Country plans local debt issue as oil price drop hits finances

March 3, 2016 9:24 AM

With more than $130 billion in reserves and little foreign debt, Algeria says it can weather the impact of lower oil prices. Last month, the government sought Chinese financing for some projects, its first foreign funding in a decade.

Algeria's Prime Minister Abdelmalek Sellal attends a Franco-Algerian summit at the Hotel Matignon in Paris, December 4, 2014. REUTERS/Charles Platiau

Algeria plans to issue local debt as a source of financing to offset the collapse in world oil prices, which halved government energy revenues last year, Prime Minister Abdelmalek Sellal said.

The North African OPEC member, which relies on oil and gas for 60 percent of its budget, has already started to trim back some state-subsidised energy services, reduced 2015 and 2016 public spending and frozen some infrastructure projects.

Prime Minister Abdelmalek Sellal told reporters the government had no plans to issue foreign-currency bonds, but would issue local-currency debt in April with an interest rate of 5 percent, according to a report on Thursday from the state news agency APS.

He did not give details of the size of the issue or its maturity. It was not clear whether it would be open only to local Algerian businesses and banks.

With more than $130 billion in reserves and little foreign debt, Algeria says it can weather the impact of lower oil prices. Last month, the government sought Chinese financing for some projects, its first foreign funding in a decade.