Algeria: Options for excess billions
It is not only baguettes that France gifted to Algeria. There is also the passion for big infrastructure projects, bureaucracy and saving.
Between 2005 and 2008, in the biggest oil bull run the world had ever seen. Algeria budgeted for a price per barrel of just $19. It only increased that figure to $37 this summer.
The result is that Algeria’s central bank has some $140 billion in foreign exchange reserves, invested in treasury bills and central bank deposits abroad. The finance ministry also has a hydrocarbon stabilization fund, known as the Fonds de Régulation des Recettes. According to finance minister Karim Djoudi, this has a dinar-denominated equivalent of about €50 billion. It acts as a savings fund, helping ensure that the budget will balance if there is a hydrocarbon price crash, so that, for example, infrastructure projects can continue.
Djoudi says Algeria is not about to use such funds to purchase shares in private companies abroad, or for other more adventurous plays. "The central bank manages foreign exchange reserves first and foremost to ensure liquidity. It is less about making a profit," he says.
Many in Algeria say there is enough to be done at home in terms of investment.