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AfDB and Algeria sign €900-million loan agreement

Staff Writer |
The African Development Bank (AfDB) and Algeria have signed an agreement for a €900-million loan to support the country’s industrial and energy competitiveness.

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This budget support loan provides the government with the resources needed to offset the drop in its revenue due to the sharp fall in oil prices.

Although the country’s trade balance shows a structural surplus, it recorded a deficit of about $13 billion for the first time in 20 years owing to a substantial drop in oil export earnings, which slumped by almost 43% between 2013 and 2014.

The overall balance of payments – which replenishes official foreign exchange reserves – that has remained positive for many years, also recorded its first deficit in 2014.

Although official foreign exchange reserves are still at a comfortable level (more than two years of imports), they (excluding gold reserves) declined by 24.3% between December 2014 ($179 billion) and December 2015 ($144 billion).

Among other outcomes, the programme will improve domestic resource mobilization, with an increase in non-oil tax revenue from 17.1% of GDP in 2015 to 17.7% of GDP in 2017.

It will also help control current expenditure which will decline from 34.6% of GDP to 30.6% of GDP in 2017.

It will help establish an improved business climate that is conducive to SME development and promotion of entrepreneurship.

The greater energy sector contribution to the country’s real economy should lead to job creation and private sector development by capitalizing on the energy sector supply chain.

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