IMF says household debt defaults pose no risk to Argentina's economy

Household debt defaults do not pose a risk to Argentina's economy, as household debt remains comparatively low relative to other Latin American nations, International Monetary Fund (IMF) spokesperson Julie Kozack said on Thursday.

"We are, of course, monitoring the recent increase in household delinquency rates. We do not consider this to pose a significant risk to financial stability in Argentina," Kozack said at a press conference in Washington, responding to journalists' questions on the issue.

"Essentially, what we see in Argentina is that household debt remains relatively low. It stands at around eight percent of GDP in Argentina, which is lower than what we see in many other countries in Latin America," she added.

Some 5.8 million Argentines are considered to be in arrears, meaning they are more than 90 days behind on debt repayments, according to recent Central Bank figures. Half are classified as having debts deemed uncollectable.

The figures represent the highest level of delinquency in two decades. Recent reporting has also highlighted a sharp rise in overdue household loans, particularly among lower-income borrowers and users of digital lending platforms.

"The banks are well capitalised and liquid, and they have provisions covering more than 85 percent of their non-performing loans," the spokesperson added.

"Overall, Argentina's banking system is quite small, and deepening these markets – providing avenues through which credit and savings can be channelled towards investment and opportunities for Argentines – will be very important going forward," Kozack said.

The IMF has repeatedly expressed its support for President Javier Milei's free-market reform programme, which has renewed the country's relationship with the Fund after years of stagnation linked to previous payment defaults.

Argentina signed a four-year, US$20-billion Extended Fund Facility agreement with the IMF in 2025.

The Fund's Managing Director, Kristalina Georgieva, visited the country in July.

– TIMES/AFP