The Minister of Economy Sergio Massa announced this Monday a 30% increase in the limits of the Credit cards and affirmed that the measure will allow “increasing the purchasing power” of 39 million people. The objective is to sustain consumption and the domestic market in the face of a drop in GDP as a result of the drought.
Within the framework of the “Strengthening credit to the private sector and improvements in the regulatory framework”the head of the Palacio de Hacienda led the presentation of the new measures with which they bet to face the negative effects on economic activity of the fall in agricultural exports.
“The drop in GDP due to the drought will be 20% this year,” said the minister, stressing the need to offset this impact by “feeding” the “other two turbines of the Argentine economy, which are investment and consumption or the domestic market.”
Among the measures implemented by Economy and financial entities, the 30% increase in purchase margins on credit card installmentsas well as a 25% increase in margins on purchases with credit cards in one payment. Besides, the margins for advances in checking accounts for MiPymes will rise by 25%.
“Improved access to credit can help us offset part of the drop in GDP as a result of the drought,” Massa added. when communicating the agreement with the public and private banking entities of national capital to increase the credit card limit by 30%.
“Improving the credit capacity of 39 million people who have a credit card, increasing their purchasing power by 30% and their credit profile is a very valuable contribution from the Argentine financial system,” said the minister, noting that “the regulator ( BCRA) and public and private banks with national capital take this initiative and support it” since it will allow “consumers and SMEs to benefit”.
Massa highlighted “the effort” of the Argentine banks and the national State in the implementation of the increases that will have a scope “of more than 300 thousand SMEs and MiPymes and more than 39 million people”.
Promotion of consumption with credit cards
The agreement was reached with the Association of Argentine Banks (Adeba), which brings together national capital entities, and with Abappra, which brings together public and private banks.
Prior to the announcement, from the Palacio de Hacienda they explained the effect that the increase in the credit limit will have. “For every $10,000 pesos available in a payment, 3,000 more pesos are added; and if a family had 50,000 pesos of credit on their card, now they will have 65,000 pesos”, they highlighted.
On the part of the banking sector, they assured that “This effort must be complemented with actions by the State and by political leaders from all sectorsthat allow the macroeconomic ordering necessary to achieve the reduction of inflation”.
“Modifications to the regulatory framework are also required in order to promote the channeling of society’s savings towards credit, efficiently and avoiding the generation of distortions, especially those generated by setting minimum rates,” they added.
These measures are in addition to the two announced last week that seek to sustain retail consumption, such as the reduction in the Now 12 rate and interest balances for credit cards, in addition to the increase in refunds to vulnerable sectors for card purchases debit.
Credit cards: how will the increase be
- Purchase margins on credit card installments will increase by 30%.
- The margins of purchases with credit cards will be increased by 25% in one payment.
- Advance margins on checking accounts for MiPymes will increase by 25%.
Credit cards: another benefit
Since May, the limit has been increased to $40,000 to withdraw cash with a debit card in businesses. Until now, customers could withdraw $30,000 from merchants where they paid for their purchases with a debit card. This practice is called extracash, a modality that already represents 4.14% of the total volume of consumption with a debit card, according to the latest Prisma Medios de Pago index for the first quarter. In order to withdraw money, the customer must make a purchase with a card.
Promotion of SME innovation
Prior to the announcement related to consumption, the Minister of Economy presented a new financing for $120,000 million to launch programs aimed at promoting innovation and the transition of Argentine SMEs towards industry 4.0.
In this context, Massa referred to the negative effect of the drought on the economy and the need to reverse the impact on activity. “This year we are going to lack US$15,000 million in exports,” he said, due to the effects derived from the lack of rain in the countryside at the end of last year and at the beginning of 2023, and he said that this must be compensated with financing and “economic planning”.
Regarding the tools that the Government began to use to deal with this scenario, Massa commented that the SWAP with China will be executed until next August in yuan for imports for an amount equivalent to US$5,000 million.
Source: Ambito
