In a country with high public debt, raising interest rates increases the cost of borrowing for the government. This leads to higher debt servicing costs, which can strain public finances and limit fiscal flexibility. This tension between monetary tightening and fiscal sustainability is particularly pronounced in highly indebted economies, where rising rates exacerbate debt vulnerabilities.

B is incorrect: While this is a typical consequence of monetary tightening, it does not specifically address the unique tension caused by high public debt. The question focuses on the fiscal implications of monetary tightening.

C is incorrect: Higher rates can reduce asset values (e.g., bonds), but this is not a primary tension for fiscal policy in a high-debt scenario. The central issue remains the government’s debt servicing costs.

D is incorrect: This could occur if the government pursues expansionary fiscal policy, but the question emphasizes the tension created by high debt levels, which limits fiscal policy flexibility rather than offsetting monetary tightening.