Algeria to introduce Islamic financial services at two state banks before the end of this year and four others in 2018: PM
ALGIERS - Algeria plans to issue its first sukuk, or Islamic bond, next year as it seeks new funding sources after a fall in energy earnings hit state finances, Prime Minister Ahmed Ouyahia said on Thursday.
Ouyahia also said the government will introduce Islamic financial services at two state banks before the end of this year and four others in 2018.
The steps are part of wider reforms planned by the government after the OPEC member's finances were hit by the more-than-50-percent drop in crude oil prices since mid-2014.
The North African country had rejected sharia-based financing options after a war with Islamist movements that killed about 200,00 people in the 1990s.
But financial difficulties have prompted the government to speed up implementation of long-delayed reforms aimed at weaning the economy off its reliance on oil.
"This will help us cope with the situation," Ouyahia told parliament, referring to the plan to sell sukuk, which he said would be in the finance law for 2018. He gave no details.
Algerian firms rely heavily on state spending, which in turn depends on the hydrocarbons sector, with oil and gas exports accounting for 60 percent of the state budget and 95 percent of total sales abroad.
The government also aims to modernise the stock market, which is now smaller than those in neighbouring Morocco and Tunisia and has a very low level of liquidity.
The measures follow public spending cuts and new taxes on some susidised products including electricity, gasoline and diesel.
But Ouyhia said subsidies for basic products will be maintained for now, pending the launch of talks with political parties and civil society.
"We are still stuying how to rationalise subsidies," he said.
(Reporting by Hamid Ould Ahmed; Editing by Catherine Evans) ((firstname.lastname@example.org;))