Rabat – Algeria’s Central Bank “Banque d’Algérie” has announced it will print $15 billion in Algerian dinars to “refinance” the country’s struggling economy. The new initiative aims to pump money into the economy as part of a “national economic revival program,” yet Algerian press were quick to denounce the move as simple “money printing.”
The move by Algeria’s central bank comes as part of a June 10 legislative regulation which calls for a “temporary sale of liquidity contribution carried out at the initiative of the Bank of Algeria.”
The bank also aims to provide “syndicated loans” to boost investment in Algerian public enterprises such as national airline Air Algeria and the national energy company Sonelgaz.
While most countries typically use foreign currency loans to boost economic programs, Algeria has been skeptical of cooperation with international financial institutions like the World Bank and the International Monetary Fund.
Instead, Algeria’s public treasury will issue bonds that will serve as collateral for the 15$ billion-worth of Algerian dinars to be printed by the Central Bank. The move means that the country’s public treasury will both provide the collateral for the newly issued currency, as well as buying back the “syndicated loans” in exchange for central bank securities.
“This is unconventional money creation,” financial analyst Chabane Assad told Algerian newspaper Liberte Algerie. He argued that if the funds are used strategically to fund profitable small and medium-sized enterprises the move could create a “new dynamic.” Government statements however indicate the funds will mostly flow to Algeria’s massive state-owned enterprises.
Decision-makers in Algiers are clearly attempting to generate a new narrative of economic recovery, with newly appointed prime minister Aymen Benabderrahmane evoking an “economic revival” in his first public statement on Friday.
Benabderrahmane, who succeeds former Prime Minister Abdelaziz Djerad, stated he will “spare no effort to fulfill the major missions entrusted to me.” Still, many in Algeria remain skeptical of the new prime minister as his close connections with President Abdelmadjid Tebboune indicate more continuity than change in Algeria’s leadership.
Benabderrahmane did little to distance himself from the previous government. He instead highlighted Tebboune’s economic program as “ the one that will allow Algeria to begin its long-awaited economic recovery,” while predicting “a revival whose beginnings are already on the horizon.”
