“So, a long-term savings development or capital market was never generated in Argentina,” he explained.
The FGS as a source of long-term financing
The initiative will use the Sustainability Guarantee Fund (FGS) as a tool to extend the terms of the funding available to banks.
“What will be done is to extend the terms of these fixed-term deposits, conduct transparent bidding with banks to extend the terms of these fixed-term deposits between one year and five years. And this will allow banks to significantly accelerate the level of mortgage loans,” Caputo explained.
The logic of the program is that banks can have resources with longer maturities and, in this way, reduce the mismatch between the deposits they receive and the mortgage loans they grant.
The Government thus seeks to create a deeper mortgage credit market, facilitate access to housing, and at the same time give a greater boost to construction.
The Government seeks to reactivate construction
The initiative also targets one of the sectors that most need to regain dynamism: construction.
During her visit to Argentina, the head of the International Monetary Fund (IMF), Kristalina Georgieva, pointed out the importance of reactivating activity and generating conditions for the recovery of the sector.
From the real estate market, various proposals had also been made to the Government to use the FGS as a tool to expand mortgage financing.
With this new program, the administration of Javier Milei seeks to transform part of the available savings into long-term financing, increase the supply of loans, and facilitate access to first homes.
The first auction of $200 billion will be the first step to measure the response of the financial system and determine the pace at which the $2 trillion program aimed at putting mortgage credit back at the center of the Argentine market will advance.
