Economics
Algeria Playing a Risky Fiscal Consolidation Game, IMF Says
- Better strategy includes foreign borrowing, boosting trade
- Current approach risks undermining growth in the medium term
Algeria relies on oil exports for most of its foreign funds.
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Algeria should weaken its currency, consider external financing and broaden its policy options to stimulate its economy, the International Monetary Fund said in a report.
The current focus on import restrictions and belt-tightening may encourage growth in the short-term but risk suppressing it further out by stoking inflation and further eroding foreign reserves that are already half their 2013 highs, the Washington-based lender said. It recommended a gradual exchange rate depreciation, external borrowing, more diverse financing avenues and measures to encourage private sector activity.