Bloomberg analysis: “Algeria’s assets in foreign currencies to be depleted within 15 months”

According to data culled from the IMF 2015 report, Sunday, April 19, the American economy-oriented news Agency Bloomberg, stated that the exchange reserves of Algeria declined by 11.6 billion dollars in January 2015, the biggest monthly slump for more than 30 years. At this spending pace, the assets of Algeria in foreign currencies will be consumed in 15 months, according to a Bloomberg analysis.

Algeria’s foreign reserves: Most sharp monthly decline in 30 years 

Speaking on the occasion of the “spring meetings” of the Fund international monetary (IMF) in Washington, the Governor of the Bank of Algeria, Mohamed Laksaci said that “the fall of the oil prices has eroded the Algerian reserves and fiscal position of the country, ushering in a bleak scenario for the country”, according to the same source. 

Indeed, with Algerian reserves valued at 179 billion dollars at the end 2014, such a pace of spending, If it is retained, would lead to a depletion of Algeria’s foreign reserves in a little more than a year, warns the Agency. 

Oil prices’ expected hike: A ceiling of $70 

Asked about his estimate of the level of the price of oil within a year, Laksaci refused to come forward. On the other hand, the Nigerian Minister of finance, Ngozi Okonjo-Iwela assesses the price of an oil barrel to a range between 60 and 70 dollars, still according to Bloomberg. 

The Nigerian Minister said that “we should consider the situation (on the market, ED) as a permanent shock ‘, reports the U.S. news Agency. Thus, according to the official of the world’s largest oil producer on the African continent, the oil prices will develop more but not beyond 70dollars a barrel. 

An analysis shared by the number 2 in command of the IMF, David Lipton: “it is better to consider that it will be sustainable, because it comes on the supply side” and added that “this won’t disappear simply through the economic recovery”, according to Bloomberg.

Furthermore, Algeria and Nigeria suffer much more from the steady fall of the oil prices contrary to countries like Saudi Arabia and other Gulf petroleum-producing  monarchies, particularly because “of their smaller foreign exchange reserves”, believes Bloomberg.

The IFM said in its latest assessment report that Algeria’s current account balance would remain negative to stand at -15.7% of GDP in 2015 and at -13.2% in 2016 (against -4.3% in 2014).

Analysis:

The Bloomberg report was derived largely from Economic Research Services, ERS, The United States international economic development research agency’s latest global economic research report.

The ERS International Macro-economic Data Set provides historical and projected data for 189 countries that account for more than 99 percent of the world economy.