is temporary and should be ended in due time so as to prevent any hidden problems that may emerge inside the banking system. in the future, hidden problems may become a source of systemic risks and we should therefore avoid this. as i have already said, if we estimate the potential amount of issues related to restructured loans in the current situation and banks ’ revenues as the banking system ’ s profit decreased by 6 % against 2019, we will see that there are no reasons why anti - crisis measures should not be terminated gradually. we believe that the regulatory relaxations for restructured loans should be cancelled according to the earlier announced schedule, that is, by 1 july. there may be still one exception. namely, we are ready to continue loan restructuring for small and medium - sized businesses in the regions where restrictions for such enterprises are still in place. however, we will need to analyse this situation in spring. this is the only exception requiring further analysis. nonetheless, we consider that the banking system is ready for the termination of this regulatory easing. simultaneously, we are aware that, despite the recovery trend, the aftershocks of the pandemic will be affecting both the economy and banks for a while longer. therefore, for banks to be capable to continue lending, we are going to partially release the buffer for unsecured loans beginning on 1 july. a particular amount of this release will be determined in the next few months, after we update the estimate of loan losses. nonetheless, our preliminary estimate shows that the amount of this release may be more than 100 billion rubles for the banking system in general. this would be substantial support to banks. however, i would like to draw your attention to several aspects in this regard. first of all, the release of buffers is not a signal that unsecured lending may be expanded recklessly. these funds are released for a particular purpose of aiding banks in loss recognition during the period when the regulatory easing is being gradually terminated for them. moreover, we will be monitoring the situation in the unsecured consumer lending market which is now actively bouncing back. we assume that january ’ s indicators on consumer lending recovery will probably exceed those on income recovery, and if any signs of future overheating emerge, we may start already this year to increase buffers for newly issued consumer loans in order to prevent an inadequate rise in households ’ debt load as compared to income growth. i would like to especially emphasise once again the fact that the decision to release

to 2. 7 per cent in 2007 - 08. over the same period, the deficit of the state governments declined from 4. 1 per cent of gdp to 1. 5 per cent. thus, we saw a large adjustment over a relatively small period. this past experience with fiscal adjustment may raise hopes that we will be able to roll back the recent fiscal deficits. such a simplistic approach may be misleading. a large part of our fiscal deficit is structural and not cyclical. also, at least a part of fiscal consolidation resulted from high growth, not the other way round. it is important to acknowledge this in order to define the problem and assess the enormity of the challenge. three issues are important in this context. first, this concept of “ fiscal adjustment over a cycle ” is inadvisable for us. adjustment over a cycle is for mature and advanced economies. even there it does not work – the uk, for instance, was running its highest fiscal deficit at the peak of the economic cycle. we will be safest sticking to a single formula and tying ourselves down to annual, inflexible targets. this is a blunt but safe way of de - linking fiscal adjustment from democratic pressures. second, we must focus on the quality of fiscal adjustment, not just chase a numerical target. the ratio of capital outlay to gdp for the central government has stagnated between 1 and 2 per cent of gdp since the early 1990s from around 2 - 3 per cent in the preceding decade. third, we cannot sit back and hope that tax increase will deliver fiscal consolidation on a platter. revenue expenditure has increased from around 12 per cent of gdp during the period 2000 - 08 to over 15 per cent now. we need to work seriously on expenditure compression. this is going to be politically challenging both at the centre and in the states, but it needs to be done regardless. fifth concern : financial stability, financial inclusion and growth the last concern i want to raise relates to the challenge of financial inclusion. given the enormity of the crisis, financial sector regulation is being tightened under the aegis of international bodies such as the bcbs and fsb. there are proposals that would raise the reserve requirement of banks. new regulations for liquidity requirements are also going to be in place. there are also proposals to require banks to hold government securities. many of these measures are necessary. but we need to recognise that all such proposals will have the impact of increasing the banks