Inflation besieges Algeria due to prices' chaos, Laksaci says
Algeria’s Bank governor, Mohammed Laksaci, warned of the continuous rise of the inflation rate during the first four months of this year, asserting that the phenomenon is likely to continue unless the government acts through all sectors to impose strict control on the prices during the production, along with strict procedures that were adopted by the Bank since 2011, like raise the compulsory reserve ratio for banks from 9 to 11% in the framework of the actions taken by the central bank to reduce the problem of excess of liquidity at the level of the commercial banks.
Governor of the Algeria’s Bank said, during a conference at the Bank, about the monetary and fiscal trends during the first half of the year; “The rate of inflation, which was almost stabilized in 2011, noticed a sharp acceleration since beginning of January 2012, recording a rate of 7.29% during the month of June, a trend that confirms inflation which became a persisting phenomenon because of the local prices.
“Basic products, which pushed inflation to record high levels in the prices of fresh agricultural products and manufactured products, contributed to 71.14% in the period between June 2011 and 2012, while they represented 69.4% in March”.
“The nominal value of the national currency the dinar has improved, contrary to what is traded locally, and recorded in the same period a decline in the pace of expansion of money supply after it kept the pace upward in recent years”.
“The phenomenon of inflation has become, during the first four months, internal and linked to a deficit government in adjusting the national market of goods and services, which needs an urgent action by government to review combination of prices during the various stages of commercial operations to impose more transparency of rules”.
“Algeria’s official foreign exchange reserves reached US$186.32 billion in late June 2012, up by over four billion dollars compared to end 2011”.
“The reserves, excluding gold, amounted to US$182.22 billion in late December 2011 and US$162.22 billion at the end of 2010”.
“The accumulated reserves by end of the first half of 2012 represent over three years of imports of goods and services”.
The BA Governor reiterated the bank’s commitment to “continue to adopt a prudential management of the reserves and in the rigorous monitoring of risk management.”
Thus, Algeria’s financial position abroad has been “further strengthened” during the first half of current year, and its outstanding external debt dropped to US$3.99 billion by end of June 2012, against US$4.4 billion at the end of 2011, owing to the decrease in the short, medium and long-term debt, according to the Bank of Algeria’s governor.