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Inflation, Debt Sustainability, and Government Borrowing in the Time of the Pandemic

Published in Economic and Political Weekly
Volume: 57
Issue: 9
Pages: 12 - 16

Public borrowing is essential to garner resources to combat the current pandemic. The ability to do so and adhere to the standard norms of debt sustainability will be harder for developing economies as compared to the developed, due to constraints, both structural and policy-induced. High food inflation and the adoption of inflation targeting will impose severe constraints on the ability to expand borrowing and maintain low levels of debt-to-GDP. In such a situation, governments must either rethink monetary policy and/or allow for debt ratios to rise.

About the journal
PublisherEconomic and Political Weekly
Open AccessYes