Under Milei’s austerity drive, Argentines trapped in 1,000pc interest rate debt crisis

In Argentina, President Javier Milei's austerity measures have plunged the country into a debt crisis, with personal loan delinquencies tripling in the past year and reaching a two-decade high, according to the Central Bank of Argentina. Approximately 5.8 million Argentines are now over 90 days behind on their debt payments. The struggle stems from stagnant incomes and a cost of living crisis, exacerbated by Milei's slashing of subsidies for essential services like transportation, gas, and medicine.

Andrea, a 32-year-old mother, took out a loan for a catering business, but her debt ballooned from one million pesos to five million after purchasing a new oven. Describing her predicament, she remarked, "I fell behind on payments, and in a couple of months the debt became too big to repay." She is not alone in facing such a situation; 21 million people, out of a population of 46 million, have some form of debt.

Milei dismisses any personal responsibility for the crisis, questioning whether individuals were forced to take out loans. However, Juan Cuattromo, president of Buenos Aires' Banco Provincia, asserts that the crisis results from a macroeconomic context that has worsened incomes, employment, and economic activity. The majority of unpaid loans—over 70%—are personal loans and credit cards.

For example, Claudia Debaste, a 40-year-old single mother, fell behind on her credit card bill, which covers utility payments, transportation, groceries, and medicine. She is now attempting to reschedule her debt. The debt crisis coincides with the surge in credit access through digital wallets like Mercado Pago, which has drawn in adolescents as young as 13.

However, high-interest rates have led many into a debt spiral. Gabriel Solano, leader of the Workers' Party, filed a criminal complaint against Mercado Libre's CEO for usury, citing an effective financial cost of 1,375% for loans. Additionally, gig workers on platforms like Pedidos Ya and Gurpi, which act as lenders, face exorbitant interest rates starting at 260% annually, with payments deducted from their earnings.