Argentina is rolling out a major economic stimulus plan, using pension and treasury funds to provide nearly cost-free housing loans of up to $77,000 each to 400,000 people who have been closed out of private-sector borrowing.
Buenos Aires Gov. Daniel Scioli on Wednesday ordered all "non-productive" government-owned land to be made available to the program President Cristina Fernandez announced hours earlier. The vast Buenos Aires province surrounding Argentina's capital is plagued with slums and has by far the nation's largest population in need of housing.
The program named "ProCreate" won both praise and criticism Wednesday from the government's political opponents. Both economic stimulus and housing assistance are sorely needed, but they questioned whether the government can follow through on its promises and avoid corruption.
Argentina's Supreme Court also took action: Six justices signed a resolution giving the pension agency, ANSES, 30 days to explain in detail where it is spending the retirement funds. Thousands of Argentine retirees have won court rulings for unpaid pensions, but have yet to see their money.
In a national address Tuesday night, Fernandez said the home loan program "doubles down the bet the State has made on a model of growth and social inclusion."
Argentina's economy grew at a bristling pace for most of a decade after its devaluation and default in 2002, and the country managed to skate through the global financial crisis in 2008 without too much trouble, but now growth is sharply slowing down. Currency controls aimed at reducing rampant tax evasion have fueled anxiety, accelerating capital flight and discouraging investment. Argentine economists have lowered growth estimates and now predict a coming recession.
"This is a time of economic difficulties that are coming from abroad," Fernandez said. "We're doing this because we're convinced that the response is to generate consumption, development and production."
The program targets people who haven't been able to obtain privately financed home mortgages, said Axel Kicillof, the deputy economy minister, who earned warm praise from the president for coming up with the idea. "We are lighting a fire under the economy as well as covering an important need."
Anyone between 18 and 65 years old will be able to borrow up to 40 percent of their monthly income, at rates of 2 to 4 percent, payable in as much as 20 or 30 years. Argentine inflation often runs higher than 2 percent a month, according to private-sector economists, so this could amount to free money for the working poor.
Applicants already planning to build on land they own can get the loans immediately. Those who lack both land and loans and earn less than $1,100 a month will be chosen for state-owned plots through a process run by the national lottery, the president said.
Congressman Ricardo Alfonsin, who lost to Fernandez in the last presidential election, said housing loans are much needed, but the program would be more effective and transparent if it had been presented to congress, rather than created through the president's emergency decree powers.
"These measures in general are announced in a hurry, without debate, and this way of making decisions generates a lack of confidence," Alfonsin told Radio La Red.
Buenos Aires Mayor Mauricio Macri, another leading opponent, praised the government for trying on a national scale what he's already done through a pilot program in the city. But he warned that the loans shouldn't go only to borrowers who have some political connection.
"It should be as transparent as the one we created," Macri told Argentina's local Diarios y Noticias news agency. "The loan shouldn't have to be for someone who will be a friend" of a government official.