Algeria's central bank to bail out banks

Jan 11, 2016

This is the first time it has happened since 2001.

The Central Bank of Algeria has announced plans to inject cash in the financial system from February to bail out banks, which have seen their resources dip significantly in 2015.

The financial system has been affected by the dramatic fall in oil prices (down 44 per cent between June and December), which had immediate effects on the economy, given that the hydrocarbon sector accounts for 58 per cent of government revenues and 28 per cent of GDP, according to figures from the African Development Bank.

In September 2015, the overall liquidity of banks was estimated at 1,828 billion dinars (€15.3 billion) against 2,730 billion dinars in 2014.

The central bank believes that the rate of expansion of credit within the economy does not seem to be "sustainable" without a bank bailout from the Bank of Algeria.

"Banks have not had to use the Central Bank for refinancing since 2001," said the Governor of the Bank of Algeria, Mohammed Laksaci, quoted by APS.

He added that a bank audit exercise will soon be launched to assess the resilience of banks and their ability to cope with external shocks.ADNFCR-2976-ID-801809655-ADNFCR