Global fiscal risks are intensifying as economic resilience masks a deterioration in fiscal balances and rising debt ratios, which are projected to reach 100% of GDP by the end of the decade. Higher interest rates are narrowing the R-minus-G gap, making debt stabilization increasingly difficult. Urgent fiscal consolidation is required, particularly for countries with high debt levels. Policy recommendations emphasize "taxing better" by redesigning tax systems to minimize distortions and improve revenue mobilization, alongside "spending smarter" by replacing broad-based energy subsidies with targeted support for vulnerable populations. Emerging markets must strengthen institutional frameworks and debt management to navigate tighter global financial conditions and potential spillovers. These measures are critical to creating fiscal space for future shocks while fostering sustainable, growth-friendly economic development.
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