Algerian economists: Algeria should invest in Sovereign Wealth Funds
The economist and deputy head of the National Social and Economic Council, Mustapha Mekideche has indicated in “ Echourouk Forum†that the US debts crisis, that reached its peak amid political tensions within the congress, will have a negative impact on the Algerian economy.
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The Algerian assets based in the US are not producing interest because of the high rate of inflation, the expert added.
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He went on saying that 50% of the overall US debt is controlled by Japan, China and the OPEC countries including Algeria, which makes of the US dollar the main exchange currency on the international market, because China is heavily relying on the US market and the US need the Asian currencies’ surpluses to offset its annual budget deficit.
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The expert has noted that “ready-made” alternatives do not exist for the time being because the Euro- zone is not able to issue bonds and the Japanese debt is making things worse. M Mekideche has asserted that the best alternative for Algeria in the medium and long term is to use part of the Algerian reserves to create Sovereign Wealth Funds.
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M Mekideche has indicated that the reluctance of the Algerian authorities to invest in the SWFs was a strategic mistake because the use of staggering amounts of money to overhaul the economic apparatus domestically will prove its limits in the long term.
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The expert has wandered why Algeria salvaged the bankrupt company “ TECHNIP” through a 1 billion euro contract to modernize Algiers refinery increasing thus the value of its shares in the stock market, while it was wiser to take over this company.
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M Mekideche has also indicated it was more than necessary to diversify the income sources beyond the hydrocarbons sector like telecommunications companies and penetrate the developing markets.
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For his part, the other expert Bechir Mesitphi has followed in the footsteps of M Mekideche noting that Algeria should buy shares Hi-tech companies, renewable energies and car manufacturing ones if it really intends to get loose from hydrocarbons’ dependency.
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The experts have called for the creation of a strategic oil reserves in a move to draw benefit from the markets’ volatility.
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