Javier Milei’s administration anticipates that energy, mining, and agriculture will continue to serve as the primary drivers of the economy. Additionally, it is placing its hopes on a renewed expansion of credit to produce the long-anticipated spillover effect and stimulate economic recovery. While not explicitly articulated, the economic team aspires to emulate the consumer lending surge that began in late 2024 and persisted into much of 2025, which ultimately ceased due to the unsuccessful unwinding of the LEFI instruments and increased pre-election volatility. A few days ago, Deputy Economy Minister José Luis Daza stated that the government is exploring “many alternatives” with that objective in mind. The challenge lies in elevated loan delinquency rates, increasing unemployment and informality, coupled with an incomplete recovery in wages. While there have been improvements in recent months, wages still fall short of their levels prior to Milei’s assumption of office, undermining the objective.
A recent report estimated that household loan delinquency climbed to 12.7% in May. That translates into 5.8 million Argentines with overdue debt, a record high. Claudio Caprarulo arrived at a comparable estimate: 27% of the 19.8 million Argentines with outstanding credit are currently delinquent, which translates to 5.3 million individuals. Caprarulo informed the Herald that although household delinquency saw an uptick in May, “the number of delinquent individuals did not.” He also observed that the rate at which bank customers are defaulting on their payments has been decelerating. Economist and former Central Bank director Jorge Carrera contended that it is not yet feasible to be “completely certain” that the debt delinquency process has concluded. “The reasons behind this remain fully in place. It has more to do with the decline in economic activity and household income than with interest rates, which haven’t fallen that much either,” he told. He said the current level of debt delinquency “is high and concerning,” adding that the number of people struggling to repay their debts “may actually be larger than the statistics suggest.”
“In some cases, because these borrowers are established clients, banks prefer to reclassify them, giving them another opportunity or offering some form of refinancing,” he explained. Luciano Patruco, contended that debt delinquency is improbable to decrease merely due to an expansion in credit, highlighting that credit growth has been stagnant for the past seven months. He added, however, that one mitigating factor is “the financing plans that some banks have been promoting, particularly Banco Nación.” Market projections circulating among banks and reviewed by the Herald indicate that overall private-sector debt delinquency reached its zenith in June. Estimates range between 7.8% and 8%, compared with 7.2% in May. From that point onward, debt delinquency is expected to decline gradually to between 6.3% and 6.5% by December. While that would represent an improvement, it would still remain too high to support a strong revival in lending. Caprarulo said that if formal-sector wages continue to outpace inflation, as they did in April, the peak in debt delinquency may already be near. “That doesn’t mean we shouldn’t be thinking about how to restore access to credit for the 5.3 million Argentines who have effectively been shut out of any possibility of obtaining financing,” he stressed.
He believes credit could recover over the coming months, although the rebound would likely be “more marginal.” Patruco said that, in addition to slowing inflation—which in May fell to its lowest level since August—another positive factor is the government’s “more flexible stance when it comes to approving wage agreements.” For example, public-sector workers—one of the groups hardest hit by Milei’s chainsaw-style spending cuts—secured a 3.8% wage increase for the third quarter, well above projected inflation for the period. As a result, Patruco argued that if wages continue to rise and delinquency declines, “more borrowers would regain access to credit, creating a virtuous cycle of growth through credit expansion.” Carrera painted a more challenging picture for the recovery of the lending market. “It’s very constrained because many of those who need credit are in a very difficult situation,” he said. He added that “banks are effectively being forced to become much more cautious when extending credit, because no one wants debt delinquency rates to keep rising.” He also noted that not only do real wages need to improve, but so does disposable income.
“Compared with one or two years ago, real wages no longer translate into the same purchasing power. Utility bills now account for a much larger share of household budgets, leaving people with less disposable income. That means a much more substantial improvement is needed.” On top of that, informality and unemployment would also need to stop rising, since formal workers are the ones most likely to qualify for “reasonable” credit. Finally, Carrera pointed to another complicating factor: the high delinquency rate among younger borrowers. According to 1816, nearly 40% of all delinquent borrowers are under the age of 35. “These are the people who have their entire financial lives ahead of them. Once you’ve been marked by delinquency, banks are much more reluctant to lend to you—and that stain doesn’t simply disappear,” Carrera concluded.