Faced with an uncertain global economic environment and high and volatile oil prices in 2008, economies in Asia stepped up policy measures to revive growth and protect consumers. They blocked international oil price transmission to domestic markets, increased oil subsidies and adopted expansionary fiscal policies supported by reduction in interest rates. These policies derailed the fiscal consolidation process in some countries and increased debt vulnerability in others. Based on repeated surveys of local fuel prices, this paper computes the transmission of recent global oil price movements to domestic markets and estimates consumer oil price subsidies in 18 Asian economies. It then examines the potential impact on fiscal deficit and public debt arising from the policy responses to macroeconomic shocks and continued subsidies when global oil prices rise. Using a forward-looking methodology for debt dynamics, the paper estimates the fiscal correction needed to sustain public debt at a steady-state level. The simulations show that prolonged economic protraction would raise debt vulnerability particularly in countries with high fiscal deficits or oil price controls. Countries with fiscal surpluses or with higher price transmission would be in a better fiscal position to respond to growth slowdown and a steep rise in oil prices.