Economy

Algeria’s Foreign Reserves Decline by $30b

Published

8 years ago

21/03/2017

Modupe Gbadeyanka

By Modupe Gbadeyanka

The International Monetary Fund (IMF) says Algeria continues to face important challenges posed by lower oil prices, leaving its foreign reserves falling by $30 billion to $113 billion.

From March 7 to 20, 2017, an IMF team led by Mr Jean-François Dauphin, visited Algiers to hold discussions for the 2017 Article IV consultation.

Discussions focused on the appropriate mix of policies to adjust to lower oil prices.

Mr Dauphin noted that Algeria’s overall economic activity was resilient, but growth in the non-hydrocarbon sector slowed under the effects of spending cuts and is estimated at 3.4 percent in 2016.

He said further that inflation increased from 4.8 percent in 2015 to 6.4 percent in 2016 and stood at 8.1 percent year-on-year in January 2017.

Also, he observed that unemployment increased to 10.5 percent in September 2016 and remains particularly high among the youth (26.7 percent) and women (20.1 percent).

But despite some fiscal consolidation in 2016, the fiscal and current account deficits remained large, and public debt increased.

“Efforts to adjust to the oil price shock are underway. The authorities achieved a notable reduction in the fiscal deficit in 2016 and have adopted an ambitious fiscal consolidation plan for 2017-19. They made progress improving the business environment and are working on a long-term strategy to reshape the country’s growth model to foster greater private sector activity and economic diversification. The central bank is adapting its monetary policy instruments to a tighter liquidity environment. This growing reform momentum is welcome.

“A key challenge at this juncture is choosing a policy mix that will help the economy adjust to the oil price shock in a way that is sustainable and the least costly in terms of growth and employment.

“Fiscal consolidation will need to be sustained as oil prices are expected to remain low and hydrocarbon reserves are exhaustible. At this stage, the consolidation should rely primarily on broadening the tax base, including through better tax enforcement and the rationalization of tax exemptions; containing current spending; gradually replacing costly energy subsidies, which mostly benefit the well-off, by direct support to the population most in need; and improving the efficiency of capital spending and reducing its cost. Investment in health, education, and well-targeted social safety nets should be preserved. These efforts should be supported by further strengthening the budget framework and closely monitoring growing fiscal risks.

“Too abrupt a fiscal deficit reduction, however, should be avoided to reduce the risk of a sharp slowdown in growth. In the mission’s view, given the relatively low level of public debt, Algeria could afford a somewhat more gradual fiscal consolidation than entailed in the current medium-term budget framework if it were to consider a broader range of financing options, including external borrowing and the sale of state assets,” Mr Dauphin said.

He said further that, “Th e mission strongly supports the authorities’ objective to decrease the economy’s dependence on hydrocarbons and unleash the potential of the private sector. This is not only needed to adjust to lower oil prices but also to ensure a sustainable source of job creation even beyond the horizon for proven oil and gas reserves. Achieving this goal will require wide-ranging structural reforms. Measures are needed to improve the business environment and access to finance, strengthen governance and transparency, make the labor market more effective, ensure that skills produced by the education system and sought by students match the needs of employers, foster greater female participation in the labor market, and further open the economy to foreign investment. The overall strategy should be designed and sequenced so that reforms reinforce each other and the burden of economic adjustment is shared equitably. Action should be timely as structural reforms take time to bear fruit.

“Exchange rate, monetary, and financial policies should support the adjustment. Further efforts to bring the dinar in line with fundamentals, combined with steps toward the elimination of the parallel foreign exchange market, would support fiscal and external adjustment. The Bank of Algeria is appropriately introducing open market operations, which should become its main monetary policy tool. The Bank of Algeria will need to stand ready to tighten monetary policy in light of growing inflationary pressures. Based on preliminary data, the banking sector as a whole remains adequately capitalized and profitable, but the oil price shock has increased liquidity, interest rate, and credit risks. It is therefore important to accelerate the transition to a risk-based supervisory framework, enhance the role of macro-prudential policy, strengthen the governance of public banks, and develop a crisis resolution framework.”

Mr Dauphin disclosed that during the visit, his team met with Finance Minister Hadji Baba Ammi; Industry and Mines Minister Abdessalem Bouchouareb; Acting Trade Minister and Housing and Urban Development Minister Abdelmadjid Tebboune; Education Minister Nouria Benghebrit; Labour, Employment, and Social Security Minister Mohamed El Ghazi and the Governor of the Bank of Algeria, Mohamed Loukal. The mission also held discussions with other senior government and central bank officials as well as with representatives of the economic and financial sectors and civil society.

Economy

Nigeria, Japan Launch Naira-based Venture Fund for Startups

Published

2 hours ago

08/04/2025

Adedapo Adesanya

By Adedapo Adesanya

Nigeria and Japan have launched a strategic venture capital initiative that will channel Naira-denominated investments into high-growth startups, shielding them from currency risks while unlocking access to long-term concessional financing.

The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, met with officials from the Nigeria Sovereign Investment Authority (NSIA) and the Japan International Cooperation Agency (JICA) to finalise the framework of the fund, which has now received formal approval from the Japanese government.

Speaking on the development, Mr Edun welcomed the development, calling it a timely response to Nigeria’s youthful demography.

He said this fund provides critical financial backing across the capital structure—from equity to debt—and is aligned with President Bola Tinubu’s Renewed Hope Agenda for inclusive economic growth, he stated.

On his part, NSIA CEO, Mr Aminu Umar-Sadiq confirmed that the initiative satisfies two key conditions set by the Minister: mitigating foreign exchange volatility by investing in Naira and securing first-loss or grant capital to de-risk private investment.

“With JICA’s support, this is not just a proposed solution—it’s a fully approved, ready-to-launch initiative,” Mr Umar-Sadiq said.

Adding his input, JICA Director General, Mr Takao Shimokawa announced that diplomatic agreements would be signed within weeks, with full implementation expected thereafter.

By combining international concessional financing with domestic currency stability, the fund marks a new model for venture capital in Africa, aimed squarely at empowering the next generation of Nigerian innovators.

Economy

Nigeria’s Economic Management Team to Assess Impact of Trump’s Tariffs

Published

3 hours ago

08/04/2025

Adedapo Adesanya

By Adedapo Adesanya

The Minister of Finance, Mr Wale Edun, has said the country’s Economic Management Team (EMT) would meet to assess the likely impact of the 14 per cent tariff on goods exported from Nigeria to the United States.

Mr Edun made the disclosure while speaking at an event organised by the Ministry of Finance Incorporated (MOFI) on Monday.

The Trump administration recently imposed various tariffs ranging between 10 per cent and 65 per cent on different countries across the world, including Nigeria which got a 14 per cent tariff on its exports to the United States.

He said the EMT will afterwards make recommendations to cushion its impact on the nation’s economy, noting that the federal government will boost non-revenue as a means of cushioning the adverse effects to trade tariffs imposed on countries by President Trump.

Mr Edun stated that while the adverse effect on Nigeria will result in an oil price plunge, the government is intensifying efforts to ramp up oil production and boost non-oil revenues.

The Finance Minister noted that the US, which is at the centre of the tariff war had on April 2, announced that it would exempt mineral exports, including oil.

“Therefore, it’s the price effect, the oil price effect that may affect Nigeria. And it is the job and responsibility of the economic management team of President Bola Ahmed Tinubu, amongst others, to look at the various scenarios that might play out.

“There’s global uncertainty at a huge level, so nobody knows exactly what will happen- the announcement that has been made. We’re not sure what will be delayed, what will be reversed, or what will be implemented.

“So, it is not an announcement that the budget is being reviewed. It’s an announcement that it is our responsibility to look at the various scenarios and options and advise government accordingly.”

Mr Edun also highlighted plans to look at budget adjustment, expenditure prioritisation as well as innovative non-debt financing strategies.

According to him, Nigeria had recorded a trade surplus in the last three years (2022-2024) with the US.

“Nigeria-US Trade has been in surplus in the last 3 years (2022-2024). Nigeria’s exports to the US were N1.8 trillion, N2.6 trillion and N5.5 trillion in 2022-2024, respectively.

“Fortunately, oil and mineral exports accounted for 92 per cent. Implying oil and minerals exports amounted to N5.08 trillion in value while non-oil was just N0.44 trillion.

“Consequently, the tariff effect on exports is negligible if we sustain our oil and minerals export volume.

“The adverse effect on Nigeria will be through oil price plunge. We are intensifying efforts to ramp up crude oil production to curtail any price effect

“We are also focusing on non-oil revenue mobilisation by FIRS and Customs, budget adjustment and prioritisation where possible, and also and innovative non-debt financing strategies,” the Minister said.

Economy

NASD OTC Exchange Depreciates by 0.08%

Published

7 hours ago

08/04/2025

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange fell by 0.08 per cent on Monday, April 7, as the global market meltdown takes its toll on the local economy.

During the first trading session of the week, the market capitalisation of the bourse went down by N1.50 billion to N1.909 trillion from the N1.911 trillion quoted at the preceding session.

In the same vein, the NASD Unlisted Security Index (NSI) depreciated by 2.59 points at the close of business to 3,306.87 points from last Friday’s 3,309.46 points.

Business Post reports that there were two price losers at the session led by Nipco Plc, which crumbled by N20.20 to close at N199.80 per share compared with the previous closing value of N220.00 per share, and Geo-Fluids Plc retreated by 24 Kobo to settle at N2.46 per unit, in contrast to the N2.70 per unit it was traded at the last trading day.

However, the price of FrieslandCampina Wamco Nigeria Plc went up by N1.22 yesterday to N38.02 per unit from last Friday’s closing value of N36.80 per unit.

The volume of securities traded by the market participants decreased by 56.8 per cent during the session to 560,253 units from the 1.3 million units transacted in the previous trading day, but the value of trades rose by 232.3 per cent to N16.7 million from N5.02 million, and the number of deals contracted by 10 per cent to 18 deals from 20 deals.

Impresit Bakolori Plc remained the most active stock by volume (year-to-date) with 533.9 million units worth N520.9 million, Industrial and General Insurance (IGI) Plc occupied the second spot with 71.2 million units sold for N24.2 million, and the third position was taken by Geo Fluids Plc with 44.4 million units valued at N89.8 million.

Also, FrieslandCampina Wamco Nigeria Plc maintained its position as the most traded stock by value (year-to-date) with 14.2 million units valued at N549.9 million, followed by Impresit Bakolori Plc with 533.9 million units worth N520.9 million, and Afriland Properties Plc with 17.8 million units sold for N364.2 million.