Algeria’s foreign exchange reserves fell by $2 billion in August and will drop further, to $102 billion by the end of this month, due to the country’s high imports bill and a sharp fall in energy earnings, Prime Minister Ahmed Ouyahia said on Thursday.
Falling reserves will hit the value of the OPEC member nation’s dinar currency, which has already seen a 25-30 percent depreciation over the past three years, Ouyahia told parliament.
Reserves were $105 billion in July, having declined from $195 billion in 2014 when global crude oil prices started falling.
That caused financial pressures that pushed the government to reduce public spending and set import restrictions, but the value of purchases from abroad is still high.
Algeria’s oil and gas exports account for 60 percent of the state budget and 95 percent of total sales abroad.
“The value of the dinar is linked to two things: the exchange reserves and the evolution of other currencies,” Ouyahia told lawmakers who had expressed concern that planned amendments to the Credit and Money law would hit the dinar.
The amendments, which will be discussed by parliament, will allow the central bank to lend directly to the public treasury to help it finance budget deficits and internal public debt.
