2026 Public Sector Perspectives

Seismic shifts in the 2025 global landscape are redefining the priorities, and operating environments, of public sector institutions. Rising geopolitical tensions have led to ballooning defense budgets across both the developed and developing world, forcing sovereigns to balance their security needs with a lack of fiscal headroom. Indeed, many governments continue to face balance sheet pressure following years of pandemic- era spending, elevated interest rates, and persistent inflation. Monetary tightening — though easing in some markets — continues to challenge funding strategies and heighten the cost of capital.