On the positive side, they represent a second source of funding for the real economy in addition to banks, and help diversify the funding base of financial and non-financial corporates. This will be particularly important in times of deleveraging in the banking sector.
The fiscal deficit is the most worrying and despite plans for a drastic cut over the next few years, it may be difficult to achieve it in the light of the U.S. involvements worldwide, the likely increase in the interest rate on Treasury Bills, and a projected slowdown of economic growth from the high rate of 4.7% estimated for 2004.