ALGIERS (AFP) – 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,” said Teb-boune, in a meeting with Algerian media broadcast late Friday.
The North African nation is heavily dependent on oil production, which generates over 90 per cent of the country’s 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 ever greater pressure on Algeria’s external accounts.
Even before this year’s crisis took hold, Algeria’s foreign exchange reserves had fallen to USD62 billion at the end of 2019, from USD180 billion in 2014.
But the president said Algeria would prefer “to borrow from its own citizens, rather than the IMF or World Bank”.
Algeria fell into heavy debt with the IMF during the 1990s, an episode Tebboune referenced in his address.
He also expressed aversion to borrowing from foreign banks, saying that doing so prevented Algeria making its position clear on issues including the fate of the Palestinians and Western Sahara.
Morocco has controlled most of the Western Sahara, a former Spanish colony, since the 1970s.
It fought a war with the Algeria-backed Polisario Front over the territory from 1975 to 1991, when a ceasefire deal was agreed.
Tebboune also said that certain “friendly” nations had offered loans, which had been declined for the time being.
The president ruled out relying on extra printing of domestic currency by the central bank, noting that this could cause an inflationary spiral.
Meanwhile, IMF has approved a USD643 million emergency loan for Ecuador, as the coronavirus pandemic and low oil prices hit the South American nation. Its Ministry of Economy and Finance said on Friday the five-year loan came with “favourable conditions” at 1.05 per cent interest.