Algeria turns to Islamic finance, bourse

Bid to rescue ‘worrying’ economy

ALGIERS, Sept 12, (RTRS): 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 measures are part of wider reforms by Prime Minister Ahmed Ouyahia’s government, which also said it plans to start fracking for shale hydrocarbons to boost oil and gas revenue, the main source of state income.

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.

“The situation remains extremely tense for the budget,” the government said in its economic action plan, using unusually blunt language. “In the current situation, 2017 will end with real difficulties, while 2018 looks to be even more complex”.

The crisis was likely to be sustained because “there is no prospect of a significant recovery in oil prices for the short and medium terms,” it said. “At the domestic level, the state of public finances is worrying.” 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”.

It is the first time the authorities have openly mentioned the introduction of Sharia-compliant Islamic finance, which respects the prohibition in Islam against paying interest. might be different. The sources declined to be named as the matter is not yet public.

In a statement to Reuters, Doha Bank said the information was incorrect but declined to elaborate. The bank employs 1,571 staff, according to its profile on Linkedin. Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed diplomatic relations and transport ties with Qatar in June, accusing Qatar of backing terrorism, an allegation that Doha denies.

As a result, banks from the other Arab states have been pulling deposits and loans from Qatari banks, raising their funding costs.