The former director of foreign exchange at the Bank of Algeria, Mohand Brahiti, hosted this Saturday, June 11 in Algiers a conference on the theme “How to ease the constraints of foreign exchange control on Algerian companies both importing and exporting”.
During this conference, many points were discussed, including the foreign exchange regulations in force in Algeria, the behavior and strategy of foreign exchange controllers and actions to ease the current constraints of foreign exchange control.
In front of an audience made up of customs experts, officials and senior executives of the State, Mr. Brahiti who spent 20 years at the Bank of Algeria, called for the application of the laws and regulations in force. “with all the necessary rigor”, and in particular “ convince the exchange control actors of compliance with it”.
Mr. Brahiti, who headed the exchange control department of the Bank of Algeria, made a point of emphasizing at the start of the presentation: ” It is not a question of seeking to be right or to prove others wrong, but only to get positive results for a clear improvement of the gloomy situation that prevails in our country, for all (…) At no time do I need to criticize or flatter anyone because, everyone is always animated by positive intentions, even if his positive intentions appear only as secondary benefits”.
“ Exchange controls help to keep the population lethargic ”
“The economy in general, including exchange controls, is something simple. I say simple and not easy. You just need to have a model to follow or adapt, to be successful,” Mr. Brahiti first said.
The former foreign exchange director of the Bank of Algeria then indicated that the existence of exchange control in a country is “linked to the non-convertibility” of the national currency. He justifies his existence in Algeria by “an unfounded fear, except in times of war or capital flight abroad”.
“If exchange control had something good for a peaceful economy, why did the American, European, Asian countries, the countries of the former Eastern Europe and China not adopt it or use it? have given up?”, he questioned. Before emphasizing: “Exchange control in its binding version only exists in four countries: Algeria, North Korea, Angola, and Cuba”.
“In such a peace, according to eminent economists, it is not I who say it, exchange control mainly helps to keep the population of the country in lethargy and makes it possible to keep longer to a class, a group or to a fraction of the population, power over the whole country. The end result would be the continued underdevelopment of the country.”
Why are there exchange controls in Algeria?
For Mr. Brahiti, the existence of exchange control in Algeria is due “to the survival of certain limiting beliefs, which come to us from afar”.
“Beliefs, as limiting as they are destructive, remain. The combination of these limiting beliefs spawned the model, the paradigm followed by many of our officials for a long time,” the former director of foreign exchange at the Bank of Algeria said.
Before emphasizing: “The mode of determining the value of the dinar is one of the limiting and serious beliefs existing in Algeria”.
“For the value of the Algerian dinars to appreciate or depreciate on the market, this market would have to exist, that is to say at a place where several suppliers and applicants meet and who freely negotiate the exchange of their assets in dinars or foreign currencies. In Algeria, no one can freely buy foreign currency, since purchases from the Bank of Algeria are conditional. Parallel market operations are prohibited, although traded at 30-50% higher prices. In such a context, no one agrees to sell their currencies at a lower price. So these foreign currencies have become currencies of refuge. There is, therefore, no foreign exchange market in Algeria,” Mr. Brahiti said.
Other “limiting beliefs” and “harmful” to economic development cited by the former foreign exchange director of the Bank of Algeria: the non-acceptance of commercial or production franchises, the model followed for determining the exchange rate in Algeria, and the prohibition for foreigners to buy real estate in Algeria, “while wealthy Algerians are buying castles in Spain, France, England, the United States and even Vanuatu”.
“Building the Algeria of tomorrow inevitably involves starting the engines and removing obstacles of all kinds, including exchange control, which is only one of the main brakes. Democracy, alternation in power, meritocracy, rule of law, social justice, happiness and well-being of Algerians are the terms that we wish for our country,” concluded Mr. Brahiti.
