Executive summary
In an international context of relative uncertainty about the flow of capital to emerging economies, but more favorable from the point of view of international trade, the Argentine economy showed signs of a very slight recovery, growing 0.8% year-on-year in the second quarter of 2000.
Sovereign risk ended the quarter 110 basis points above the level of the previous quarter, missing out on the positive differentiation it had achieved with respect to the rest of Latin American countries after the Russian crisis.
In this context, monetary variables showed disparate behaviors. There was a significant increase in international deposits and reserves in the financial system, while loans to the private sector remained stagnant and interest rates ended at higher levels than those observed in the previous quarter.
As for financial institutions, increases in the holding of liquid assets and in credit to the public sector led the growth of the assets of the consolidated system. Although the quality of the financing portfolio showed a further decline in the quarter, the sector’s exposure to credit risk was reduced, as a result of a significant increase in forecasts. The sector’s year-on-year profitability improved, given the recovery observed in net income from holding public securities, although this increase was limited by high charges for uncollectibility and the decrease in the margin for intermediation.
