Gustavo Weiss, president of the Argentine Construction Chamber, stated that the announcement by Economy Minister Luis Caputo to allocate $2 billion from the Sustainability Guarantee Fund (FGS) to banks for new mortgage loans will not directly affect the construction industry. The move, he noted, aligns with the broader goal of fostering sustained economic growth over several years. Weiss emphasized that while the decision is a step in the right direction, its immediate impact on construction activity is likely minimal. The construction sector has been struggling since mid-2024, during which time it lost 120,000 jobs and saw a 25% decline in activity. This downturn has persisted for two years, driven by factors such as near-zero national public investment, reduced provincial infrastructure projects due to declining revenue, and increased costs in dollar-denominated private works, coupled with insufficient mortgage credit availability for middle-class households. Weiss explained that the lack of long-term funding for banks has made it difficult for them to offer mortgages, and the FGS represents one of the few available options to address this gap. Weiss pointed out that the FGS holds approximately US$75 billion in Treasury bonds, much of which was placed by the government to finance state operations. However, there is also a stock of assets inherited from the nationalization of pension funds (AFJP), valued at around US$15 billion. His organization proposed selling these assets to provide liquidity for mortgage lending, arguing that this would allow more families to access housing while offering a safer investment than private equity. He noted that globally, pension funds typically invest heavily in mortgages, highlighting the potential benefits of this approach. Despite these proposals, the government has not adopted them, though the current measure is a partial step toward that goal. Weiss acknowledged that the $13 billion allocated through this initiative, equivalent to roughly 100,000 credits at $100,000 each, is modest and unlikely to significantly stimulate the construction sector. He suggested that unless far more homes are built, the effect on the industry will be negligible. Instead, he believes the primary beneficiaries will be banks, real estate agents, and individuals who can afford to purchase their own homes. The government’s decision to use FGS resources to support mortgage lending raises questions about who will ultimately benefit from the program. While the initiative aims to expand home ownership and boost economic activity, critics argue that the high interest rates, ranging from 2.5% to 4.5%, will result in higher costs for borrowers. With mortgage rates potentially reaching up to UVA plus 7.5% annually, the difference between the cost of capital and the rate charged to homeowners could range between 3 and 5 percentage points. This discrepancy highlights the financial margins retained by banks, even as public funds are used to facilitate the process. Access to these loans will also depend on income levels. A mortgage of approximately $115 million requires an initial payment of nearly $930,000, with monthly installments that should not exceed 25% of household income. To meet this requirement, a family would need to demonstrate monthly earnings close to $3.7 million. As a result, the primary beneficiaries are likely to be households in the upper income brackets, raising concerns about the distributional implications of the policy. The construction chamber expressed cautious optimism about the initiative, noting that the majority of the funds will go toward existing properties rather than new developments. While this may boost the real estate market, it is less likely to generate new construction or employment opportunities. Weiss and his colleagues believe that for the construction sector to see meaningful gains, a larger portion of the funds should be directed toward new housing projects, thereby stimulating demand for building materials and labor. In addition to addressing housing affordability, Weiss highlighted the importance of infrastructure investment for long-term economic growth. According to the chamber’s research, achieving consistent annual growth of between 3% and 4% requires investing 25% of GDP annually. This includes maintenance of existing infrastructure, new public works, private-sector infrastructure investments, residential construction, and factory setup and equipment. Such a level of investment would amount to US$150 billion per year, underscoring the scale of the challenge facing policymakers.
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