Algeria Plans to Plug Budget Deficit

Algeria’s prime minister laid out a sweeping plan to plug the budget deficit that would include direct borrowing from the central bank, as the Opec member looks to compensate for lower oil revenue without tapping international debt markets, AFP reported. The five-year plan presented by Prime Minister Ahmed Ouyahia aims to balance the budget by 2022, and reverse a deficit that ballooned with the plunge in global crude prices, which also cut foreign reserves by nearly half. “If we turn to external debt, as the IMF suggests, we will need to borrow $20 billion a year to repay the deficit and within four years we will be unable to repay the debt,” Ouyahia said. “This is what made the government look at non-traditional financing.” With domestic debt currently around 20% of gross domestic product, Algeria has room to take on additional borrowing, the IMF has said. Earlier this month, the cabinet authorized the central bank to lend money to the treasury to narrow the deficit.