The COVID-19 pandemic had a very large impact on government finances. As governments saw their revenues reduced and their expenditures increased to cope with the health and social emergencies, the public debt rapidly mounted. By the end of 2020, the debt-to-GDP ratios had increased by 10 percentage points (pp) compared to pre pandemic levels in the average emerging economies. The large surges in indebtedness increased pressures for governments to reduce their debt-to-GDP ratios to lower the risks of fiscal unsustainability. Governments have several policy options to achieve these goals. Some of these options include: (i) austere fiscal policy, which reduces the need for new borrowing, (ii) more rapid economic growth, which help reducing the relative burden of the debt, and (iii) defaulting, following a restructuring process. […]