Milei and the IMF say debt delinquency is no threat to the economy. Experts disagree

President Javier Milei's administration in Argentina has downplayed concerns over rising delinquency rates on private-sector credit, despite data showing a significant increase. According to official figures, delinquency on private-sector credit reached 7.6% in June, up from 2.9% in the same month of 2025 and just 1.8% in June 2024. Experts disagree with this assessment, arguing that the surge in delinquency is a serious issue that could negatively impact the economy.

Central Bank Vice President Vladimir Werning stated that while delinquency had peaked over the past three months, an improvement should be expected from the second half of the year onward. He attributed the rise to high interest rates, which borrowers had expected to be lower following the elections. The IMF also acknowledged the issue during one of its monthly press conferences, stating that it was closely monitoring the situation but did not believe it represented a significant risk to the country's financial stability.

They noted that household debt remains relatively low at around 8% of GDP, and banks have adequate levels of capital and liquidity.

However, experts argue that high delinquency rates can restrict access to new credit, which is a key driver of domestic consumption and economic activity. Juan Manuel Telechea, director of consulting firm T+1, stated that nearly 7 million people are currently delinquent on their debts, representing roughly 30% of all people in the traditional financial system.

This exclusion from the credit market can have a significant impact on economic growth, as both credit and improved purchasing power had been the main drivers of growth during 2024 and part of 2025.

Despite this, Milei's administration has downplayed the issue. President Milei suggested that people were buying TVs to watch the World Cup and then deciding whether to pay for them, but this explanation ignores the underlying problem. High delinquency rates can lead to a decrease in purchasing power and a slowdown in labor figures, as seen in recent data. While the corporate delinquency rate is lower than the household rate, certain sectors such as construction and textiles have been hit hard by Milei's economic policies.

Telechea suggested that the government should acknowledge the problem and take more active measures to address it, such as opening credit lines specifically for refinancing or using the Sustainability Guarantee Fund (FGS) to purchase delinquent borrower portfolios with more favorable repayment terms. However, the government has yet to explicitly address the issue in its economic team's statements.

Argentina's credit-to-GDP ratio remains low at 14.3%, well below the regional average of 47.3%, according to the Latin American Federation of Banks.