(Ecofin Agency) - Algeria’s economy should grow by 4% in 2018, Reuters reported quoting the budget. This rate is above the initial forecast which was 2.2%.

The budget expects an inflation rate of about 5.5% next year, a stable forecast compared to this year’s.

The performance will also result from the implementation of major aspects of the budget which is up 8%.

Budget deficit should slump to 9% of the GDP, from more than 14% in 2016.

But how will the country which currently has tight margins on its domestic market, finance this gap, knowing that it refuses to resort to external debt?

Indeed, up till now, oil revenues were enough to bridge the deficit of Africa’s fourth economy. However, the drop in prices of the black gold has put a lot of pressure on the country’s treasury. Since the government has pumped all the resources of the Fund for the regulation of revenues to bridge the successive deficits of the public treasury, the country intends to meet its financing needs by printing new currency notes. A decision that is criticized by many analysts who believe this would push Algeria in an abyss.

Next year, exchange reserves should continue falling, from $97 billion by the end of this year, to $84.6 billion in 2018, due to the drop in oil revenues, as oil is the country’s main export.

Fiacre E. Kakpo