2026 Perspectives for the Public Sector

Welcome to Citi Perspectives for the Public Sector S eismic 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. At the same time, technological acceleration is transforming public policy and financial systems. Artificial Intelligence, tokenization and other new technologies are moving from experimentation to implementation, offering new avenues for efficiency, productivity, and innovation—while also contributing to growing geopolitical tension as world powers vie for technological supremacy. Attendant to this, the global push for electrification and energy security is creating both opportunity and pressure, as developing economies seek access to affordable capital and developed economies race tomodernize infrastructure. Against this backdrop, this edition of Citi Perspectives for the Public Sector offers practical insights to help governments and public institutions navigate a more complex environment. We explore approaches that support financial innovation, enhance resilience, andmake effective use of emerging technologies.