Algeria turns to Islamic finance to recover from problematic economy
Algeria’s new government will introduce Islamic finance and develop its stock market to draw more investment into the economy as it struggles to cope with a sharp fall in energy earnings, according to an official document.
The North African OPEC member’s finances have been hit by a more than 50 percent drop in crude oil prices since mid-2014, prompting authorities to announce changes to the largely state-controlled economy.
In a bid to ease financial pressure for the coming years, the government plans to “strengthen the supply of banking products, including leasing and products of the so-called Islamic finance”.
The government also plans to continue spending cuts, including to subsidies, which currently apply to almost everything from food and medicine to housing, education and energy.
Analysts say spending cuts alone may not be enough to tackle the crisis. Foreign exchange reserves fell to $105 billion in July this year from $193 billion in May 2014 – mainly due to high imports, on which the government has spent $561 billion since 2000.
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