Werning sees credit recovering as arrears cycle ends
Central Bank of the Argentine Republic (BCRA) Vice President Vladimir Werning said private credit is recovering and arrears have begun declining. Speaking at Torcuato Di Tella University, he linked persistent household arrears to borrowing costs and taxes.
Households bear the arrears burden
Werning said private bank credit rose from 7.8 percent of GDP in December 2023 to 14.3 percent by August 2026.
Arrears peaked at 7.8 percent, against 6.2 percent in the previous cycle, and began declining in August.
Household arrears rose from 2.8 to 12.8 percent, while corporate arrears fell from 4.4 to 3.8 percent.
He attributed repayment strains to inflation and depreciation falling short of borrowers' expectations, raising realized real borrowing costs.
Before the October 2025 election, country risk rose from 500 to 1,500 basis points and money demand fell by roughly half of M2. Nine months after electoral uncertainty eased, corporate borrowing rates were one-fifth of pre-election levels, against three-quarters for households.
More funding, not bailouts
Werning rejected creditor bailouts, lending-rate caps, looser borrower classifications and reserve-requirement cuts, citing costs to taxpayers, credit supply, compliant borrowers and savers.
BCRA responses implemented or being promoted include a framework for dollar lending to non-exporters and long-term bank funding auctions to support inflation-indexed mortgages.
Other measures cover payroll-deduction lending, transferable digital card receivables, a centralized collateral database and higher leverage limits for bank-backed reciprocal guarantee arrangements.
The tax constraint
Werning placed the remaining constraint on taxes rather than bank funding, whose average real cost was negative.
Taxes account for roughly 30 percent of total borrowing costs on several loan products.
Provinces and municipalities impose nearly three-quarters of that tax burden, making them central to his proposed remedy.