Algeria raises over $5 bln in local debt issue says Finance Minister

ALGIERS (Capital Markets in Africa) – Algeria, faced with financial difficulties from the fall in oil prices, has raised 568 billion dinars ($5.210 billion) from a local bond issue aimed at helping offset lower energy revenues, the finance minister said.

Oil and gas revenues account for 94 percent of OPEC member Algeria’s exports and 60 percent of the state budget. The government has reduced spending in 2015 and 2016 and planned further cuts for 2017.

The African Development Bank earlier this month approved a 900 million euro ($1 billion) loan for Algeria to support domestic revenue mobilisation and investment climate as well as energy sector efficiency and promoting renewable energy.

It was the first foreign loan in more than a decade for the North African country, which had been spending generously before the start of a drop in crude oil prices in mid-2014.

“We have mobilised 568 billion dinars. It’s a very important amount and I’m very satisfied with the results of this operation,” Finance Minister Hadji Babaammi told state news agency APS.

The government has said the bond issue, the first in years, was intended for “large economic investment in all sectors”. It was launched in April with a maturity of 3 to 5 years and an interest rate of 5.0 to 5.75 percent.

The issue is part of new funding sources, which will next year include higher taxes and new ones on several subsidised products.

Under that plan, subsidised gasoline and diesel prices will go up for the second straight year to rein in rising domestic consumption and lower the import bill.

Those moves are included in the draft budget for 2017, which parliament is now debating.

Babaammi declined to say whether those measures would be sufficient to cope with the country’s financial situation. He said they were managing the available financial resources, but did not rule out new foreign debt.

Source: Reuters Africa News