The Government Poised To Print Another 118 Thousand Billion Dinars

The amount of securities issued under the unconventional financing mechanism, launched at the end of 2017 following the amendment to the Law on Money and Credit, represents approximately 28% of Algeria’s Gross Domestic Product (GDP), counting the amount of 4.005 billion dinars as securities issued at the end of September 2018 and the registration, last November, of a new request for financing reaching the sum of 1187.2 billion DA, revealed Sunday, the Governor of the Bank of Algeria (BA), Mohamed Loukal, before the National People’s Assembly (APN).

During a plenary session chaired by APN Chairman Mouad Bouchareb, devoted to the presentation of the report of the Bank of Algeria on the financial and monetary developments of the country for the 2017 financial year and the nine (09) first months of the 2018 financial year, Mr. Loukal specified that securities issued under the non-conventional financing mechanism had hiked from 19.7% of Gross Domestic Product (GDP) at the end of September 2018 to almost 28% currently, including the new demand for this funding “not yet exploited” as he put it.

According to the Governor of the BA, the amount of securities issued at the end of last September (4.005 billion DA) is distributed to the tune of 1.470 billion DA and is intended to cover the deficit of the Treasury and up to 2.264 billion DA for the financing of the debt public.
Describing the details of the printing of the banknotes under this exceptional financing mechanism, Mr. Loukal reported the issuance, in January 2018, of 1400 billion DA, of which 900 billion DA by the BA as an advance intended to partially cover the deficit of the Public Treasury and 500 billion DA representing an allocation granted to the National Pension Fund (CNR) to settle its debts towards the National Social Insurance Fund.
Then, an amount of 420 billion DA was issued, within the framework of the same formula, of which 100 billion DA intended for the repurchase of the public treasury securities held by the Algerian popular Credit Bank (CPA), in return for the reorganization of the debts incurred by the Sonelgaz company and 320 billion DA to the National Investment Fund (FNI) which will in turn lend this amount to the CPA, to finance the arrears settlement of housing “AADL” programs, for fiscal years 2017 and 2018, according to the clarifications provided by Mr. Loukal.
The balance of the account of the Treasury with the BA is creditor of 1475 billion DA at the end of September, further revealed Mr. Loukal.
Regarding the new amount (1187.2 billion DA) requested last November, the Governor of the BA announced that it “will be intended in its entirety to the FNI, to the tune of 735.2 billion DA, and to the tune of 452 billion DA for the benefit of Sonatrach.
He added, in this context, that the BA’s purchase of the Treasury’s debts reaching the amount of 9.4 billion DA represented compensations for the fuel price differential accumulated between the years 2012 and 2014 and will contribute to the partial financing of the Sonatrach’s investment program.
As for the amount of securities issued in the context of non-conventional financing, in the last quarter of 2017, which amounts to DA 2185 billion, Mr. Loukal recalled that it was distributed, up to DA 570 billion, for the financing of the overall deficit of the Treasury in 2017, in addition to 354 billion DA for the FNI, 452 billion DA for the partial repurchase of the Treasury securities held by Sonatrach, 545 billion DA for the repurchase of the securities of the Treasury of the debts of Sonelgaz, in addition to 264 billion DA earmarked for the payment of the first part of the National Bond Loan.
Mr. Loukal explained, moreover, that the Public Treasury had mobilized unconventional financing funds stemming from the Bank of Algeria (BA) in return for the issuing of Government securities with a maturity of 5 to 30 years and a unified interest rate of 0.5%.
Following the presentation of the relevant report by the Governor of the BA, the deputies engaged in a free-wheeling debate session, notably by raising their concerns especially about the ongoing financial and monetary developments of the country.