No Crisis Exit Except At An Oil Price Of Over $ 70 Dollars

Minister of Finance, Abderrahmane Raouya, has strongly defended the Government’s choice to resort to unconventional funding to bail the country out of its ongoing financial crisis, saying “printing money is not a crime … it is the only option for the Government to restore its financial balance away from foreign borrowing”, while stressing that Algeria needs a barrel of oil worth over $ 70 to revive the national economy, a scenario he ruled out for now.

In a speech before the lower house of parliament on Thursday morning, Mr. Abderrahmane Raouya reiterated that the Government’s only alternative to restore its financial balance was to resort to unconventional funding after excluding the option of external borrowing. 

On the sidelines of his presentation of a draft law on currency and credit before the MPs, he argued that Algeria needed a barrel of oil equivalent to $ 70 so that it can achieve its financial balance.

“Unconventional funding is the only solution to the scathing fiscal deficit that Algeria has been experiencing since the second half of 2014, especially after the state revenues have fallen by more than half, offset by a rise in imports and expenditures,” he asserted.

He also underlined that Algeria’s financial resources had shrunk sharply, which, he said, had led to the exhaustion of the fund altogether, causing a deficit in the treasury and erosion of the country’s exchange currency reserves, which are expected to  drop to $ 97 billion dollars by the end of the year.

In return, the Finance Minister outlined before the deputies of the lower chamber of Parliament a number of difficulties in Algeria. “We have lost more than $ 58 per barrel since 2014, which led to a decline in revenues that fell from $ 60 billion in 2014 to $ 31 billion by the end of this year while pointing out that the revenues of petroleum collection amounted to 1,100 billion dinars this year, which represents 60 percent of the level achieved three years ago.

The Minister of Finance further affirmed that Algeria needs a barrel of oil in the range of $ 70 dollars so that it can ensure its overall financial balance, which he considered elusive at the moment.

On the matter of guarantees needed for the smooth running of the Government’s readjustment endeavor, the Minister of Finance assured that this option will be accompanied by structural reforms so as to re-establish financial balances, while providing greater transparency in the management of public expenditures.