Economists called upon the Algerian government to get rid of the U.S Treasury Bonds

Economists called upon the Algerian government to search quickly for safer alternatives for their reserves of foreign currency that are invested in U.S. Treasury Bonds, after USA was subject to the biggest hit in its economic history.

 An economist Bashir Mesetfa told Echorouk that the reduction in credit rating of the USA, in the long term by one degree to (AA+) due to concerns about the deficit in the state budget and high debt burdens means an increase of credits costs for the U.S. government, companies and consumers, which cause a deficit in the trust money and terraces of the American sovereign debts.

“The decision will prompt USA to issue new bonds to finance its soaring deficit, but the demand for these bonds will be few after the loss of capacity of high rating which it enjoyed for more than 40 years. The world will notice a new fever before getting rid of the U.S bonds, which would reduce its value in the financial markets in the same way that the value of shares noticed during the crisis of subprime three years ago. The world will notice strong offerings this time for getting rid of the U.S. bonds which lost its excellent value following the new decision by Standard & Poor’s”, he added.

“It is necessary to get rid of the U.S. treasury bonds. Every minute delay by Algeria Bank to take this action is a loss to Algeria because the price of these bonds will fall in global markets significantly. The direct impact on Algeria is to display all the existing Algerian investments in dollars, including the exchange reserves to corrosion (lower purchasing power of the currency). The best solution to the Algerian government is resorting to safer alternatives such as gold and Euro. The problem facing Algeria is the decline of the dollar against the euro, which is a major import currency for Algeria, which will reflect negatively on the import bill which will exceed $50 billion this year and for the first time.