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Argentina to stimulate economy with home loans

Associated Press Modified: June 13, 2012 at 4:31 pm •  Published: June 13, 2012

BUENOS AIRES, Argentina (AP) — 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."

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