Argentina targets SMEs with US$2.6bn loan program

Argentina's President Mauricio Macri unveiled a program extending a 100bn-peso (US$2.56bn) credit line to SMEs, an initiative to counter impacts from the recession, declining consumption and high interest rates.

As detailed in the announcement, the program would operate through state and private banking institutions offering loans at annual interest rates of between 25% and 29%, representing a 12-point subsidy from the nation's productive development fund (Fondep) at an estimated fiscal cost of 400mn pesos.

In subsequent comments, reported by local news outlet Télam, production minister Dante Sica said this was "the opportune moment" to launch the initiative with "the economy beginning to show signs of improvement."

Argentina saw its economy contract last year at the strongest pace since the 2009 global financial crisis, with statistics agency Indec reporting that December economic activity fell 7.0% year-on-year, pulling the full-year reading to 2.6%.

The recession, however, looks to moderate in 2019 with the IMF seeing a 1% contraction in GDP this year, an improvement from the -1.6% estimate in its October World Economic Outlook.

The new financing package also includes 80bn pesos to facilitate the financing of working capital for SMEs, channeled through the financial system and the capital market.

The amount includes 60bn pesos for advances on post-dated checks for up to 120 days in public banks (with a final interest rate for SMEs of 25% per year) and in private banks (with a final annual rate of 29%). This line of financing will be available at a total of 27 banks.