President Javier Milei's administration in Argentina is facing increased scrutiny as a growing wave of household debt, particularly among young people, strains public support. The economic policies aimed at taming inflation have coincided with rising costs for essential services and high borrowing rates, forcing many Argentines to take on debt to cover basic needs.
Martín Taborda, an 18-year-old law student, exemplifies the struggles. Despite attending Argentina's tuition-free University of Buenos Aires, Taborda can no longer afford transportation or study materials due to mounting debt and unemployment. He borrowed about $100 through a mobile payment app for educational expenses, which rapidly escalated due to high interest rates on missed payments.
According to the Center for City Studies, an Argentine nonprofit, nearly half of the nation's 45 million people owe money, with over 5 million behind on payments. Borrowers under 25 have the highest delinquency rate at 37.6%. Many students report taking on debt for necessities like groceries or to manage existing loans.
"Households took on debt to survive and now cannot repay it," stated opposition lawmakers who proposed emergency measures, including interest-rate caps, to Congress. However, Milei's administration has largely dismissed calls for government relief, with Economy Minister Luis Caputo asserting that debt repayment is a private matter, while acknowledging banks are working to ease repayment terms. Milei himself has attributed the surge in debt to irresponsible spending by consumers.
Since taking office in late 2023, Milei has focused on fiscal austerity, significantly reducing the budget deficit and bringing down annual inflation from a peak of 289% to about 34%. This macroeconomic stability has encouraged increased lending from banks. Concurrently, cuts to subsidies for utilities and transportation have raised living costs, making borrowing a necessity for many.
Unlike past periods where wage increases kept pace with inflation, easing the burden of fixed loan payments, the current environment of slower inflation means smaller pay raises. This, combined with high borrowing costs stemming from the government's tight monetary policy, exacerbates the debt crisis. Digital payment apps, offering convenience, often charge significantly higher interest rates, with annual rates sometimes exceeding 100%.
Advocacy groups like Organized Debtors highlight that borrowing is no longer for large purchases like homes or cars, but for basic survival. The psychological toll is also significant, with a university observatory reporting that over 80% of adults surveyed in the Buenos Aires area in April felt economic problems severely impacted their well-being.
Public opinion consultants warn that the mounting debt could jeopardize Milei's reelection prospects in the 2027 presidential election. A recent poll indicated a decline in approval for Milei's administration, with a majority of respondents reporting they are financially worse off than when he took office. The growing debt crisis among young Argentines presents a key challenge to Milei's economic agenda and his administration's popularity.