How does a country’s debt level affect its ability to respond to an economic crisis?
Answer (1)
When a country has a high level of debt, it has less flexibility to respond to crises because much of its budget is already committed to paying off loans and interest. This limits its ability to spend on public health, education, job creation, or emergency cash aid. For example, if the Philippines borrows too much and a crisis hits, the government may struggle to find money for stimulus programs without increasing taxes or cutting other important services. Having manageable debt allows the country to act faster and borrow at better terms during emergencies.
