Certain Asia-Pacific sovereigns could face constraints as they increase government fiscal support especially for state-owned entities, Fitch Ratings said in a recent release.
Governments with higher government debt-to-GDP ratios compared to peer medians are especially vulnerable, Fitch said.
Sovereigns carry out this support through capital additions or subsidies to state-owned enterprises (SOEs), the rating agency said.
Many sovereigns in the region play a major role in fostering economic growth, but the levels of support, as seen in the share of combined SEO debt relative to GDP, also vary, the rating agency said.
Meanwhile, some advanced economies have high SOE debt partly due to increased transparency in data reporting, according to Fitch.