International debt metrics from the perspective of financing the green agenda

The article summarizes the public debt policy issues in the context of financing climate change measures, and suggests priorities and mechanisms of fiscal, debt and sectoral policies to ensure sufficient financing of the green agenda. Authors have emphasized the trilemma between achieving climate goals, maintaining fiscal sustainability, and ensuring political capacity. It has been found that even under favorable external financial conditions, climate-vulnerable countries face a constant premium to the cost of borrowing. As a result, developing countries with high levels of debt and climate vulnerability are caught in a vicious circle of growing investment needs for climate- sustainable structural transformation and significant dependence on increasingly expensive debt financing, which leads to a combination of deteriorating debt sustainability and insufficient funding for climate change challenges. Authors argue for a comprehensive multilateral policy aimed at reforming the international debt architecture and increasing the amount of available financing for climate change adaptation under a government-led framework. Achieving common goals requires a carefully calibrated combination of climate change mitigation instruments based on enhanced domestic revenue mobilization, in particular through carbon pricing, more efficient spending on transfers, green subsidies and investments, and regulatory measures. Authors propose a comprehensive approach to implementing climate change mitigation policies, including the implementation of a fiscal strategy, sectoral policies to prevent climate change, and stimulating private investment. Emphasized the importance of developing further tools for incorporating climate policy into debt sustainability analysis.