The bankers took him to Sergio Massa a plan for increase credit score in the country, so enlarge the pie of consumption through bank financing. The proposal was received with relief, because the impact of inflation on the reduction of purchasing power of workers had begun to be seen in consumption, with a drop in sales and a drop in production, mainly in SMEs. But it wasn’t all praise: If the macroeconomic problems are not solved, it is impossible for the offer to become universal against the credit risks of a troubled economy.
Words more, words less, the owners of the national banks who met with Massa at the Palacio de Hacienda asked him “the need for the authorities and the members of the different political forceseach according to their roles and functions, carry out the necessary actions to achieve a macroeconomic order that leads to a sustained reduction in inflation”. This is how they portrayed him PROFILE sources that participated in the meeting that was held in the Belgrano Room on the fifth floor of the Palacio de Hacienda.
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There was a paper of work that circulated without the final check. It was intended to become a joint statement of the two entities that participated in the agreement: the Association of Argentine Banks (ADEBA) and the Association of Public and Private Banks of the Argentine Republic (ABAPPRA). There the reproach pointed against the intervention of the State: “They also require modifications to the regulatory framework in order to promote the efficient intermediation without distortions of the economy’s resources, particularly those linked to the fixing of minimum rates. This will also contribute to improving financing conditions for companies and individuals”. That part was even left out of the off the recordbut some ABAPPRA partners allowed the leak.
The Argentine financial market, weak credit
The banks that operate in Argentina have been raising the need to increase the participation of the population in the use of credit cards. The comparison with other countries is lapidary. Local bank financing reaches around 8% in relation to the Gross Domestic Product of Argentina; While in the rest of the region that percentage is closer to 55%. “We need to bank the country more and for that there must be a political decision of reduce the tax burden in the long term, but it must be complemented with a currency stability”, assured, outside the microphone, a source from the sector.
According to information from the banking sector, to which PROFILE, Peru and Colombia They are in a Relationship credit to the private sector/GDP of the 55%which had a floor of 22% in 2000. At that time, Brazil was in the order of 31% of the financing and the exponential growth of its economy led it to 70% peak, being the most vigorous in that area. While Paraguaywhich also recorded a 22% 23 years ago, managed to expand credit almost 50%despite a drop between 2004 and 2007. The only downside was the Argentinawhich started with 23% in 2000, sank to around 10% since 2003 and fell to 8% this year.
How much will the limit for credit card purchases increase?
Some data from the banking system that Adeba brought to the meeting with Massa were explicit: the amount of credit card that exist in the country are 39 million plasticswhose total financing contemplates $ 2,500 billion. While the total funding advance in checking account of $1,000 billion. None of this is attractive for a system that has the capacity to multiply by six to adapt to the rhythm of the region, but the impediment, according to the bankers, is the instability of the local currency, due to macroeconomic imbalances.
The increase in limits is not universal
According to the agreement reached by the banks, these amounts extend 30% for purchases in credit card installments; 25% for purchases with credit cards in one payment; and 25% for limits on checking account advances to MiPymes. “For every $10,000 of available in a payment, $3,000 will be added. Along these lines, if a family had $50,000 of credit on their card, they will now have $65,000. For this reason, these increases will allow families to access more assets with the Now 12 plan”, Massa highlighted in the meeting.
However, the banks clarified that that increase will not be linearly applied. It happens that all the beneficiaries they must go through the scoring financial to qualify in the readjustment, which implies that there will be a portion of credit card users who will be outside of the improvement in consumer conditions. Massa asked to put the magnifying glass on that universe of people to help “those who are compressed and with little capacity to borrow”and noted that represents 10% of users. The banks replied that they will not be able to lend irresponsiblyalthough they also admitted that the level of late payment “still very small”.
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Despite the crossed recipes and claims, Massa took the proposal as a wink that the national capital banking sector made to his management. The initiative serves as a relief for the middle class, which is the owner of credit cards and has the capacity to borrow, above the offer that the financial circuit had given up to now. The act of this Monday did not imply any new regulationnot even state intervention, because it is a private action. “There is no obligation to anyone. It was a coincidence of needs”he told PROFILE one of the bankers present.
The minister’s fear is that a fall in consumption, with its immediate effect on production and employmentis validated right at the entrance of the definition of the national candidacies. Massa still has hopes of playing his presidential chances and more concerned than the inflation rate is the purchasing power of the population. If the salary beats the remarks, the problem is less at the polls, they reason in different official offices. In this sense, the president of the Argentine Chamber of the Optical and Related Industry (CADIOA), Norberto Fermanisentenced: “The population in general does not want to get into debt, because it is risk averse; and, if we add to this that credit card limits did not allow any type of possibility of financing a purchase, this perfectly indicates what the consumption problem we have”.
AM / ED
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