Fiscal Adjustment Bolsters Credit Availability

After a period of significant contraction, the Argentine credit market is showing the first signs of recovery. The economist Jorge Day, from the Mediterranean Foundation – Ieral, highlighted that fiscal adjustments implemented by the new government are responsible for this upturn. These adjustments have reduced government fund demands, freeing up resources for banks to extend to the private sector.

“With the change of administration and fiscal adjustment, the government demands fewer funds, thus releasing resources for the banks,” Day explained. “If we measure it by inflation, what we see is that credits have almost doubled, obviously starting from the bottom, but they have doubled, which is a striking increase.”

Mortgage and Consumer Loans Lead Recovery

Day noted that the recovery is evident across various credit types, with mortgage loans seeing the least improvement. Construction sectors, despite reduced public works, have received significant credit volumes, indicating a sector-specific resilience.

“This is an operation with greater operational complexity, as each property is different and not standardized as a car,” Day said. “If the economic plan is maintained, this sector will have the most impulse.”

Mendoza, Formosa and the Northwest Lead in Credit Growth

The study also analyzed credit behavior across provinces. Mendoza and Formosa have shown the greatest credit growth, with Mendoza seeing a higher allocation to businesses and Formosa primarily focusing on personal credits. Salta and Jujuy provinces, linked to mining activities, have also exhibited substantial growth.

High Interest Rates Persist

Despite signs of economic stabilization, high interest rates continue to be a challenge. Day explained that these rates are influenced by inflation projections and country risk, which, though declining, remain elevated. As international credibility improves, rates should decrease, encouraging more medium to long-term borrowing.

“Mattress Dollars” Initiative Faces Hurdles

The government’s recent measures to stimulate “dollar savings” have seen slow adoption, largely due to regulatory uncertainties and historical mistrust driven by decades of inflation. Day concluded that the process requires time, as Argentines remain cautious about protecting their savings in dollars.