Govts Grapple with Policy Trilemma – Balancing Debts, Climate, and Political Goals

By: Nghiinomenwa-vali Erastus

Governments across the world are confronted with a challenging policy trilemma, navigating between achieving climate goals, maintaining fiscal sustainability, and meeting political feasibility.
This is according to the Fiscal Monitor for 2023 published by the International Monetary Fund (IMF).
The IMF highlighted that pursuing any two of these objectives comes at the cost of partially sacrificing the third.
The report reveals that, for all countries, balancing public finances has become increasingly difficult due to growing demands for public spending, high debts, elevated interest rates, and political constraints on taxes.