Increasing Public Debt During the Pandemic Keep the Economy Rolling

The Philippines' economic manager recommended that the government need to continue spending to rev up the economy even if it means running into a huge debt. Admittedly, the current pandemic produced several historic highs in the macroeconomic records of the country—for instance, the worst economic recession after more than 30 years, at -16.5 percent. However, critics lamented that soon, the government has to reap the negative consequences of incurring these public debts. However, the leading economic managers warned about removing economic support from industries is catastrophic. This financial supports made available in the economy create benefits more significant than the cost.

Due to the imposed restrictions on the movement of people, small businesses were severely affected. The idle resources cause the economy to operate below the production possibility curve (PPC) for the economy to move along the PPC. The objective is to release the idle resource and allow the economy to move in the PPC. Officially, the economy is in a recession, pushing the economy along the PPC required enough support to business until there is a clear upward trajectory in the economy. Withdrawing assistance during a recession will eventually create a multifaceted problem, which makes economic recovery less likely.

For conservatives, who doubted the ability of the government to service the debts, the current administration may borrow from the Bangko Sentral ng Pilipinas (BSP). With a low inflation rate, there is enough elbow room for the government to create more money. Besides, the current financial market has enough confidence in the country's economic potential that these institutions are willing to lend.

The government can quickly secure a long-term debt since the economy is expected to recover immediately after the pandemic with a predicted economic growth of more than 5 percent. For several decades, public debts have become a regular feature of the modern economy. Aside from continued public expenditure, increasing people's confidence in the economy can readily usher the country to economic recovery.