Declining revenues from oil and gas amid lower prices this year have prompted the Algerian government to consider a bond issue to raise the equivalent of $2.3 billion.
Algeria’s government plans a seven-year Islamic bond issue, the so-called sukuk, of 297 billion Algerian dinars, or $2.3 billion, broadcaster Asharq TV reports, as quoted by Bloomberg.
The issue will be offered to Algerian nationals in and outside Algeria; foreigners are not allowed in the subscription period beginning in early November.
Algeria, an OPEC member and one of the eight OPEC+ producers that are currently rolling back their production cuts, has seen its deficit widen this year amid falling revenues from oil and gas and increased public spending.
“Declining hydrocarbon revenues combined with increased public spending significantly widened the fiscal deficit and depleted available fiscal buffers,” the International Monetary Fund (IMF) said earlier this month in a report on Algeria’s economy.
The drop in energy exports and increased imports have reversed the current account surplus into a modest deficit, according to the IMF.
While the easing of the OPEC+ group’s production cuts is expected to stabilize hydrocarbon activity in Algeria, falling oil and gas prices compared to 2024 limit the upside for additional Algerian oil production.
Moreover, global uncertainty continues to weigh on prospects and could constrain public investment and exports and put pressure on fiscal revenues, the IMF noted.
The current account deficit is projected to widen further, the fund said.
“With the fiscal buffers depleted, large fiscal deficits pose significant financing and debt challenges, warranting urgent policy adjustment,” the IMF added.
Algeria is not the only OPEC producer to have tapped the debt markets this year.
Saudi Arabia, OPEC’s top producer and the world’s biggest crude exporter, has been boosting debt issuances by the government and Aramco as lower oil prices have hurt both public finances and the state oil giant’s balance sheet.
By Charles Kennedy for Oilprice.com
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