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Montevideo, August 17th 2017 - 06:00 UTC

Argentine administration props the housing and construction industry ahead of mid term elections

Tuesday, July 18th 2017 - 07:30 UTC
Full article 3 comments
The program primarily benefits the urban middle-class, who largely supported president Macri in 2015 elections after more than a decade of populist rule The program primarily benefits the urban middle-class, who largely supported president Macri in 2015 elections after more than a decade of populist rule
“For the middle class, which is large, all this spurs the economy and generates activity,” said Ivan Kerr, Deputy Secretary of urban development and housing “For the middle class, which is large, all this spurs the economy and generates activity,” said Ivan Kerr, Deputy Secretary of urban development and housing
The October vote will be crucial: ex president Cristina Fernandez is eyeing a Senate seat in Buenos Aires province, the country's largest, which would scare investors. The October vote will be crucial: ex president Cristina Fernandez is eyeing a Senate seat in Buenos Aires province, the country's largest, which would scare investors.

Argentina's new subsidized mortgage scheme is gathering steam, boosting construction activity and winning over the middle class ahead of mid-term elections in October that will determine the future of President Mauricio Macri's market-friendly agenda and his attempts to put the country's accounts in order.

 Argentines took out 3.7 billion pesos (US$219.32 million) in mortgage loans in June, up from 558 million pesos in the same month last year, central bank data shows. While the overall amount is still modest, it is a notable leap in an economy where high inflation discourages many from seeking credit.

That primarily benefits the urban middle-class, who largely supported Macri in 2015 elections after more than a decade of populist rule, but have since suffered from high inflation and utility price hikes.

“For the middle class, which is large, all this spurs the economy and generates activity,” Ivan Kerr, national Deputy Secretary of urban development and housing, was quoted in an interview.

The vote will be crucial in October's legislative elections, in which former President Cristina Fernandez is eyeing a Senate seat in Buenos Aires province, the country's largest. A victory by Fernandez would scare investors.

In March, the government launched a plan to provide subsidized mortgages to 90,000 Argentines with monthly incomes between 16,000 and 32,000 pesos (US$948.43-US$1,896.86) per month. Half of Argentina's economically active population earns less than 10,000 pesos (US$593) per month, official data show.

Another recently launched plan provides low-interest mortgage loans adjusted for inflation.

“The government is looking to re-conquer the middle class,” said Mariel Fornoni, director of Buenos Aires consultancy Management & Fit. “They supported the government, and today they're unemployed or have access to fewer things because their salary has deteriorated - they can't travel or consume like before.”

The heightened interest in home purchases, together with a flood of dollars entering the legal system from a tax amnesty program that wealthier Argentines are investing in real estate, has contributed to a real estate boom.

That, along with an increase in government infrastructure spending, has boosted construction activity. After falling by 12.7% in 2016, Argentina's construction activity rose by over 10% year-over-year in March, April and May, helping offset continued weak performance in the industrial sector.

“Without a doubt the strong demand for mortgages represents a motor for economic activity and jobs,” said Juan Curutchet, president of the public Bank of Buenos Aires Province.

Categories: Economy, Argentina.

Top Comments

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  • Marti Llazo

    Makes us wonder... whenever “subsidies” and “Argentina” are in the same sentence.

    Remember the previous government's “subsidies” ? Note today at BAH:

    ”Kirchnerite figures had a bad week in the courts ahead of next week’s judicial recess, with several racking up new charges or facing adverse decisions. ...Federal Judge Luis Rodríguez would not be seeking [de Vido's] arrest in connection with alleged fraud in the Río Turbio coal mine in Santa Cruz, Victory Front (FpV) Lawmaker Julio De Vido was slapped with a fresh indictment in connection with subsidies for public buses in during the Kirchnerite governments. Federal Judge Claudio Bonadío, leading the investigation, also issued a lien worth a billion pesos as well as a travel ban against the influential former Planning minister.The judge considered that there was sufficient evidence to show that “between July 2003 and March 2004, by abusing the authority inherent to the positions that they had, the defendants participated in an illegal manoeuvre by which they systematically distributed to public transport companies subsidies that were greater than what they were owed.” Martín Sabbatella, former head of the now defunct AFSCA, was indicted over alleged irregularities in the distribution of subsidies in the period 2014-2015 totalling almost 10 million pesos. Sitting City Legislator Andrea Conde of the FpV, who was also a member of the AFSCA, was also indicted on charges of defrauding the state....”

    -----------

    Subsidies. It has a different meaning in Argentina.

    Jul 19th, 2017 - 02:12 pm 0
  • Enrique Massot

    @ML

    Our industrious commentator Martillazo once again manages to take a current issue (the subsidization of mortgages by the Macri government) and make it about the government in place until a year and a half ago. Not even Macri's assessor Durán Barba could've come up a better strategy.

    Jul 21st, 2017 - 04:13 pm 0
  • Marti Llazo

    Reekie is apparently unaware that the criminals of the government that ended “a year and a half ago” have not been absolved of their felonies.

    We note that the Kirchners' accountant was recently hauled away in handcuffs, and is now in jail.

    Since Reekie missed the point about the fraudulent use of subsidies by the Kirchner government, let's have him actually read the comment posted previously. Then perhaps someone can help him to understand it.

    Jul 21st, 2017 - 07:29 pm 0
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