Algerian officials have in recent weeks spelt out their new “unconventional” financial strategy whereby the country will boost spending amid rapidly depleting reserves without any recourse to foreign debt. This is to be done by forcing state-owned banks to lend to the government – a strategy which is patently inflationary and risks a currency collapse (MEES, 29 September).
Indeed, having been stable at around AD110 to $1 for the first eight months of 2017, the currency has slumped to $1=AD114 since the policy was announced. The IMF, in its latest World Economic Outlook, released this week, revises up its estimate of Algeria’s 2017 inflation to 5.5% from 4.8% six months earlier. (CONTINUED - 1503 WORDS)
