Algerian President Abdelmadjid Tebboune has declared his country will not approach the International Monetary Fund (IMF) for loans, despite a financial crisis triggered by a collapse in global oil prices and coronavirus lockdowns.
“Accumulating debt harms national sovereignty,” Tebboune told reporters in a meeting with Algerian media, broadcast late Friday.
Algeria fell into heavy debt with the IMF during the 1990s, an episode Tebboune referenced in his address.
Algeria is heavily dependent on oil production, which generates over 90 percent of its export receipts.
A collapse in hydrocarbon prices this year – caused by plunging demand due to societal lockdowns designed to combat the spread of coronavirus, and exacerbated by a brief price war between key players Russia and Saudi Arabia – is putting even greater pressure on Algeria's external accounts.
Even before this year’s crisis took hold, Algeria’s foreign exchange reserves had fallen to $62 billion at the end of 2019, from $180 billion in 2014.
But Tebboune stressed he prefers “to borrow from Algerian citizens, rather than the IMF or the World Bank.”
He also expressed reluctance to borrowing from foreign banks, saying that doing so prevented Algeria from making its position clear on issues including the fate of the Palestinian cause and Western Sahara.
Tebboune also said that several “friendly” nations had offered loans, which had been declined for the time being. he did not name these countries.
He ruled out relying on extra printing of the local currency by the central bank, noting that this could cause inflation.
Tebboune also revealed plans to develop new natural resources, including uranium, gold and phosphate, with the help of foreign investors, after the end of the health crisis caused by the novel coronavirus.
“The novel coronavirus has frozen several plans and projects. But they will be launched after the health crisis is overcome,” he said.
A sharp fall in oil and gas revenue in recent years has deepened the country’s financial problems, widening the budget and trade deficits.
Algeria still relies heavily on energy earnings despite previous announcements that it would carry out reforms and develop the non-hydrocarbon sector.
The coronavirus outbreak has worsened the economic situation with energy earnings dropping further, forcing the government to cut spending and planned investment for 2020.
“We are determined to develop our agriculture and reduce significantly the value of purchases from abroad,” Tebboune stressed.
Elected in December 2019 after mass protests demanding political and economic reforms and the removal of the ruling elite, Tebboune has vowed to open up the economy and amend the constitution to give a greater role to parliament.
“A political change will take place and strong institutions will be created,” Tebboune said, referring to demands by the protest movement known as Hirak.
The government has decided to postpone loan payments for state and private firms financially hit by the coronavirus, and Tebboune said more measures would be taken to benefit companies and the self-employed.
“Losses of firms are being assessed. We are ready to provide financial support. Even self-employed people such as taxi drivers and hairdressers will be helped,” he said.