Session 9: Fiscal Issues in Asia
Moderator:
Donghyun Park



Can the Government Debt Binge be Sustainable?

The pandemic driven crisis has prompted governments to increase debt to provide relieve and stimulation to their economy. This stream of government borrowing has so far been supported by a low interest rates environment. Can this be sustainable? This paper analytically examines the dynamic relation between the interest rate-growth differential and government debt ratio relative to GDP and discusses potential conditions for debt to be sustainable going forward. Commitments to future fiscal discipline and healthy growth recovery environment seems to be the key elements.

Author/s: 

Arief Ramayandi


JEL codes: E43, E62, H63