On the other hand, many countries have run into difficulties over sub-national government debt, arousing justified concern that cities and other subordinate governments may operate under soft budget constraints if they are perceived to enjoy implicit or explicit sovereign guarantees. The main challenge, therefore, is to create mechanisms that ensure economic stability and sound fiscal management. Meanwhile, the lower levels of government must be granted sufficient flexibility to cope with unforeseen events, as well as sufficient financial capacity to deliver public services and finance essential investment (Vammalle and Hulbert, 2013).