting requirements while maintaining strong ESG commitments. This column discusses how leveraging pollution registers can provide an actionable picture of […]
History suggests that using lax monetary policy and a weaker currency to address debt sustainability is a dangerous game. This column revisits a unique early experiment with a managed float of state-issued money in Venice between 1619 and 1666. Newly digitised exchange rate data show that even for a government with a strong fiscal reputation, […]
How can the euro area’s return to fiscal sustainability be organised in view of soaring debt levels and the sovereign debt crisis? How can debts be financed efficiently, not least to prevent debt crises in weaker countries where high debt levels compounded by a hike in risk premiums on government bonds can create a debt […]
Climate-related risks are increasingly recognised as an important threat to long-term fiscal sustainability. This column studies the extent to which credit rating agencies integrate these risks into their sovereign rating assessments. It finds that measures of physical risk lead to lower credit ratings, but the impacts are small in magnitude. Ambitious CO2 reduction targets and […]
After the June NATO summit, Europe faces greater challenges in funding its green, digital, and defence transitions, as new defence commitments strain national and EU budgets. Balancing strategic priorities with debt sustainability is key. This column proposes a three-pronged strategy of (i) using existing fiscal tools, (ii) adopting additional national measures, and (iii) building a […]
As the world continues to emerge from the COVID-19 pandemic and its aftermath, countries face new and unexpected challenges. Elevated debt levels, persistent inflation, and weakened growth prospects have created a perfect storm of financial pressure. For many nations, this has meant shrinking the budgets in vital sectors like health, education, and the environment. In […]
A fundamental problem for sovereigns enacting climate policies is whether they can manage increasing debts as their economies suffer from adverse climate impacts. We develop stochastic debt sustainability analysis integrating a coupled climate-economy model with debt financing scenario optimisation, and stress test sovereign debt for representative countries globally under the Intergovernmental Panel on Climate Change […]
