Debt simulations show that while a no-policy-change scenario implies an explosion of government debts, even a 0.5 percentage point structural adjustment would not be sufficient to bring debt ratios to the level of 60% of GDP over an acceptable time horizon.
In the background, it seems that two factors are at work, namely, sluggish demand for funds by firms and households due to the economic downturn, and the need of financial institutions to improve their capital ratios. Future developments in both factors continue to require attention.