Argentina Eases Rules on Dollar-Denominated Loans for Businesses

Argentina is set to allow its banks to lend a portion of their U.S. dollar deposits to companies, a significant policy shift designed to boost credit for the corporate sector. Economy Minister Luis Caputo announced that financial institutions will be permitted to lend up to 15% of their dollar deposits under the new framework.

Boosting Corporate Credit

The measure is intended to inject much-needed liquidity into the economy and increase the availability of credit for businesses, according to Caputo. The government's goal is to help reactivate an economy struggling with the high cost of borrowing in the local currency.

High peso interest rates have created significant difficulties for business owners, prompting calls for more flexible financing options. Caputo noted that industries such as automotive and construction had specifically requested such measures to support their operations and investments.

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Broader Economic Reforms

This policy change aligns with the broader economic agenda of President Javier Milei's administration and recent recommendations from international bodies. Last month, International Monetary Fund (IMF) Managing Director Kristalina Georgieva praised Argentina's economic reforms for helping to lower inflation but stressed the need to improve credit access for both businesses and households.

The government also stated that the new lending rule complements ongoing tax reforms. Those reforms are designed to encourage Argentines to declare savings held in cash or in overseas accounts and move them into the formal financial system, which would in turn expand the deposit base for this new lending capacity.