Algeria, December 26, 2017

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Foreign trade: Banking measures, regulations to contain imports

Algeria's foreign trade deficit has significantly declined in 2017 as a result of a recovery in oil prices and its positive impact on crude exports, but without an important drop in imports despite the extension of the quantitative quotas and the establishment of banking measures.

Expected to decrease to 45 billion dollars by the end of the year, imports have declined by little more than one billion dollars only compared with 2016, while the goal set for 2017 was to be reduced to USD30 billion.

In addition, the balance of payments showed a deficit of more than USD11 billion in the end of the first quarter of 2017.

This resulted in a significant erosion in the foreign exchange reserve which was due to close the year at USD97 billion against USD114 billion in late 2016, that is, a drop by USD17 billion in one year.

In 2016 import licenses were granted only for vehicles, cement and concrete reinforcing bars, before extending to 21 other industrial and agricultural products.

The government decided afterwards a shift to reduce imports and encourage domestic products, by temporarily suspending importation of several hundreds of products, rising taxes and tariffs for others and suppressing import licenses.

The suspension of imports is expected to affect 851 products as from 2018.

In addition, the government has decided to extend the list of goods subject to the domestic consumption tax (DCT), to the rate of 30%, for 10 families of finished products, with an increase in custom duties, which may reach 60% for 32 families of finished products.

Banking measures to provide framework for foreign trade

At the same time, the Bank of Algeria (BA), since early 2017, has issued a series of measures to provide a framework for foreign trade, in order to further contain imports.

Banks have thus been requested to suspend all banking domiciliation for imports of citrus fruits and fresh vegetables and to freeze domiciliation for cars imported by companies for their own account.

No vehicle import license has been granted in 2017.

In addition, the Bank of Algeria issued new provisions making the domiciliation of imports for resale in the same condition obligatory, before any dispatching of goods bound for Algerian territory.

It also requires from importers a financial provision covering 120% of the value of the imported goods during domiciliation, less than 30 days before the dispatching of goods.

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