Argentina is forcing the country’s biggest banks to lend companies at least 15 billion pesos ($3.3 billion) at rates that are less than inflation to shore up production as the economy slows.
Measures announced by the central bank today obligate all banks whose deposits exceed 1 percent of the country’s total deposits to provide credits for three years or more to finance investments that will enable businesses to boost output of goods and services.
The banks will charge a fixed rate of 400 basis points above the average benchmark deposit rate in June for the loans, the bank said in an e-mailed press release. The average rate private banks paid last month for 30-day deposits of more than1 million pesos, known as the badlar, was 12.1 percent.
“At the rates banks are charging now, nobody asks for loans,” President Cristina Fernandez de Kirchner said yesterday in a speech that outlined the measures. “The central bank will establish conditions that will make borrowing accessible.”
Growth of South America’s second-biggest economy will slow to 2.75 percent this year, according to the median estimate of economists surveyed by Bloomberg, down from 8.9 percent last year and 9.1 percent in 2010.
The lending rate of about 16 percent compares with annual inflation estimated at 24 percent in a survey of economists released by opposition lawmakers. Argentina’s national statistics agency, whose data has been questioned by the International Monetary Fund, said consumer prices rose 9.9 percent in the 12 months through May.
Under the new rules, banks will be required to lend 5 percent of their deposits as of June. In May, deposits totaled 434 billion pesos, according to latest central bank data.
A change to the central bank charter announced in March allows the institution to set lending rates for commercial banks.