Algeria ends nonconventional financing less than two years after launch


ALGIERS – The announcement made Sunday by Minister of Communication, spokesman of the government Hassane Rabehi, that the non conventional financing era was “over.”


Algeria is resolutely turning the page of this nonconventional financing, launched late 2017.

Questioned by APS about the measures to be taken by the Government to meet its budgetary commitments, notably the announcement of the end of the non conventional financing, Rabehi said that the “government had taken measures which are meant to protect the national economy from any risk.”

The “protection of the national economy and the national institutions is everyone’s responsibility,” he said on the sidelines of the launch of a journalist training programme on environment.

Authorized by an amendment of the law on currency and credit, allowing the Public Treasury to take debt from the Bank of Algeria (BA), the non-conventional financing was initially planned for a five-year period, which would culminate with “major structuring reforms.”

Known also as “money bill printing,” this financing mechanism, offered, according to the then government, an “urgent response” to shrinking liquid assets induced by drastic fall in oil prices from mid -2014, while the options of external indebtedness or the introduction of further taxes were categorically ruled out.

The serious financial crisis, caused by the sharp fall of oil prices notably resulted in the depletion of the Revenues Regulation Fund (FRR) resources in February 2017.

Between late 2016 and 2017, Algeria’s exchange reserves fell by nearly $17 billion, down from $114 billion to $97.3 billion.

Besides the coverage of the Treasury needs, the nonconventional financing was destined to refund the internal public debt, notably the securities of the National Loan for Growth undertaken in 2016, and the securities issued in return of the purchasing of Sonelgaz debt and those issued for Sonatrach, to compensate the differential of the imported fuel and desalinated water prices.


  An “unwarranted” funding, according to the Bank of Algeria

It also provides the Treasury with the possibility of endowing the National Investment Fund with resources, as part of the State’s acquisition of holdings in investments or funding, in the long term, of public investment programmes.

In a note published on 1 April 2019, the Bank of Algeria explicitly said that Algeria’s resort to banknote plate was from the beginning unjustified.

It also dubbed “paradoxical” the insistent call, launched in April 2017 by the initiators of this funding, a “task force” set up under the authority of the Prime minister’s Office of that time.

The Bank of Algeria said that the situation in Algeria in the first months of 2017 was “far from presenting similarities with the cases included in the note of experts (United States of America, Europe, Japan) that might justify the resort to unconventional financing in our country.”

The Bank of Algeria wanted to be sure that the bank’s liquid assets that will be liberalized will actually serve financing the economy, but it was skeptical about this objective.

In fact, between mid-November 2017 and late January 2019, out of DZD6,556.2 billion mobilized by the Treasury from the Bank of Algeria for unconventional financing, only DZD3,114.4 billion were pumped into the economy, according to the Bank’s note.

Since May 2019, the current government has adopted a new approach aimed at preserving the country’s reserve currency, notably by reducing the reliance on imports as well as by encouraging the national production.








Please enter your comment!
Please enter your name here