Fiscal sustainability: where do we stand?

Despite progress in reducing deficits, public finances in many advanced economies remain unsustainable. Beyond the burden created by age-related expenditure, a potential rise in long-term interest rates from their ultra-low levels poses a risk to public finances in several countries. Many advanced economies therefore still need to increase their primary balances significantly to put debt on a safer, downward trajectory. Measures to curb future increases in pension and health care spending are key to the success of these efforts. Public finances in emerging market economies are in a relatively better position, but securing them for the future will require prudence.