Fiscal Support Sustains Stability Amid Credit Risks

High interest rates are posing a significant risk to balance sheets, particularly for smaller and micro businesses forced to pay higher loan costs due to an inability to issue investment-grade debt. However, the situation is mitigated by substantial fiscal support from the government, which has injected 6% to 7% of GDP into the private sector annually. This fiscal generosity bolsters incomes, allowing individuals to service their debts and preventing a downward spiral of reduced spending and income loss. The proactive use of fiscal policy and job creation linked to government activities has played a crucial role in avoiding the typical income shocks that would have worsened credit vulnerabilities.