Argentina's economy minister rules out government aid for indebted families

Argentine Economy Minister Luis Caputo has firmly stated that the government will not implement measures to aid indebted families, characterizing such debts as a "private agreement" between lenders and borrowers where the state cannot intervene. He expressed confidence that the rate of defaults will decrease over time.

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We will not be able to do much there.

Caputo made these remarks in an interview on Friday, as household debt in Argentina has surged to record levels. Data from the Central Bank of Argentina (BCRA) revealed that the default rate reached 12.8% in May, the highest in over two decades. The minister acknowledged warning the financial system about the potential rise in defaults, recalling his advice to banks about lending at high interest rates when salaries were not keeping pace.

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The default rate will eventually fall.

He suggested that individuals taking out loans might have had limited options or were uncertain about the government's economic plan, perhaps anticipating a change in administration and a subsequent decrease in inflation. Caputo also noted that banks themselves may not fully understand the purpose behind each loan. He reiterated his belief that the default rate would normalize as banks actively refinance debts at lower rates and longer terms.

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Each of us must take responsibility for our decisions.

When questioned about potential government intervention, Caputo stressed personal responsibility, stating, "Each of us must take responsibility for our decisions." He defended President Javier Milei's announced reform of the Central Bank's Organic Charter, asserting it is crucial for combating inflation and paving the way for medium and long-term stability. Caputo explained that the reform aims to address the monetary financing of government deficits, which he described as a hidden tax fueling inflation. He called the reform "foundational" and potentially the most significant in a century, predicting it would transform the country. Additionally, he anticipated benefits for small and medium-sized enterprises.

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This really changes the country.