IMF report: Algerian monetary system going from bad to worse

An assessment released by the International Monetary Fund (IMF) over the Algerian economy has revealed that the Algerian monetary system is irrationally ran and could lead to a social and economic chaos if the strategy is not reviewed.

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• The IMF blames the Algerian bank for failing to curb inflation, which is regarded as the economy’s cancer, and didn’t perform the task assigned to it including inflation control.
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• The report has revealed that the inflation rates in Algeria are set to rise to alarming levels and it will be extremely difficult to cope with their economic and social downfalls in case where the financial authorities (Algerian bank) do not implement a sound strategy at earliest.
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• The inflation rates have drastically increased in a very short period of time in Algeria going from 1.38% in 2005, to 2.31% in 2006 then 3.86% in 2007 to reach 5.74% last year. These estimates show that the Algerian economy is moving towards a virtual one.
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• The IMF has criticized the Algerian public banks that tendency to implement benefit rates sometimes lower than inflation rates which means that these financial institutions are losing money instead of garnering benefits as it is supposed to be .
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• If the overall benefit average is estimated at 5.5% and the inflation average is 5.7% it means that the real benefit average is – 0.2% and this is the reality of most of the Algerian banks. This situation engenders a loss estimated at 220 billion Algerian dinars per year.
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•  The average saving over the Gross Domestic Product has slumped from 57.8% in 2008 to 49.9% last year while 19.8 of it was invested in 2008 and 28% in 2009 while Morocco has registered 31% and 29% respectively over the same period and used 36.3% and 29.9 % meaning that Morocco is following a better monetary policy than Algeria.