French financial boost for Algerian economy

27th July 2004, Comments 0 comments

ALGIERS, July 27 (AFP) - France plans to provide Algeria with EUR 2 billion (USD 2.4 billion) to give a major boost to its economy, visiting French Economy and Finance Minister Nicolas Sarkozy said Tuesday.

ALGIERS, July 27 (AFP) - France plans to provide Algeria with EUR 2 billion (USD 2.4 billion) to give a major boost to its economy, visiting French Economy and Finance Minister Nicolas Sarkozy said Tuesday.

The financial package, to be delivered as part of a new "partnership for growth and development", will include reconverted debt, loans on favourable conditions and loans to underwrite trade, Sarkozy and his Algerian counterpart said in a statement.

The document was released after the French minister and Algerian Finance Minister Abdelatif Benachenhou signed a memorandum on the development and growth partnership between France and its former colony in North Africa.

Of the EUR 2 two billion, half will be granted in trade loans, EUR 750 million (USD 912 million) will be low-interest loans and EUR 288 million will consist of forgiven foreign debt turned into investment.

"This initiative is based on the shared conviction that it's in the interest of Algeria and France to make the best use of the complementary nature of the two economies to accompany current changes in the Algerian economy and society, boost trade and multiply the shared business interests," the communique said.

France "has decided to put at Algeria's disposal the whole of the amount allowed for the conversion of debt into investment under the current rules of the Paris Club, which is EUR 288 million," it added.

The Paris Club is the name given to each developing debtor nation's group of foreign creditor countries.

"France will go to the Paris Club to support a request for the ceiling for debt conversion into investment to 30 percent, from the current 10 percent," the statement said.

Along with the measures to promote French business investment, the French development agency (AFD) has allocated EUR 55 million to easing the development of small and medium-sized companies in Algeria.

The two countries also reached agreement on bilateral cooperation in the domains of transport, water management, habitat and urbanism.

About two thirds of the trade loans announced in the statement will go towards financing equipment for a new underground railway system in Algiers, which will eventually cost some EUR 350 million, and rolling stock on existing rail lines in the suburbs of the capital.

France also plans to help modernise the ailing water supplies networks in Algiers and other big Mediterranean coast cities such as Oran and Constantine.

Low-interest loans released via the AFD, amounting to EUR 75 million, will be used to rehabilitate decrepit urban housing and to rebuild in areas which were ravaged by a devastating earthquake in the Algiers region in May last year.

The statement also said the two countries plan to encourage "a multiform partnership between banks" to enable Algerian banking institutions to benefit from French experience.

After the financial discussions, Sarkozy had talks with President Abdelaziz Bouteflika, who then hosted a lunch in his honour.

He was scheduled to stop over on the French Mediterranean island of Corsica on his way back to Paris.

© AFP

Subject: French news

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