Given the unforeseen and uncertain circumstances during the pandemic, the role of government expenditure becomes extremely relevant in sustaining lives and livelihoods of the masses. This brings forth public sector deficit as a key issue of macroeconomic policy debate. This article aims at investigating the effects of an unanticipated adverse shock like COVID-19, on the real value of public debt, in a small open economy, consisting of traded and non-traded sectors, along with proposed management of such crisis with fiscal and monetary expansion. The results of policy-induced and exogenous shocks depend on the difference in the speeds of adjustments in real exchange rate, interest rate and real value of debt, and the associated multitudes of cross effects. While an unanticipated adverse shock like COVID-19 causes contraction of both traded and non-traded sectors and reduces consumption expenditure, investment expenditure and level of employment and real value of aggregate income in the short run, fiscal expansion causes higher real value of debt and lower real exchange rate.

JEL Codes: E12, E62, H63

鉴于大流行期间不可预见和不确定的情况，政府支出在维持群众生活和生计方面的作用变得极为重要。这导致公共部门赤字成为宏观经济政策辩论的一个关键问题。本文旨在调查在一个由贸易和非贸易部门组成的小型开放经济体中，像 COVID-19 这样的意外不利冲击对公共债务的实际价值的影响，以及对此类危机的拟议管理货币扩张。政策性冲击和外生性冲击的结果取决于实际汇率、利率和债务实际价值调整速度的差异，以及相关的多种交叉效应。

JEL 代码： E12、E62、H63