27 November 2025

Sustainable Public Finance: Foundation for Debt Resilience and Inclusive Green Growth

The eighth PAGE-DCO Dialogue, convened on 19 November 2025 in Addis Ababa, framed debt management as a multidimensional challenge intrinsically tied to fiscal planning, governance, and social inclusion. Participants, including international experts, UNRCO economists, and PAGE country teams, emphasized that sustainable debt management is not about how much a country owes, but about how debt and public resources are used to build resilience, expand equitable opportunities, and drive long-term sustainable development.

UNRCO economists played a pivotal role, bringing practical evidence and policy insights that demonstrate how integrating gender, climate action, and competitiveness into fiscal frameworks is feasible and essential. Strengthening governance, enhancing transparency, and coordinating across sectors emerged as critical enablers for countries navigating debt pressures alongside the imperative for low-carbon, inclusive growth.

Diagnosing the Debt Challenge

Discussions underscored that rising debt pressures are a symptom of deeper structural challenges. Tight fiscal space, fragile revenue systems, climate shocks, and declining development assistance are combining to make it difficult for countries to balance recovery and long-term reform.

Keynote speaker, Attiya Waris, UN Independent Expert on Debt and Human Rights, highlighted that most climate finance comes in the form of loans rather than grants (71% vis-à-vis 29%), exacerbating debt burdens for vulnerable economies. Delivering climate finance as grants and using mechanisms such as debt-for-climate swaps and solidarity levies could alleviate fiscal stress. Combating illicit financial flows remains essential to preserving national fiscal space.

Building Fiscal Resilience

Himanshu Sharma, a Sustainable Finance expert from UNEP, introduced the Sustainable Budgeting Approach, a practical tool to help countries realign budgets toward productive, green investments. The approach has been piloted in Gabon and is underway in several other countries. Mr. Sharma stressed that short-term fiscal space can also be improved through debt swaps. Countries can access technical assistance through several initiatives, including the new Debt Swap for Development Hub launched by the World Bank and the Government of Spain in the context of FfD4.

Embedding Sustainability into Debt Frameworks

Nona Tamale, Debt Specialist from UNDESA, urged reforming Debt Sustainability Assessments and credit ratings to account for climate resilience and sustainability investments, potentially reducing financing costs for vulnerable countries. Participants supported climate-resilient debt clauses to provide payment relief in disasters and encouraged preemptive, sustainability-linked debt restructuring.

Aligning Debt, Trade, and Sustainable Investments

Peter Aidoo, DCO Lead on Debt, Trade, and Investment, emphasized intentional economic policy aligning debt, industrial policy and growth strategies toward investable, income-generating projects. Leveraging regional trade agreements and strengthening FDI screening are key to attracting sustainable investments and reducing risks associated with unproductive capital outflows.

Gender-Inclusive Public Finance

Maureen Gitonga, Gender Advisor at DCO, stressed the disproportionate impact of austerity on women due to increased unpaid labor and informal work, which undermines growth. Institutionalizing gender-responsive budgeting, using detailed time-use data, and maintaining ongoing policy-level dialogue are vital to embedding gender equity in fiscal resilience.

Country Approaches: Rwanda and Uganda

UNRCO economists from Rwanda and Uganda shared their country perspectives. Rwanda aims to mobilize USD 44 billion over five years, primarily from private sources, supported by its Green Taxonomy Framework and Green Exchange Window. Uganda’s Integrated National Financing Framework reinforces domestic revenue mobilization and public finance management, anchored by a dedicated Climate Finance Unit.