Design Choices for Debt Sustainability

The document proposes a shift from rigid fiscal rules to a 'constrained discretion regime' for emerging markets facing rising debt costs. It recommends implementing flexible debt anchors, embedding them within a broader fiscal policy regime with independent oversight, and increasing transparency to maintain market confidence.

• Current rigid fiscal rules in emerging markets are often counterproductive, leading to complexity, instability, and a lack of flexibility when responding to economic shocks.
• The report recommends a transition to flexible debt anchors that ensure long-term sustainability but allow for temporary deviations during shocks, supported by independent fiscal councils to assess risks and advise policy-makers.
• To restore public and market trust, governments should adopt a comprehensive fiscal regime that includes clear policy strategies, disclosure of relevant data, and independent evaluations.

APA

Wiedenbrüg,, Y. H. M. (2025). Design Choices for Debt Sustainability. International Institute for Sustainable Development. https://www.iisd.org/publications/report/design-choices-debt-sustainability

Chicago

Wiedenbrüg,, Yanne Horas,Fernando Morra,Anahí. Design Choices for Debt Sustainability. International Institute for Sustainable Development, 2025. https://www.iisd.org/publications/report/design-choices-debt-sustainability.

Wikipedia

{{cite report |last1=Wiedenbrüg, |first1=Yanne Horas,Fernando Morra,Anahí |title=Design Choices for Debt Sustainability |publisher=International Institute for Sustainable Development |date=24 June 2025 |url=https://www.iisd.org/publications/report/design-choices-debt-sustainability |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wiedenbrg2025design, author = {Wiedenbrüg,, Yanne Horas,Fernando Morra,Anahí}, title = {{Design Choices for Debt Sustainability}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = jun, url = {https://www.iisd.org/publications/report/design-choices-debt-sustainability}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }