ALGIERS, Sept. 26 (Xinhua) -- Algeria said Tuesday that its foreign exchange reserves could fall to 97 billion U.S. dollars by the end of December 2017, the lowest since the continuing downward trend started from 2014.
Algerian Finance Minister Abderrahmane Raouya made the announcement before the Finance and Budget Committee of the People's National Assembly, saying that it is also the first time that the foreign exchange reserves are less than 100 billion dollars.
The government announced that the amount of 100 billion is a red line for national security.
The decline in foreign exchange reserves could be explained by the fall of oil prices, which began in the second half of 2014, from 117 dollars per barrel to just 27 dollars in February 2016 and rebound to nearly 60 dollars recently.
The other factor that contributed to the acceleration of the decline of foreign exchange reserves was the value of the import bill.
According to a report by the International Monetary Fund (IMF), Algeria's foreign exchange reserves peaked at 194 billion dollars at the end of 2013. The amount decreased to 178 billion at the end of 2014 and 143 billion in 2015. It further shrank to 114 billion dollars at the end of 2016.
In order to limit imports and reduce the expenditure of foreign exchange, the government had put forward the policy of license system for all imported products.
Prime Minister Ahmed Ouyahia said last week that his government will resort to non-traditional funding to save Algeria from severe economic crisis. He said the public treasury will turn to the central bank rather than borrowing foreign debt.
Some local financial experts worried that these measures would cause depreciation of the currency and vicious inflation.
