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.



Oil Heads for Weekly Gains on Anxiety over Intensifying Ukraine War

Pump jacks operate in front of a drilling rig in an oilfield in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford/File Photo
Pump jacks operate in front of a drilling rig in an oilfield in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford/File Photo
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Oil Heads for Weekly Gains on Anxiety over Intensifying Ukraine War

Pump jacks operate in front of a drilling rig in an oilfield in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford/File Photo
Pump jacks operate in front of a drilling rig in an oilfield in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford/File Photo

Oil prices extended gains on Friday, heading for a weekly uptick of more than 4%, as the Ukraine war intensified with Russian President Vladimir Putin warning of a global conflict.
Brent crude futures gained 10 cents, or 0.1%, to $74.33 a barrel by 0448 GMT. US West Texas Intermediate crude futures rose 13 cents, or 0.2%, to $70.23 per barrel.
Both contracts jumped 2% on Thursday and are set to cap gains of more than 4% this week, the strongest weekly performance since late September, as Moscow stepped up its offensive against Ukraine after the US and Britain allowed Kyiv to strike Russia with their weapons.
Putin said on Thursday it had fired a ballistic missile at Ukraine and warned of a global conflict, raising the risk of oil supply disruption from one of the world's largest producers.
Russia this month said it produced about 9 million barrels of oil a day, even with output declines following import bans tied to its invasion of Ukraine and supply curbs by producer group OPEC+.
Ukraine has used drones to target Russian oil infrastructure, including in June, when it used long-range attack drones to strike four Russian refineries.
Swelling US crude and gasoline stocks and forecasts of surplus supply next year limited price gains.
"Our base case is that Brent stays in a $70-85 range, with high spare capacity limiting price upside, and the price elasticity of OPEC and shale supply limiting price downside," Goldman Sachs analysts led by Daan Struyven said in a note.
"However, the risks of breaking out are growing," they said, adding that Brent could rise to about $85 a barrel in the first half of 2025 if Iran supply drops by 1 million barrels per day on tighter sanctions enforcement under US President-elect Donald Trump's administration.
Some analysts forecast another jump in US oil inventories in next week's data.
"We will be expecting a rebound in production as well as US refinery activity next week that will carry negative implications for both crude and key products," said Jim Ritterbusch of Ritterbusch and Associates in Florida.
The world's top crude importer, China, meanwhile on Thursday announced policy measures to boost trade, including support for energy product imports, amid worries over Trump's threats to impose tariffs.