Algeria is facing tough options proposed by the International Monetary Fund (IMF) in an attempt to reform the country’s economy.
Earlier this week, an IMF team concluded a visit to Algiers, during which they held discussions with government officials on setting a mix of policies and reforms to restore macroeconomic balances and foster sustainable and inclusive growth.
Economists criticised the IMF’s recommendations that “the Algerian government has failed to control the economic indicators after the four-year oil price shock.”
They said that the IMF proposals “do not represent a solution to the crisis.”
At the end of the visit, the IMF called on the Algerian government to implement “a gradual exchange rate depreciation combined with efforts to eliminate the parallel foreign exchange market would also support the adjustment.”
It also advised on “tapping a broad range of financing options, including domestic debt issuance at market rates, public-private partnerships, sale of assets and, ideally, external borrowing to finance well-chosen investment projects.”
The Algerian authorities refuse to resort to external borrowing as it “would impose foreign sovereignty over the country,” as recently described by the Algerian President Abdelaziz Bouteflika.
As of end of 2017, Algeria’s foreign debt amounted to $3.85 billion, according to country’s central bank’s official data.
“If the choice is to continue monetizing the deficit, robust safeguards should be in place. Such safeguards should include strict quantitative and time limits to monetary financing, and the pricing of such financing at market rate,” IMF team reiterated.