Sustained inflation in the last five years caused the volume of loans from the banking sector to companies, measured in real terms, to be reduced by almost half.
This is indicated by a report submitted yesterday by Second Capital Group, which updated the amount of commercial loans from the beginning of 2014 until the end of last year, with values adjusted with the Consumer Price Index (CPI) of the City of Buenos Aires (CABA) and data from the Accentral Bank of the Argentine Republic (BCRA).
The study reveals that at the beginning of 2014 the stock of loans to companies would be equivalent in current values to 750 billion pesos; while in December last year that figure ended at 393,939 million pesos, which implies a reduction of 47.5 percent during that period.
According to the consultant, the data shows that financing for companies was decreasing as the peso deteriorated.
“The loss of the value of the currency, the monetary restrictions imposed by the BCRA, the galloping inflation and the limitations to the banks to grant new credits, as a result of the rise of the banking reserve requirements, are some of the causes of the sensitive fall of financing to the private sector ”, highlights the study.
The only thing down
Commercial loans are those credits that can be used both at the beginning of a business and throughout its execution to finance its operations. They also serve for expansion, cover financial needs or pay off outstanding debt.
This downward trend deepened over the past year, mainly during the last three months, and in December showed a decrease of 3.1 percent over the previous month. The balance of almost 394 billion pesos with which it closed 2018 represented a year-on-year decrease of 3.6 percent, against 408,770 million at the end of 2017 in nominal terms.
Commercials were the only line of financing to the private sector that fell in 2018. Credit to the private sector increased 17.2 percent compared to 2017; In this context, personal loans (19.3 percent), credit card financing (28.7 percent), and pledge (9.9 percent) grew. Mortgages (62.4 percent) were the most dynamic item during the past year.
The BCRA, in its quest to curb inflation and the increase in the exchange rate with the dollar, raised the monetary policy reference rate (interest on Leliq bond settlements) to 73.5 percent.
The measure triggered the cost of commercial financing at restrictive levels for companies, which faced a year with a drop in sales in almost all areas.
Given this, Second Capital Group points out, the companies pointed to the “liquidation of stock of financial assets and products rather than obtaining new loans to support the activity”. For companies, liquidating merchandise reduces costs and generates cash flow, without having to go to the banks, but reveals a lower level of economic activity.
The survey of the last five years shows that these loans, adjusted for inflation, grew only in two periods: between June and December 2015, and during the second half of 2017.
“Each one of these mentioned periods was led by presidents and ministers of Economy with different visions about how to face the challenge of governing, and both periods coincided with moments in which electoral processes of great importance for the main actors of politics, ”explained Guillermo Barbero, a member of Second Capital Group.
Except for those few months, in the rest of the period analyzed, the decline in commercial credit accompanied the decline in financial and productive activity.
“As long as we cannot recover the value of our currency and defeat inflation, all the efforts made in the financial segment of the economy to boost growth in activity, cover greater productive sectors and tend to inclusion, end up being sterile and they only result in being in the same place from which we started, ”Barbero concluded.