The COVID-19 Pandemic has stretched our public finances and increased public debt enormously. Still, there are calls for even more spending and more debt in the recovery period. This view contrasts with growing concerns about the effectiveness and sustainability of public spending.
The lecture will look at the facts, challenges and solutions around public spending in advanced countries. It will discuss the history of spending, the performance of governments and the fiscal risks related to population aging and financial crisis from an international perspective. It will argue that we do not need more but better spending to build trust with citizens, deliver on core services, manage fiscal risks and master the challenges of climate change and geo politics. Rules-based and yet pragmatic policies are the best way to ensure that public spending attains government and citizen objectives in a financeable, growth-friendly manner. Asian countries are in a reasonably good position but should avoid some costly mistakes.