MercoPress. South Atlantic News Agency

Argentine household arrears reach 17.5% and the government rules out intervening

The report, which combines bank and non-bank financing, counts 20.4 million people holding some form of credit, of whom 5.3 million — 26.1% — were more than 90 days behind on payments

Arrears on credit to individuals in Argentina reached 17.5% of total lending in June, according to a study by Universidad Austral and the consultancy Eco Go based on central bank data. Javier Milei's government has ruled out intervening and maintains the solution must come from the market.

The report, which combines bank and non-bank financing, counts 20.4 million people holding some form of credit, of whom 5.3 million — 26.1% — were more than 90 days behind on payments. Total lending to individuals amounts to 97.1 trillion pesos, around 64.7 billion dollars. Arrears had risen for twenty consecutive months as of June.

The series shows rapid deterioration: irregular balances stood at 3.6% in December 2024, 12.6% a year later and 17.5% in June. The study itself cautions that comparisons should be treated carefully, because since July 2024 the central bank raised the minimum debt that lenders must report from 1,000 to 25,000 pesos. The official figure in the central bank's banking report, which covers only the financial system, stood at 12.8% in May, the highest level in more than two decades.

Behaviour differs by lender. Non-financial credit providers, including digital wallets and non-bank card issuers, account for 14.1% of the portfolio and show arrears of 31%, against 15.2% for banks, finance companies and credit unions.

Economist Marina Dal Poggetto, director of Eco Go, attributes the phenomenon to the credit cycle stalling in early 2025, to the change in macroeconomic regime — the shift from negative real rates to instalments no longer eroded by inflation — and to the global expansion of digital credit. She adds that the picture is completed by insufficient household income and high lending rates. A personal loan at a private bank can carry a nominal annual rate of between 55% and 172%, and at a digital wallet between 48% and 260%. Annual inflation stands at 33.8%.

A study by Banco de la Provincia de Buenos Aires found that of the four million new defaulters between 2024 and 2026, three million already held loans two years earlier and had been paying normally. Its president, Juan Cuattromo, an associate of governor Axel Kicillof, attributes the situation to the government's economic policy.

Milei has responded by asking whether borrowers had “a gun put to their head” to take on debt. Economy Minister Luis Caputo acknowledged some rates are “abusive” and suggested refinancing, but argued for the market to correct itself: “Empathy should not be confused with public policy.” Central bank deputy governor Vladimir Werning said bank arrears peaked in the second quarter.

Around thirty bills have been introduced in Congress, and several provinces offer refinancing, among them Buenos Aires, Santa Fe and the capital, governed by different political forces.