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Why do some governments in Asia and the Pacific pay higher borrowing costs than others?
UNESCAP
2026.05.26
This paper examines the determinants of government borrowing costs in Asia and the Pacific using both 10-year sovereign bond yields and spreads over United States Treasury bills. At a time when many countries face rising debt burdens and large investment needs to achieve the Sustainable Development Goals (SDGs), understanding the drivers of borrowing costs is critical for maintaining fiscal sustainability and expanding public investment. The paper contributes to the literature by focusing on the Asia-Pacific region, where debt vulnerabilities and development financing needs remain significant. It provides empirical evidence on how macroeconomic conditions, fiscal policy and international market conditions shape sovereign yields and spreads. The findings offer practical insights for policymakers seeking to manage public debt and mobilize affordable financing for sustainable development.