Algeria: Reserves Slump To 12-Year Low, But Country Has Bigger Problems

Algeria’s foreign reserves stood at just $90bn as of end-May, well under half levels during the 2011-14 years of $100/B-plus crude. The IMF says it expects reserves to fall further to $83bn by end-2018 and below $50bn by end-2020 (see chart).

But as the Washington-based institution makes clear, in an uncharacteristically blunt assessment released last month, this is far from Algeria’s most pressing economic problem.

Reserves, for now, remain “comfortable” at 18 months of import cover; a bigger problem is Algeria’s near-absolute refusal to take on foreign debt, no matter how stretched the country’s finances. Instead Algiers has opted for the highly-inflationary path of printing money to finance the country’s expected $19bn 2018 deficit (a cumulative $80bn since 2014 – MEES, 13 October 2017 ). A temporary ban on a whole swathe of imports is Algeria’s other key ‘alternative’ economic measure in its bid to balance the books ( MEES, 12 January ). (CONTINUED - 851 WORDS)

DATA INSIDE THIS ARTICLE

chart Algeria’s Foreign Currency Reserves Fall To 12-Year Low Of $90bn At End-May As IMF Forecasts Further Slump ($BN, End Period)
table Algeria: Key Economic Indicators