Even though it was obviously a problem by the middle of 2025, President Javier Milei’s government didn’t start providing explanations for record-high delinquency rates until a few months ago. According to the most recent official data, total delinquency on private-sector credit was recorded at 7.6% in June. In comparison, the figure stood at 2.9% in June 2025, while it was only 1.8% in the corresponding month of 2024. Delinquency levels are elevated not only in comparison to prior years but also relative to regional benchmarks. A report published in August by the Latin American Federation of Banks found that the average delinquency rate in Latin America is just 2.7%, roughly one-third of Argentina’s level. Central Bank Vise President Vladimir Werning indicated in early September that although credit delinquency had reached its zenith over the preceding three months, a recovery is anticipated from the latter half of the year onwards. He attributed the increase to interest rates, arguing that they had become excessively high in real terms for borrowers who had anticipated higher inflation or a devaluation following the elections. Werning stated that the resolution ought to be achieved solely through sustainable refinancing by the private sector, without any intervention or bailout from the Central Bank. He stated that banks possess adequate capital to absorb the losses and should refrain from further raising interest rates for households to counterbalance the rise in delinquency. The International Monetary Fund also addressed the issue a week ago.
In response to enquiries during the organization’s monthly press conference, IMF spokesperson Julie Kozack stated that the IMF was “closely monitoring” the situation. However, she raised the question of whether it “represents a significant risk to the country’s financial stability.” The IMF official indicated that household debt is currently positioned at a relatively modest level, approximately 8% of gross domestic product. She also noted that banks maintain sufficient capital and liquidity levels, with provisions exceeding 85% of non-performing loans. The most pronounced rise in delinquency has taken place specifically within household lending. In June, the delinquency rate in that segment stood at 12.8%, an increase from 5.2% in the corresponding month of the previous year. A month ago, President Milei provided a straightforward rationale for the phenomenon: “People bought TVs to watch the World Cup and then decided whether to pay or not.” However, that argument overlooks a fundamental issue. Elevated delinquency rates limit access to new credit, which is a crucial factor influencing domestic consumption and, by extension, overall economic activity. Juan Manuel Telechea informed that approximately 7 million individuals are presently in default on their debts, accounting for about 30% of the entire population within the conventional financial system. “That means these people are shut out of the traditional financial system’s credit market, except for refinancing,” he said. Telechea emphasised that the situation has a distinct effect on the economy. “Credit, along with the recovery in purchasing power, had been the two main drivers of economic growth during 2024 and part of 2025,” he said. He noted that both credit and enhancements in purchasing power experienced a slowdown in the latter part of the previous year and persisted throughout 2026.
Data indicates that private-sector registered wages have decreased by 3.6% when adjusted for inflation since Milei assumed office. Claudio Caprarulo told that credit could have helped “smooth out” a situation in which purchasing power “has failed to recover and labor figures continue to deteriorate.” With that tool no longer available, he warned that “what happens not only with household delinquency but also with corporate delinquency is becoming increasingly relevant.” With that tool no longer available, he cautioned that “what happens not only with household delinquency but also with corporate delinquency is becoming increasingly relevant.” While the corporate delinquency rate stands at a comparatively lower level than that of households – recorded at 3.5% in June, an increase from 1.1% in the same month the previous year – Caprarulo noted that construction firms associated with the construction supply chain and textile companies “are showing the highest delinquency rates.” Both sectors have experienced significant adverse effects as a result of Milei’s economic policies. Construction has experienced a downturn due to the suspension of public works, whereas the textile sector has faced challenges stemming from the swift increase in imports and a reduction in purchasing power. Telechea stated that the initial action for the government to tackle the situation is to “acknowledge the problem,” a step that the economic team has not yet taken explicitly, even as the issue becomes more apparent in official data.
On Thursday, the government published GDP figures for the second quarter of 2026. They demonstrated that although the economy expanded by 2% year-on-year, it contracted by 0.6% on a seasonally adjusted quarterly basis, accompanied by a 2.4% decrease in private consumption. The T+1 director said the government could “play a much more active role in refinancing, for example, by opening credit lines specifically for that purpose,” something it has already begun doing through Banco Nación. In a similar vein, Caprarulo suggested that the Sustainability Guarantee Fund of the state pension agency ANSES acquire the portfolios of delinquent borrowers held by banks, akin to the practice of banks selling these portfolios to collection agencies. The objective would be to “implementing recovery policies with interest rates and repayment terms that do not make families’ day-to-day lives more difficult.” He added: “It is important to keep expanding credit in order to try to sustain the growth of Argentina’s financial system.” Argentina possesses the lowest credit-to-GDP ratio in Latin America, standing at 14.3%, as reported by the Latin American Federation of Banks. The regional average stands at 47.3%.
