Economics Affairs

Preserving exchange reserves: Government banks on streamlining imports

APS - 16 May 2019

ALGIERS- To face the continued depreciation of exchange reserves, the government opted for an approach based on the streamlining of imports, notably through the decision on the extension of the deferred payment of the value of imports, approved on Wednesday.

During the last three meetings, held on 2, 8 and 15 May respectively, the Government gave the go-ahead for important measures coming under this approach, run by the Ministries of Finance, Trade and Industry. The first measure, presented to the government by Minister of Finance Mohamed Loukal, as part of his periodical presentation on “the measures to undertake to reduce the balance of payment deficit and preserve the exchanging reserves, consist in streamlining the imports of CKD/SKD kits destined to car assembly and the manufacturing of household appliances, electronic and mobile phones.

Streamlining these imports starts also with speeding up the drafting of specification on the household appliances and electronics assembly activity, in compliance with the standards and conditions governing this activity, notably the rate of integration, recruitment of local workforce and the export requirement. The government decided to amend the executive decree of 2000, defining the conditions of the identification of production activities from collections destined to assembly industries and CKD collections, to be limited to the essential parts of the products, by integrating sub-contracting and determining the duration to benefit from different incentives.

It also committed to implementing incentives provided for by the finance law 2017, by speeding up the promulgation of the related inter-ministerial decree, under elaboration, determining the integration rate in the assembly activity. Algeria imported, only in three months, about USD1 billion worth of CKD/SKD kits meant for car assembly.

In the first quarter of 2019, the country imported USD920.86 millions of these kits, up by 21.41% compared with the same period in 2018. These imports reached USD3.73 billion in 2018 against USD2.2 billion in 2017, i.e. an annual sharp increase (+70%).