The Islamic Development Bank (IsDB) has allocated a $3 billion funding facility for Algeria to support its economic diversification plans and infrastructure projects.

IDB Chairman Muhammad Al-Jasser said the facility is not a loan but a financing mechanism, which will be available for the North African Arab nation during 2025-2027.

“This is not a foreign loan but a new chapter of cooperation between the two sides,” Al-Jasser told local reporters in the capital Algiers on Thursday.

“I have never mentioned lending…it is a cooperation framework involving  a facility of $3 billion for three years in case Algeria decides to benefit from it….if not, then the funds will remain in the Bank,”  he added.

Al-Jasser, quoted by Elkhabar newspaper and other Algerian outlets on Friday, said he was reacting to reports that Algeria has decided to borrow from the Jeddah-based IsDB.

“What has been said is wrong…there is misunderstanding in this respect…it is just a cooperation framework,” he said, in response to comments by Algerian officials that the country does not intend to borrow from abroad.

Algerian officials said last week that the deal with IsDB would be used to fund competitive sectors, economic diversification programmes  and infrastructure projects as well as support the private sector to play a bigger role in the domestic economy.

Algeria rarely resorts to foreign borrowing to finance fiscal imbalances and local projects, opting instead to domestic banks.

The OPEC producer is also planning to issue its first sovereign Islamic bonds (sukuk) in June to cover the budget deficit and fund infrastructure projects.

(Writing by Nadim Kawach; Editing by Anoop Menon)

(anoop.menon@lseg.com) 

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