ECONOMICRESEARCH

April3,2012

WhatsonNourielsMind:ABalanceSheet RecessionCallsforMonetizedFiscalDeficits,Not FiscalAusterity

ByNourielRoubini IthasbeenarguedrecentlybyeconomistRichardKoothattheeurozone(EZ)shouldfollowtheexample of Japans response to balancesheet recession. While there is a misperception that policy mistakes causedthestagnationthatJapanfacedforoveradecade,KooarguesthatifJapanhadnotundertaken massive fiscal stimulus monetized by the central bank, the recession following the bust of its equity marketandrealestatebubblewouldhaveledtoa1930sstyledepression. The argument is that when the private sector is rapidly deleveraging after a privatesectordriven spending and credit boom and asset bubble lead to a credit bust and asset deflation, the best policy responseislargefiscaldeficitsfinancedbydebtmonetization.Withoutlargeandpersistentfiscaldeficits, the increased savings, reduced consumption and capital spending, and debt reduction of the private sector will usher in a recession or even a depression because of the overall lack of aggregate demand; monetization is necessary to finance the surge in public deficits and debt at low interest rates. These policyprescriptionsarerelevantfortheperipheryoftheEZaswellasothercountriesthatrecentlyhave experiencedbalancesheetcrises(theU.S.,theUK,Iceland,Dubai,etc.). UnlikeJapaninthe1990sandtheU.S.intheaftermathoftheglobalfinancialcrisis,theEZseemsbound to repeat the fundamental mistakes of the Great Depression: lack of fiscal stimulus and outright fiscal contraction; insufficient monetary easing and resulting buildup of banking and fiscal strain; and maintenance of a rigid monetary union that did not allow significant nominal and real depreciation to restoreexternalcompetitiveness,externalbalanceandeconomicgrowth.

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HowtoJumpStartanEconomyFacingaPrivateSectorBalanceSheetCrisis AttheAmbrosettiForumthattookplaceatItalysVilladEstethispastweekend,Ichairedasessionontheglobal debt crisis and how to resolve it. A fascinating debate emerged after Koo, one of the leading contemporary experts on Minskystyle balancesheet recession, made a presentation based on a paper1 on the lessons the EZ couldlearnfromtheJapaneseboom,bustandstagnationofthelasttwodecades.Hismainmessage:Whenthe privatesectorisrapidlydeleveragingafteracreditboomandassetbubbleleadtoacreditbustandassetdeflation, thebestpolicyresponseislargefiscaldeficitsfinancedbydebtmonetization.Withoutlargeandpersistentfiscal deficits,thereducedspending(bothonconsumptionandfixedinvestment),increasedsavingsanddebtreduction oftheprivatesector(households,corporations,banksandfinancialinstitutions)willusherinarecessionorevena depression because of the overall lack of aggregate demand. Monetization is necessary to finance the surge in publicdeficitsanddebtatlowinterestrates,andisnotinflationarybecauseinabalancesheetrecessionbanks hoardtheextrabasemoneycreatedbythegovernmentintheformofexcessreserves.Thus,velocitycollapsesas

RichardKoo,TheEurozoneCrisis:Causes,RemedyandMisperceptions,March2012.

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basemoney(M0)swellswhileM1,M2,M3andcreditcontractheavilyindebtedborrowersdontwanttoborrow evenatzerorates,andbanksareunwillingtolendtothem. KoospolicyprescriptionscontrastedsharplywiththoseofthetwoEuropeansonthepanelbothfromthecoreof the EZwho argued that the solutions to the EZ problems were implementing fiscal austerity and avoiding monetizationofpublicdebt. This debate on the appropriate policy response to a balancesheet recession is relevant not only for the EZ (specifically for Ireland, Spain and Portugal); economies such as the U.S., the UK, Iceland and Dubai also have experiencedrecessionsalongthelinesofwhatJapanwentthroughinthelasttwodecades.ConsistentwithKoos argument,theseeconomieshaveexperiencedmassivedeleveragingoftheirprivatesectors:InSpaintheprivate sectorhasincreaseditsfinancialsavings(thegapbetweenprivatesavingsandinvestment)by18%ofGDPsince 2008;inIreland,29%;inPortugal,8%.IntheU.S.,theincreaseinsavingswas9%,whileintheUKitwas7%.Sharp increasesinprivatesavingsand/orcollapsesinfixedinvestmentalsooccurredinIcelandandDubaifollowingthe bustoftheirrealestatebubbles. JapanLearnsaLesson;theWorldTakesNote By comparison, in Japan the change in the savingsinvestment balance of the private sector was 22% of GDP between the peak of the boom and the bust. While there is a misperception that policy mistakes caused the stagnationthatJapanfacedforoveradecade,KooarguesconvincinglythatifJapanhadnotundertakenmassive fiscalstimulusmonetizedbythecentralbank,therecessionfollowingthebustofitsequitymarketandrealestate bubblewouldhaveledtoa1930sstyledepression.Indeed,inJapannominalGDPneverfellbelowtheprecrisis level,andrealGDProseby16%between1990and2011inspiteofpersistentdeflation;whereasduringtheGreat Depression, manycountries saw real GDP shrink by 3040% amid massive deflation and the collapse of nominal GDP.Ifanything,Japansproblemwasnotthatiteasedmonetaryandfiscalpolicytoomuch;ratherthattheeasing didntoccuruntilthemid1990sinsteadofrightafterthebust,anditwaserroneouslywithdrawnin1997,2001 and2005,promptingrenewedeconomiccontractions. The lesson the world learned from Japan returned to thefore in the global financial crisis of 200809. After the collapseofLehmanBrothers,theU.S.andglobaleconomywerecontractingatafasterratethanbetween1929 and1931,basedondataonconsumption,investment,industrialproduction,employment,exportsandimports. This Great Recession indeed could have ended up a second Great Depression. What prevented this was the massivemonetaryandfiscalstimulusthatoccurredintheU.S.andtherestoftheworld,bothadvancedeconomies andemergingmarkets,startinginearnestinthespringof2009. ThetriggerfortheglobalmonetaryeasingwastheU.S.FeddecisiontointroduceawhoppingUS$1.8trillionfirst roundofquantitativeeasing(QE)afterpolicyrateshadbeenpusheddownto0%andtheeconomyhadentereda liquiditytrap;onthefiscalside,theG20summitinLondoninthespringof2009ledtoacoordinatedstimulusin bothadvancedeconomiesandemergingmarkets.Itisthusnowonderthatshortlythereafterthefreefallinrisky assetsstarting with global equitystopped and stock markets recovered, while the U.S. and global recession bottomed out by that summer. As households, corporations and banks were rapidly deleveraging, the surge in fiscaldeficitsanddebtpreventedtherecessionfromturningintoadeflationarydepression. Thesourcesofthissurgeinpublicdeficitsanddebtwerethreefold: 1)Anincreaseindeficitsasautomaticstabilizerskickedin;

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2)ProactiveKeynesianstimulus,withincreasesingovernmentspendingandtransferpaymentsandreductionsin taxes,tobothdirectlyandindirectlystimulateaggregatedemand; 3)Andringfencing,guaranteesandbailoutsofbanks,financialinstitutions,indebtedhouseholdsandcorporations thatshiftedprivatedebtsontopublicbalancesheets. TheU.S.ChoosesStimulus;Europe,Austerity Whiletheinitialresponsetothecrisiswascoordinatedandconsistentacrosscountries,subsequentlytheresponse became extremely fragmented and divergent, with acrimonious debates between Americans and Europeans on therightpolicypath.TheU.S.embarkedonadditionalmonetaryandfiscalstimulus,withQE2andOperationTwist (possiblysoontobefollowedbyQE3),aswellastworoundsoffiscalstimulusinlate2010andagaininlate2011 early2012,amountingtoanotherUS$1.4trillioninextendedtaxcutsandtransferpaymentsfor2011and2012 (income,capitalgains,dividendandpayrolltaxesandunemploymentbenefits). TheEZtooktheoppositepath.StartingwithpressureonGreecein2010,theEZdogmabecametheneedforfiscal austerity in both the periphery countries in trouble (Greece, Portugal, Ireland, Spain and Italy) and those in the core, a bias now formalized with the new fiscal compact. On the monetary side, the ECB did an initial, token attemptatQE(60billionofcoveredbondpurchases,sparechangecomparedtotheUS$1.8trillionoftheFeds QE1). Otheradvancedeconomiesresponsesfellsomewhereinbetween.AfirstroundofQEoccurredinboththeUKand Japan(bothlargerthanintheEZbutsmallerthanintheU.S.),butthentheBankofEngland(BoE)andtheBankof Japan(BoJ)wentonholdin2010astheFedstartedQE2tothetuneofUS$600billion.TheBoEfelthobbledbythe temporaryriseinheadlineinflationdrivenbythedepreciationofthepound,thebumpincommoditypricesand the increase in indirect taxes; while the BoJ was blocked by the widespread belief that Japanese deflation was driven by structural factors (the excess supply of goods given the lack of restructuring), not a lack of aggregate demand,whichunderminedtheargumentforpursuingmoreaggressivemonetaryeasingorembracinganinflation target. Worse,theECBwentinreversein2011byraisingitspolicyratewhichhadnotbeenreducedduringtheglobal financialcrisistothenearzerolevelsoftheU.S.,UKandJapanfrom1%to1.5%,leadingtoasharpappreciation oftheeuroandaworseningoftheliquidityanddebtproblemsofEZbanksandsovereigns.Thedoublewhammyof frontloadedfiscalausterityandmonetarytighteningtippedtheEZintoadoublediprecessionbylate2011,with massivestrainonbanks,privatesectorborrowersandsovereignsintheEZperiphery.Bytheendof2011,allofthe EZperipherywasbackinasevererecessionafterabarelyperceptiblerecovery,andeventhecorehadreturnedto amildrecession. IntheUK,theCamerongovernmentthatcametopowerin2010decidedtofrontloadthefiscalausterityatatime when the BoE was on hold given the rise in headline inflation. The combination of fiscal tightening and lack of furthermonetarystimulustippedtheUKintoanearrecessionbyH22011,forcingtheBoEintoasecondroundof QEbyearly2012inspiteofaninflationratestillabovetheBoEtarget.Eventhefrontloadedfiscalausterityofthe CameronOsborneteamhadtobenudgedbacktopreventfurtherfiscaldrag. Other central banks also moved toward a second round of QE between 2011 and 2012. The BoJ and the Swiss National Bank (SNB) first introduced FX intervention policies to prevent their currencies from appreciating too much, and the BoJ introduced QE2 and a formal inflation target in early 2012. The Japanese earthquake and

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tsunamialsoledtoanotherroundofreconstructionledfiscalstimulusthatpulledJapanoutofthedoubledipthat itexperiencedin2011followingthesetragicnaturaldisasters. BythetimetheECBhadreverseditspolicyratehikereturningtherateto1%inNovember2011andengagingin two large quasiQE operations (3y longterm refinancing operations or LTROs that increased EZ base money by over1trillion)thedamagetotherealeconomywasdone,andtheLTROscouldonlypatchoverthewoundto banksliquidityandtosovereignspreads. DivergentPolicies,DisparateOutcomes ThevaryingoutcomesforthecountriesthatsufferedfrombalancesheetrecessionsreinforceKoosargumentin favorofpersistentfiscalstimulusandmonetization.TheU.S.mostcloselyfollowedKoosremedyinaneconomy withalargeexternaldeficit,unlikeJapanandby2012,withrepeatedroundsoffiscalstimulusandQEitsgrowth rate was at worst 2% and possibly closer to 2.5%. Amid the ongoing deleveraging that follows a balancesheet recession,theU.S.experiencedasubpar,anemicrecoveryandbelowtrendgrowth,butby2012inflationwaslow, 10y Treasury yields were at 2% and strains in the banking and household sectors were reduced. At the other extreme was the periphery of the EZ, which sank into a deep recession that risked becoming a depression in GreeceandSpain,withyieldsonGreek,Portuguese,Irish,ItalianandSpanishbondsspiking(andthreecountries survivingoninternationalbailouts).Finally,theECBsbelateddecisiontoimplementdisguisedQEviathe3yLTROs partiallyandtemporarilynarrowedthespreadsonItalianandSpanishdebt. Between the U.S. and the EZ was the UK, where austerity tipped the economy into a near recession but an independentmonetaryauthoritypartiallycommittedtomonetizeddeficits(asopposedtotheECBshawkishness) keptlongtermgovernmentbondyieldsclosetoU.S.levels.SimilartotheUKcase,JapanseventualQEandfiscal stimulusafterexternalanddomesticshocksensuredafragileandtentativeeconomicrecoveryratherthanadeep doublediprecessionwhentheearthquakestruck. TheECBandGermanywouldreplytoKoobyarguingthatthecrisisoftheEZperipherywascausedbythatregions fiscallaxitynotaprivatesectorbalancesheetboomandbustandbyalackofstructuralreformthatledtoa loss of competitiveness. But this interpretation is only partially valid. While Greeces troubles were obviously causedbyrecklessfiscalpolicybeforethecrisis,IrelandandSpain(liketheU.S.,theUKandIceland)experienced typicalbalancesheetrecessionscausedbyaboomandbustintheprivatesector;theresultingriseinpublicdebt anddeficitswastheresultofeffortstodampentheeffectsongrowthoftheprivatedeleveragingthatfollowedthe housingbust.ThecaseofPortugalislessclear:Thecountryhadrelativelyloosefiscalpolicynotasrecklessas that of Greecebut it also had significant privatesector imbalances (an excess of investment compared with savingsofthecorporatesectorandfinancialsystem).InItaly,thefiscaldeficitwasmodestbeforethecrisis(while the public debt was high as a legacy of large deficits in previous decades), and the private sector didnt have significantfinancialimbalances. AggressivemonetizationwouldhavebeentherightpolicyfortheEZtopreventsovereignspreadsfromblowingup when fiscal expansion was needed to counter a balancesheet recession and/or to finance already large public deficits and debt. Significant fiscal stimulus also would have made sense for Spain and Ireland, while the fiscal austerity in Greece and Portugal should have been less frontloaded. Italy should have used proactive fiscal stimulus in 2009 rather than relying only on automatic stabilizers, and its fiscal austerity should have been less frontloaded as well. Germany and the core of the EZ also should have implemented more substantial and persistentfiscalstimulusratherthanfrontloadingtheirfiscalausterity.

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Still,therecessionarydeleveragingoftheEZperipherywasboundtobemoreseverethanthatofJapan.Unlike Japan, which was running a large current account surplus and did not suffer from a lack of external competitiveness,theEZexperiencedrealappreciation,ariseinunitlaborcostsandlargecurrentaccountdeficits Page|5 that investors were unwilling to finance once the sudden stoppage of capitaland outright capital flight occurred.Sincedomesticdemandwasfallingbecauseofdeleveraging(inSpain,IrelandandPortugal)whilepublic spendingwascontractingincountriesthatrequiredfiscaldisciplinetorestoregrowthandavoidsevererecession (and,atbest,onlymodestlyexpandingincountriesundertakingfiscalstimulus),netexportshadtoimprove.The bestwaytoachievethenecessaryrealdepreciationwouldhavebeenanominaldepreciationoftheeurotogether with higher inflation in the core of the EZ relative to the periphery. These could have been achieved through aggressivemonetaryeasinganddeficitmonetizationaswellasrelativelylargefiscalstimulusinthecoreoftheEZ. Instead,thecoreandtheECBimposedanasymmetric,deflationaryandrecessionaryadjustmentontheperiphery, attemptingtobringforthrealdepreciationwithstructuralreformsanddeflation(internaldevaluation). Thetroublewiththeseoptionsisthatstructuralreformstaketoolongtoincreaseproductivitygrowthandtothus reduceunitlaborcosts(andcanberecessionaryintheshortrunastheintersectoralresourcereallocationoflabor andcapitaltakestime).Plus,deflationisalwaysassociatedwithdeepeningrecessionandcausingaheavierreal burden of already high private and public debt as prices and wages fall. These risks were realized in the EZ periphery. Like the EZ peripheryand unlike Japan, which was running a current account surplus and was a net foreign creditorothereconomieswithprivatesectorbalancesheetcrises,suchastheU.S.,theU.K.andIceland,were also running large current account deficits and had currencies that were overvalued in real terms before the bubbleswentbust.Thus,apolicyofmonetizedfiscaldeficitsisnecessarytorestorecompetitivenessandexternal balanceandreturntopotentialgrowthasdomesticprivatedemandisconstrainedbythedeleveragingprocess.Of course,thefiscalstimulus,byincreasingpublicdissaving,slowsdowntheprocessofachievingexternalbalancebut thatemphasizestheneedforadditionalnominalandrealcurrencydepreciationtoenhancecompetitivenessthat willaccelerateexternalbalance. Themainobstacletoexternaladjustmentfordeleveragingcountrieswithlargecurrentaccountdeficitsisthatin orderforthemtospendless,savemoreandundergonominalandrealdepreciation,countrieswithundervalued currencies,largecurrentaccountsurpluses,highsavingsandexcessincomeoverspendingneedtosaveless,spend more and allow their currencies to appreciate. Given the current global imbalances, China and other emerging economies with undervalued currencies and large current account surpluses need to allow their currencies to appreciate,savelessandincreasedomesticconsumptionandspending.IntheEZ,Germanyandthecoreneedto save less and spend more domestically (including via fiscal stimulus) and allowon top of a weakening of the external value of the eurointraEZ real appreciation via a higher inflation rate in the core relative to the periphery. So far, China, other emerging economies, Germany and the core of the EZ are resisting currency movements, reduction in savings and increase in spending that would allow current account deficit reduction amongeconomieswithintheEZandelsewhere,includingtheU.S.,thatarerunninglargeexternaldeficits. TheRoadtoDepression Unlike Japan in the 1990s and the U.S. following the global financial crisis of 200809, the EZ seems bound to repeat the fundamental mistakes of the Great Depression: lack of fiscal stimulus and outright fiscal contraction; insufficient monetary easing and resulting buildup of banking and fiscal strain; and maintenance of a rigid monetaryunionthatdidnotallowsignificantnominalandrealdepreciationtorestoreexternalcompetitiveness, external balance and economic growth. The ECB is now starting to remedy its mistakes, but the damage to the
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sovereignspreadsoftheEZperipheryhasalreadybeendoneandtherecentspreadcompressioninItalyandSpain (notinPortugalandGreece)followingthe3yLTROsmayprovetemporaryastheEZrecessiondeepens,drivenby Page|6 manyfactors: 1)Theongoingfiscalausteritythatisevenmorefrontloadednowthatbindingruleshavebeenimposedbythe fiscalcompact; 2)Atoostrongeurogiventhelackofaggressivemonetaryeasingandotherpolicyaction; 3)ThecreditcrunchthattheEZperipheryisexperiencinginspiteofbankliquidity,asbanksdeleveragelikethe rest of the private sector and sell assets, as they have been forced to frontload the increase in their required capitalratiosto9%ratherthanreceivingforbearance; 4)RisingoilpricesthatarefurtherunderminingEZgrowth; 5) And a lack of fiscal stimulusinstead, actual fiscal austerityin the core of the EZ to compensate for the deleveragingoftheperiphery. Already,afterovera1trillionincreaseinbasemoneyfollowingthetwo3yLTROs,thespreadsonSpanishdebt arerising.Imposingdraconianfiscalausterity,witha3%ofGDPprimaryadjustmentin2012alone,onaneconomy wheretheprivatesectorisundergoingdrasticdeleveragingwhilearealestatebustisstillunderwayisarecipefor adeepeningrecession.Oncetherecessionworsens,asitdidin2011,theprimarydeficitwillovershootitstarget and force another round of fiscal austerity thatas in Greecewill turn the recession into a depression. With unemploymentinGreeceandSpainalreadyabove20%(above40%amongyoungpeople)andstillsharplyrising, bothcountriesareonapathtoeconomicdepression.Portugal,hobbledbyalongtermlackofcompetitiveness,is notfarbehind;alikelysecondbailoutforPortugalwillonlybrieflypostponeaGreekstylecoerciverestructuringof itspublicdebt.IftheSpanishrecessionbecomesdeeper,asislikely,yieldswillrisetothepointwherethecountry loses market access and requires a large IMF/EZ bailout package. Italy has made progress on the fiscal and structural fronts, but the necessary policies are recessionary; that is why even the Monti government is rightly starting to talk about the need for EZwide policies to restore growth in the periphery. These policies need to includemoreaggressiveeasingbytheECB,weakeningoftheeuro,fiscalstimulusinthecoreandlessfrontloaded fiscalausterityintheperiphery,togetherwithamuchlargerinternationalfirewalltopreventliquidityproblems fromturningintoinsolvency. Restoring external competitiveness, external balance and economic growth is critical for periphery countries to remainviablemembersoftheEZ.IftheeurodoesntfallsharplytowardparitywiththeU.S.dollar,andifstructural reforms take too long to restore competitiveness while deflation turns recession into near depression, the only viableoptionforadistressedEZcountrytorestoregrowthandcompetitivenesseventuallywillbecomegivingup theeuro,exitingthemonetaryunionandreturningtoanationalcurrency.TheECBhaspostponedalossofmarket accessforItalyandSpain,preventedfornowadebtrestructuringinPortugalandIrelandandavoidedanearlyexit ofGreecefromtheEZ.Butliquidityonlybuystime;itdoesntresolvethefundamentalproblemsofprivateand public insolvency and lack of growth and competitiveness. As Koo warned at the Ambrosetti Forum, to avoid a repeat of the Great Depression and achieve milder stagnation like that experienced by Japan, the EZ periphery requiresadifferentsetofmacroeconomicpolicies.

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AfterthePrivateSectorBalanceSheetRepair

Theargumentthatabalancesheetrecessionrequiresamonetizedfiscalstimulusdoesnotimplythatsuchapolicy Page|7 shouldbefollowedwithoutanylimitandthatrelevantstructuralreformsincludingrealandfinancialrestructuring shouldnotoccur.Eventually,oncetheprivatesectorbalancesheethealinghasoccurred,thefiscalstimulusneeds tobephasedout.Oncetheeconomyreturnstopotentialgrowth,theexcessliquidityinthefinancialsystemneeds to be mopped up and sterilized. But, as I have argued recently, the optimal path of fiscal consolidation is back loadedratherthanfrontloaded:shortrunstimuluswithacredibleplantoreducespendingandraisetaxesover the medium term, once the deleveraging and privatesector balancesheet repair has occurred. In a recent presentationataBrookingsInstitutionpanel,BradDeLongandLarrySummersalsoshowthatamonetizedfiscal stimulus is the appropriate policy response to a balancesheet recession and subsequent deleveraging in economies that are in a liquidity trap. Of course, if the crisis was caused in the first place by a lack of fiscal discipline(asinGreece)anappropriatefiscalausterityplanthatisnotexcessivelyfrontloadedandanorderly debtrestructuringcannotbepostponed;rathertheyneedtobepartofthestrategytosolvethecrisis. Finally,relevantstructuralreformsincludingrealandfinancialrestructuringshouldoccurattherightpace.Initially, some forbearance for banks and financial institutions and appropriate provision of backstops, ringfencing and liquidity are necessary to prevent a systemic meltdown of the financial system. But over time, keeping zombie banks,financialinstitutions,corporationsandhouseholdsonpermanentemergencyliquiditysupportpreventsthe realandfinancialrestructuringthatisnecessarytocleantheirbalancesheetswhenforbearance,timeandliquidity aloneareinsufficienttodoso.Indeed,whenproblemspertaintosolvencyratherthanliquidityalone,therealand financial restructuring (including orderly debt restructuring and recapitalization of undercapitalized institutions) shouldnotbepostponedfortoolong. Infact,oneofthemistakesJapanmadewaswaitingtoolongtorestructurezombiebanksandcorporations:They werenotrecapitalizeduntilthelate1990s,almostadecadeaftertheassetbubblebustin1990.Similarly,unlike theU.S.,theEZhaspostponedfortoolongthefinancialrestructuringandrecapitalizationofbanksandfinancial institutions,andputtingthelossesofthefinancialsystemonthegovernmentbalancesheetasinIrelandrisks leadingtotheinsolvencyofthegovernment.Thegovernmentbalancesheetcantakesomeoftheprivatesector losseswhenitisstrongenough;otherwise,theinsolvencyoftheprivatesectoristransferredtothepublicsector. Privatesectorbalancesheetrepairshouldnotcomeatthecostofthesolvencyofthepublicsectorbalancesheet. Thus,theresolutionofprivatesectorbalancesheetcrisesisacomplexproblem.Intheshortterm,itrequireslarge andpersistentmonetizedfiscaldeficitsandbackstoppingofilliquidbutsolventprivateagents.Overthemediumto longterm,howeveroncethebalancesheetrepairiswellunderwayitrequiresbackloadedfiscalconsolidation (morefrontloadediflargefiscaldeficitswereoneoftheoriginalcausesofthecrisis),moppingupexcessliquidity, restructuring the debts of governments, banks, households and corporations that face solvencynot just liquidityissuesandappropriatestructuralreformstoincreaseproductivityandlongtermeconomicgrowth.
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