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Algeria excludes foreign debt option to face crisis

Xinhua, March 3, 2016 Adjust font size:

Algeria on Wednesday said it will not stack up foreign debts to sustain development as oil price slump has been driving down government revenues.

"Algeria will not resort to foreign debt for the moment despite sharp drop in oil prices which affected the nation's revenues," Prime Minister Abdelmalek Sellal said at the Parliament.

In 2005, Algerian President Abdelaziz Bouteflika decided to suspend foreign indebtedness option, after the oil-rich country managed to prepay 30 billion U.S. dollars of foreign debts.

The Budget Law 2016 is drawn by a reference price at 37 dollars per barrel, while any surplus revenue is placed in the Revenue Regulation Fund, to which the government resorts to fix budget deficit.

Sellal specified that the government is due to issue five percent bonds in April, and the central bank will lend money to the public treasury in line with legal mechanisms so as to confront the financial crisis.

He further noted that the government is to reveal a "new economic model" for the period 2016-2019, saying Algeria is gradually heading towards industrialization and investment.

"It is irrational to rely on oil revenues and then resort to International Monetary Fund to borrow money," he concluded.

Sellal stressed that the challenge is to build a diversified, strong and fair economy, saying "either change and reform, or submission." Endit