FILE PHOTO – Argentina’s President Mauricio Macri speaks during a meeting with Brazil’s President Jair Bolsonaro in Brasilia, Brazil, January 16, 2019. REUTERS/Ueslei Marcelino
BUENOS AIRES (Reuters) – Argentine President Mauricio Macri, vying for re-election this year, said on Wednesday the government would extend $2.6 billion in loans to the country’s embattled private companies.
Small- and medium-sized enterprises (SMEs), the country’s top employer, have been the hardest-hit by soaring inflation and a plunging currency.
Benchmark interest rates, now around 50 percent, have also spooked many smaller businesses from taking out loans, hurting economic activity that fell 7 percent in December, official data released on Wednesday showed.
The new credit lines, which will be made at an interest rate of between 25 percent and 29 percent – well below the current central bank benchmark – will be available from 27 private and state banks throughout the country, Macri said in a televised speech.
“Everything that happened to us in 2018 generated a serious problem in the economic system, great instability in the exchange rate, and those who suffer the most are the SMEs,” Macri said.
Macri rolled out measures to dissuade struggling firms from laying off workers last year, which has kept employment levels relatively stable.
Argentina, the third-largest economy in Latin America, saw the value of its peso currency halved in 2018 as investors fled. The central bank has been selling short-term “Leliq” notes with interest rates that climbed above 70 percent in October in an effort to slow down safe-haven dollar-buying.
Macri will seek re-election in October, looking to bounce back from what he termed economic “storms” in 2018 that dented his popularity and opened the possibility that a candidate from the Peronist opposition could beat him at the ballot.
GRAPHIC-Argentina’s (elusive) economic growth png – tmsnrt.rs/2EzMChN
Reporting by Maximilian Heath; additional reporting by Eliana Raszewski; writing by Cassandra Garrison; Editing by Susan Thomas