Sustainable goals, unsustainable debt? An empirical analysis of the sustainable development goals and government financial sustainability

Purpose This paper aims to examine the relationship between the implementation of the sustainable development goals (SDGs) and governments' financial sustainability. It analyzes whether progress toward the 2030 Agenda is associated with increasing public debt, thereby highlighting the potential fiscal implications of sustainability-oriented policies. Design/methodology/approach The study uses a balanced panel of 145 countries covering the period 2016–2023. A dynamic model is estimated using the two-step system generalized method of moments. The dependent variable is general government gross debt (% of gross domestic product (GDP)), while the key independent variable is the SDG Index. Additional control variables include GDP per capita, unemployment, population metrics, revenue, political ideology, gender representation and voter turnout. Several robustness checks have also been conducted, including alternative estimation methods, variable substitutions and subsample analyses. Findings The results show a significant and positive relationship between SDG performance and public debt levels. Countries with higher SDG scores tend to exhibit greater indebtedness, suggesting that SDG progress is frequently financed through borrowing. Originality/value This is among the first empirical studies to examine how SDG implementation affects national debt. It offers new insights into the financial trade-offs of sustainable development, highlighting the importance of aligning sustainability strategies with sound fiscal planning. The findings contribute to debates on financing the 2030 Agenda and inform public finance and policy decisions.