Algeria aims to repay foreign debt next year

[Al-khiyal]

Algiers • Algeria plans an early repayment of what remains of its foreign debt of about $5bn next year, the official Algerian news agency APS quoted the country’s Finance Minister Mourad Medelci as saying.

“Indeed, the minister indicated that the case of early repayment of the rest of the foreign debt will be opened with creditors at the end of the year 2006 and could be wrapped up during the year 2007,” the agency said.

APS said the North African country had a similar accord with London commercial lenders and had won the cancellation of about $4.7bn of bilateral debt to Russia. Drawing on windfall revenue from oil and gas exports, Algeria has pushed its external debt to under $5bn from $15.5bn at the start of the year.

Algeria aims to repay foreign debt next year

[Al-khiyal]

Algiers - Algeria wanted to repay its trade debt of $5bn early after clearing all its rescheduled public debt, Finance Minister Mourad Medelci said on Thursday.

The Algerian minister said he intended to open talks with creditors at the end of the year, with a possible repayment next year.

Since June, the North African country has used high oil revenues to repay $7.9bn in rescheduled debt under the terms of an agreement with the Paris Club of creditor countries on May 10.

Soaring oil prices meant that in the first nine months of 2006 Algeria booked $40bn in oil revenues, accumulating more than $70bn in foreign currency reserves by the end of August.

Medelci announced that his country did not intend to call on external loans in 2007 to finance its development programme.

The minister said on Monday that Algeria has repaid ahead of schedule all of its $1.2bn debt owed to the United States.

Overall, the country reimbursed more than $12bn in debt ahead of schedule between 2000 and the end of October. Russia cancelled another $4.73bn, according to official statistics.

The latest repayment was $372mn to Germany on Wednesday.

External debt fell from $15.5bn at the beginning of the year to less than $5bn in November, equal to 4.0 percent of GDP and 12 percent of export revenue.

Between 1985 and 2005, the oil-rich country paid back a total of $117.9bn, including $84bn in principal and $34bn in interest.

The fall in oil prices in the late 1980s landed Algeria in fiscal trouble and the country has vowed not to allow a repetition.

In 1994, a then cash-starved Algeria was forced to ask the World Bank to restructure loans.

Algeria vows to avoid future debt trap

[Al-khiyal]

Algeria has reduced its external debt to $5 billion after signing its final debt repayment agreement of $372.11m with Germany in Algiers on November 15th. The repayment, which will be made on November 30th, follows an initial prepayment of $387.64m in August.

Algeria reached a multilateral agreement on debt prepayment in May with the Paris Club, a group of financial officials from 19 of the world's richest countries. In September, Algeria reached another agreement with the London Club.

Algeria has now paid off restructured debts of $8.5 billion ahead of schedule. The debts were originally scheduled to be repaid between November 30th of this year and November 30th 2011.

In 2004, Algeria paid off loans of $3.107 billion to international financial institutions such as the World Bank and African Development Bank.

Additionally, a $4.737 billion debt with Russia was written off in exchange for the purchase of military equipment.

Business in Africa Online reports that Algeria's outstanding foreign debt at the beginning of the year was $15.5 billion.

Algerian Finance Minister Mourad Medelci, told senators on November 16th that the debt-paying is a reflection of the international community's support for economic reforms and will make the country more attractive in the eyes of foreign investors.

On a tour of North African countries last week, German Foreign Minister Frank-Walter Steinmeier praised recent political reforms in Algeria and promised further European co-operation with the country, according to German newspaper Deutsch Welle.

"I know how important it is that you follow a decisive debt repayment policy and I'm particularly pleased that we can make a specific contribution to development on the basis of this agreement," the newspaper quoted Steinmeier as saying.

Algeria intends to repay its remaining external debts after finishing off the remainder of its rescheduled debts and multilateral loans. It hopes to start the process by the end of this year and finish in 2007.

The country is motivated by a desire to avoiding interest payments, commissions to debt services and other financial charges worth $2 billion. Debt has long hampered Algeria's development efforts.

The recent ability to pay off debts has been spurred by a sharp rise in the global prices of oil, the backbone of Algeria's economy.

Algeria to finish paying off Paris Club debt