OECD urges stronger fiscal governance as Southeast Asia debt rises

The OECD and Asian Development Bank's Government at a Glance: Southeast Asia 2025 report, released December 11, 2025, calls for stronger public institutions as regional debt rose to 58% of GDP in 2023. The findings signal how public-finance and green-budgeting reforms shape sovereign risk and the regulatory climate for businesses across the region.

The OECD, with the Asian Development Bank, issued a call for improved public governance across Southeast Asia in its Government at a Glance: Southeast Asia 2025 report, released December 11, 2025, covering nine regional economies. It details fiscal vulnerabilities: general government gross debt surged from an average 44% of GDP in 2019 to 58% in 2023, while government revenues remain low at 17.8% of GDP, less than half the OECD average of 38%. Only a fraction of nations have independent fiscal institutions.

The report affects governments and businesses operating across Southeast Asia's nine covered economies. It stresses environmental and digital governance gaps: "green budgeting" remains uneven, and limited environmental data hinders evidence-based planning. The region lags OECD countries on the Digital Government Index, with seven of eight countries unable to offer citizens secure digital-identity access to most online public services. Companies face an environment where government capacity for climate-infrastructure and tax planning directly influences operational certainty and sovereign risk.

Businesses should anticipate a push for greater corporate tax transparency and increased focus on sustainable procurement as governments implement OECD recommendations to mobilize domestic resources and operationalize green budgeting. Entities should monitor reforms strengthening budgeting processes, domestic revenue mobilization and digital transformation, including ethical AI application. The report frames stronger fiscal governance as reducing sovereign risk and improving the regulatory climate for foreign direct investment across the region.

Key figure — Debt rise: regional gross government debt climbed from 44% of GDP in 2019 to 58% in 2023