Financial Intermediation The size of the banking credit to the nonfinancial private sector in Argentina has declined as a percentage of GDP, and is low compared with that ratio in other Latin American economies, not to speak of developed countries (Figures A.5 and A.6).
Figure A.5: Evolution of the Credit to Figure A.6: Credit to the Nonfinancial Private the Nonfinancial Private Sector in Sector in Latin America (% of GDP) Argentina (% of GDP) 20
0
18
20
40
60
80
100
Chile (2008)
16
Brazil (2008)
% 14
Bolivia (2008) Uruguay (2008)
12
Peru (2010)
Source: IFS.
2011
2010
2009
2008
2007
Venezuela (2010) 2006
8
2005
Paraguay (2008) 2004
10
Argentina (2011)
Source: IFS.
International Finance As illustrated above, access to international finance is constrained by a very elevated sovereign risk premium, which of course also affects the rates at which private agents can borrow or issue internationally. Moreover, FDI flows to Argentina have declined over the past few years (as a percentage of GDP) and lie well below the ratios observed for other countries in Latin America (Figures A.7 and A.8).
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