Algeria Refuses to Borrow from IMF to Ease Financial Crisis

A vendor wearing a protective face mask serves customers inside his shop, ahead of the holy month of Ramadan, amid concerns over the coronavirus, in Algiers, Algeria. (Reuters)
A vendor wearing a protective face mask serves customers inside his shop, ahead of the holy month of Ramadan, amid concerns over the coronavirus, in Algiers, Algeria. (Reuters)
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Algeria Refuses to Borrow from IMF to Ease Financial Crisis

A vendor wearing a protective face mask serves customers inside his shop, ahead of the holy month of Ramadan, amid concerns over the coronavirus, in Algiers, Algeria. (Reuters)
A vendor wearing a protective face mask serves customers inside his shop, ahead of the holy month of Ramadan, amid concerns over the coronavirus, in Algiers, Algeria. (Reuters)

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.



Riyadh and Tokyo to Launch Coordination Framework to Boost Cooperation

Saudi Ambassador to Japan Dr. Ghazi Binzagr. (Asharq Al-Awsat)
Saudi Ambassador to Japan Dr. Ghazi Binzagr. (Asharq Al-Awsat)
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Riyadh and Tokyo to Launch Coordination Framework to Boost Cooperation

Saudi Ambassador to Japan Dr. Ghazi Binzagr. (Asharq Al-Awsat)
Saudi Ambassador to Japan Dr. Ghazi Binzagr. (Asharq Al-Awsat)

Saudi Arabia and Japan are close to unveiling a higher partnership council that will be headed by the countries’ leaderships in line with efforts to build a partnership that bolsters the technical transformation and joint research in clean energy, communications and other areas, revealed Saudi Ambassador to Japan Dr. Ghazi Binzagr.

He told Asharq Al-Awsat that the two countries will soon open a new chapter in their sophisticated strategic partnership.

The new council will be chaired by Prince Mohammed bin Salman, Saudi Crown Prince and Prime Minister, and Japanese Prime Minister Shigeru Ishiba to push forward the Saudi-Japan Vision 2030, he added.

The council will elevate cooperation between the countries and pave the way for broader dialogue and consultations in various fields to bolster political, defense, economic, cultural and sports cooperation, he explained.

The two parties will work on critical technological partnerships that will focus on assessing and developing technologies to benefit from them, Binzagr said. They will also focus on the economy these technologies can create and in turn, the new jobs they will generate.

These jobs can be inside Saudi Arabia or abroad and provide employers with the opportunity to develop the sectors they are specialized in, he added.

Binzagr said Saudi Arabia and Japan will mark 70s years of relations in 2025, coinciding with the launch of Expo 2025 in Osaka in which the Kingdom will have a major presence.

Relations have been based on energy security and trade exchange with Japan’s need for oil. Now, according to Saudi Vision 2030, they can be based on renewable energy and the post-oil phase, remarked the ambassador.

Several opportunities are available in both countries in the cultural, sports and technical fields, he noted.

Both sides agree that improving clean energy and a sustainable environment cannot take place at the expense of a strong economy or quality of life, but through partnership between their countries to influence the global economy, he explained.

"For the next phase, we are keen on consolidating the concept of sustainable partnerships between the two countries in various fields so that this partnership can last for generations,” Binzagr stressed.

“I believe these old partnerships will last for decades and centuries to come,” he remarked.

Moreover, he noted that the oil sector was the cornerstone of the partnership and it will now shift to petrochemicals and the development of the petrochemical industry.