Algerians Need 50 Thousand Billion Centimes (DA) Or 5 Billion Dollars To Wrap Up The Year 2017

date 2017/09/13 views 1120 comments 0
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icon-writer Imène Aouimer / English Version: Med.B.

The Government is closing its current fiscal year with a financial deficit that makes it need $ 5 billion, or 50 thousand billion centimes (DA), to cover its growing financial needs. The Government considered that the state's ability to pursue economic and social development efforts is being hindered by the current financial constraints facing the country.

The Ouyahia Government has justified its recourse to an overhaul of the Loan and Monetary Law, which allows it to print fresh money, citing the reasons that all the contributions made by Algeria to cope with the severe external shock was caused by the steep decline in prices in the world oil market in order to wrap up willy-nilly the year 2017 with the injection of billion of dinars through the printing plate.

According to the same legal text, of which Echorouk got a copy, the relevant amendment aims to license the Bank of Algeria, on an exceptional basis, over a period of five years, to spearhead the purchase of bonds issued by the Public Treasury, in order to achieve three things, the first is to cover the needs of treasury financing, the Domestic debt, especially the National Development Loan Bonds for 2016, treasury bonds issued against the repurchase of Sonelgaz's bank debt, and treasury bonds issued to Sonatrach to offset the differences in the prices of imported fuel and desalinated water, as well as allowing the Treasury, if need be, to allow the National Fund to invest resources in the context of ensuring the state's contributions for the launch of fresh  investments or implementing long-term programs via public investment funds.

For four years, Algeria has been facing a severe external shock caused by a drop in prices in the global oil market, which has led to a significant drop of over 50 per cent in revenues stemming from hydrocarbon exports, Government sources said, noting that this harsh decline had a negative impact on the country’s balance of payments, which registered a deficit starting from 2014, further exacerbated in 2015 and 2016, thus seriously slowing down the continuation of development efforts.

After that, the Government says, all public reserves have been used, forcing the Treasury to mobilize additional financial resources. Thus, a national syndicated loan has been used and the Treasury is now to benefit from considerable financial spin-offs, with the latter being deducted from the coffers of the Bank of Algeria.

The Government fears that prices remain on the world oil markets at current low levels as this adverse situation will increase the pressure on the treasury of the State in the short and medium term, and these perceptions - as outlined by the document , pose  a significant threat to the capabilities of the State to pursue economic and social development efforts, at a time when monetary and domestic finances are steadily shrinking, thus curtailing the possibilities of spurring national economic investment.

In its view, the Executive Branch has justified its readjustment endeavor by the fact that public authorities wisely precluded the recourse to external financial debt so as to cope efficiently with the acute financial downturn currently besetting the country.

The related draft law enforced by the authorities noted to this effect that the non-traditional financing or quantitative easing mechanism was not only used by Algeria but first appeared in Japan in the 1990s and was also used in the United States and Europe as a remedial measure after the global financial crisis that cropped up in 2007.

It also spelled out that these non-traditional instruments are intended to allow the Public Treasury to mobilize exceptional funds, which have a limited transitional nature over a period of 5 years, and the use of which should be strictly regulated and subjected to a continuous and rigorous follow-up.

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