Experts: “Algeria could steep into “danger zone” if its external debt exceeds $15 billion”

Economic experts have warned against the adverse provisions contained in the complementary finance law for 2015 on the lifting of the ban on solely banking on the Algerian enterprises by allowing them to resort to external funding, describing such a move as “dangerous” for the national economy especially as national public companies have so far borrowed up to $60 billion and the reimbursement of this enormous financial package hasn’t been carried out up to now.

In a statement to “Echorouk”, economist, Abdelhak Lamiri, affirmed in this connection that the Government has reopened the door of debt when it realized that the country’s exchange reserves will not last more than 5 years.

This, he added, curtailed the possibility of further borrowing for the implementation of basic development projects without closely keeping watch over the required debt repayment and the interest rates accrued by such a freewheeling borrowing spawned by the shrinking external revenues stemming from plummeting world oil prices.

For his part, international economic expert, Abdelmalek Serrai, outlined steps Algeria can take to diversify the economy away from hydrocarbons. He said that for Algeria to truly develop, it must aim to become less dependent on energy revenues, which remain a key contributor to the economy.

Foremost to diversification efforts is the necessity to stimulate and support investment into the economy, as well as reduce the role of the informal sector, which undermines the proper functioning of the economy, he said. Other measures included simplifying and improving the business environment and reorganizing the institutional structure of the economy.

Moving away from public sector spending and investing instead in the development of small and medium-sized enterprises (SMEs) is the approach favored by the economic experts in their various statements.

The government, these experts suggested, should provide more incentives to private sector investors. By supporting greater private sector participation in the economy, the country would be able to boost its non-oil exports.