As
banks in Argentina register record profits, most Argentines are
suffering the consequences of government austerity.
Banks in
Argentina have declared record profits for the month of August
despite the South American country slipping even further into an
economic crisis with rising unemployment, poverty, and hunger. The
banking sector recorded a 264 percent growth in profits this August
in comparison to the same month last year, the Central Bank's monthly
report revealed.
According
to local newspaper Pagina12, the profits registered in August
by financial entities, including private and local banks as well as
public and foreign institutions, exceeded 26 billion Argentine pesos
(US$715 million) while in August 2017 banking profits reached 7
billion Argentine pesos, or US$192 million.
The
figures for August are not isolated but a part of a trend that has
seen stable growth throughout the year.
The
record profits come as Argentines who receive pensions, cash
transfers known as the Universal Allocation Per Child, and local
salaries have seen their purchasing power greatly affected by
currency devaluation and inflation rates, while banks’ profits have
increased at a rate superior to that of devaluation.
Actually,
as the peso rapidly lost value during April and May, financial
institutions registered high profits. According to the Central Bank,
in May they accumulated 14.5 billion pesos, or US$405 million, in
profits.
Investment
in state bonds represents the main driving cause of such great
profits. In August, the Central Bank increased interests rates on
state bonds to over 60 percent in a failed attempt to curb currency
devaluation.
The
other driving force is the interest banks are able to charge on
loans. Income for interest increased by over 70 percent in August.
Argentines
continue to be affected by the economic crisis and the economic
policies implemented by the government of Mauricio Macri. This year,
public teachers and university professors have organized national
strikes against the loss of purchasing power due to inflation and
currency devaluation. The real economy — which creates jobs —
continues to contract on a monthly bases, and layoffs continue to
increase in the private and public sector.
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