BUENOS AIRES, Aug. 28 (UPI) -- Argentine household debt is at one of its worst levels in decades.
The country has the highest bank loan delinquency rate in Latin America, as household debt surges and millions of borrowers fall behind on payments amid declining purchasing power and a rising cost of living.
A report by the Argentine Center for Political Economy, or CEPA, based on data from the Central Bank and its Central Debtors Registry, shows a sharp deterioration in households' ability to repay debt.
According to the study, delinquency rates have reached levels not seen since Argentina's 2001 economic crisis.
The problem extends from traditional banks to newer financial platforms. In June, 12.8% of bank loans to households were delinquent. Among digital wallets and other companies providing credit outside the banking system, the rate reached 30.1%.
The deterioration began to accelerate in late 2024. In October that year, just 2.5% of bank loans to households were delinquent. By June 2026, the rate had increased more than fivefold.
The problem is even more severe in digital lending. The delinquency rate rose from 7.3% in November 2024 to 30.1% in June, surpassing the peak recorded during the COVID-19 pandemic, when it reached 27.1% in May 2020.
Official data showed 20.96 million people had debts with banks or nonbank credit providers in June 2026. Of those, 5.91 million were behind on payments.
Argentina also ranks first in Latin America for bank loan delinquency. A report by the Latin American Federation of Banks, or Felaban, published by Infobae, compared 16 Latin American countries and found that 7.3% of loans issued by Argentine banks to the private sector were delinquent in the first quarter of 2026.
That was well above the regional average of 2.78%. Argentina ranked ahead of Brazil at 4.3% and Colombia at 3.7%.
The regional figures cover only traditional banks. They do not include loans issued by digital wallets, fintech companies and other nonbank credit providers.
Opponents of President Javier Milei's government say the rise in delinquency is a consequence of his administration's economic austerity measures and deregulation. The government, however, says banks, financial companies and borrowers should resolve the problem themselves.
Milei and Economy Minister Luis Caputo have described the situation as a "problem between private parties."
The government's position was reiterated this week during a news conference by presidential spokesman Adrián Ravier.
"The problem here, to a large extent, lies with the banks and nonbank financial institutions that issued loans at high interest rates, perhaps to protect themselves against the risks they were taking, and this has left these financial institutions exposed," Ravier said.
"Having the government rescue them with taxpayers' money would, in some way, mean taking resources from one part of the population to save the banks."
The problem is concentrated particularly in two forms of credit used by millions of families: personal loans and credit cards. Delinquency on personal loans rose from 3.3% in October 2024 to 15.9% in May. For credit cards, the rate increased from 1.6% to 13.1%.
Young people are the most exposed group. The analysis found that people under 35 account for 38.7% of all delinquent borrowers, meaning nearly 4 in 10 people behind on payments are in that age group.
Digital wallets also play a particularly significant role among younger borrowers. Of delinquent borrowers younger than 35, 72.6% owe money to those platforms.
Hernán Letcher, director of CEPA, told UPI the main factor behind rising household debt is the loss of purchasing power.
"Many families had to compensate for that loss by taking on debt," Letcher said.
The problem, according to Letcher, was compounded by sharp increases in expenses that households cannot avoid. Utility costs rose about 850% and transportation costs nearly 1,500%, while wages increased by an average of 300%.
"For many families, that adjustment meant cutting spending, but also taking on debt. First, they postponed payments and rolled over their debts until they reached a point where they could no longer keep paying them," he said.
Letcher also pointed to the high cost of borrowing. Although the government has managed to reduce some benchmark interest rates, he said the total cost a borrower ultimately faces can be much higher.
"The total financial cost of a loan can range from 180% to 1,500%. With annual inflation at 35%, that is extremely expensive," he said.
To illustrate the problem, Letcher said he simulated a short-term loan offered by a digital wallet and found an interest rate of nearly 900%.
"I have a very good payment record and even then, they offered me that rate. I didn't take the loan," he said.
Letcher identified a third factor: the ease with which people can obtain new loans.
"Apps constantly offer credit and often do not sufficiently assess the income of the person applying," he said. "That creates a very dangerous combination: people who need money and platforms that make it extremely easy for them to borrow."
Gala Díaz Langou, director of the International Panel on Social Progress, or IPSP, agreed that declining incomes are increasing the need for credit.
She told UPI that more people are turning to loans to cover everyday expenses instead of using them to purchase high-value goods.
"There is greater demand for credit because real income has fallen. Many people are using credit to cover their everyday consumption," Díaz Langou said.
The expansion of credit outside the traditional banking system has added to the problem.
"Nonbank lending, which carries greater risks, has expanded. That includes digital wallets and cards issued by nonbank financial companies," she said.
A third factor, she said, involves the government's response. In her view, the official position that the situation is exclusively a "problem between private parties" limits the possibility of implementing refinancing programs that could help families restructure their debts.
"The government's refusal to intervene prevents the creation of refinancing programs that could ease the situation," Díaz Langou said. "Without those tools, the problem could continue to grow."
Guido Zack, economics director at the consulting firm Fundar, also questioned the government's position.
"Millions of people made similar decisions. It is not possible to think that they all coordinated to make the same mistake at the same time. What existed were the wrong incentives," Zack told UPI.
He said the government also bears responsibility for creating those conditions because officials "created those incentives and now maintain that it is not their responsibility to do anything."
Zack said about 1 in 4 Argentines with a loan is behind on payments. He also estimated that one in every six pesos lent to households is not being repaid on schedule.