Public External Debt Sustainability and its Impact on Fiscal Policy
Public debt is one of the most important components of fiscal policy management, which can be considered as a factor stimulating economic growth. Ineffective management of public debt may lead the country to a crisis instead of growth.
Fiscal policy and public debt sustainability are two interrelated concepts whose analysis requires a complex approach. First of all, it is important to assess the underlying risks that affect the growth of public debt.
Both the foreign and domestic debt increased significantly during the crisis caused by the Covid-19 pandemic in 2020. Against the backdrop of an economic downturn, sharp debt growth could put developing countries under fiscal pressure. Therefore, in the event of a pandemic, prudent management of public debt is important to ensure the sustainable development of the country.
Keywords - Public Debt Sustainability, Fiscal Policy, Covid-19 Pandemic