Argentina faces deep credit crunch as public debt strains banking system

By 2026 Argentina's export‑oriented, extractive and agricultural model, shaped by policies linked to JP Morgan, has led to rising poverty, business closures, unemployment and dwindling domestic consumption. The government, seeking a primary fiscal surplus to purchase foreign‑exchange from its trade surplus, can cover only about half the interest on the growing public debt.

The state's reliance on borrowing rather than strengthening tax collection has enlarged debt, while the Treasury now absorbs roughly 60% of the financial system’s lending capacity. In April 2026 public‑bond holdings accounted for 44.6% of bank deposits, and by June 2026 private‑sector loans in pesos were split 54.5% to households and 45.5% to firms; dollar‑denominated credit is directed almost entirely to companies. The monetary base has expanded more than five‑fold, reflecting a massive increase in cash and coin issuance.