Source: Asia Development Bank
The findings highlight the impact on economies most vulnerable to climate change. The results suggest that factors such as political stability and financial development have the potential to alleviate these effects. It reveals that the influence of climate risk on fiscal capacity is more significant in situations of limited fiscal space. Implementing fiscal consolidation emerges as a crucial factor in mitigating the negative impact of climate risks on fiscal capacity, with political stability and financial development also playing pivotal roles.