Algerians increasingly nervous over their country’s cash shortage

By Rania Hamdi
Posted on Thursday, 13 August 2020 17:56

A customer gives money to a seller in a grocery store in Algiers, Algeria. REUTERS/Ramzi Boudina

Endless queues, withdrawal limits and rows between customers: the liquidity crisis is causing tension in Algeria, despite measures introduced by Abdelaziz Djerad’s government to remedy the situation.

To address the queues and rows pitting post office customers against employees in light of Algeria’s liquidity shortage, Abdelaziz Djerad’s government implemented several emergency measures on 28 July.

“Lately, you get a text message indicating the bank transfer date, the availability of the money and withdrawal options,” says a retiree who is fed up with having to wait in line to receive his pension. “These past few months have been hell. We had to queue up outside in the blistering heat. Fortunately there were volunteers who provided us with chairs so we could take a breather,” he adds.

The government had to intervene to reduce the negative impact of the liquidity crisis, asking the relevant departments to spread out the payment of wages, pensions and government welfare benefits over the entire month, adjust post office opening hours based on demand and limit cash withdrawals.

In addition, the government recommended the transfer of funds from branches with excess liquidity to those short on cash, the expansion of access to bank ATMs by establishing interoperability between Algérie Poste’s electronic banking systems and those of banks, and, lastly, that civil society stakeholders be permitted to assist with supervising queues in keeping with coronavirus prevention guidelines.

However, these measures appear to be far from adequate, as a memo from the state-owned postal service’s management, which recently set a maximum cash withdrawal limit of 100,000 dinars (around $777.5), suggests. Algérie Poste is asking customers to use alternative methods such as inter-account transfers and check payments.

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“This week when I wanted to withdrawal €1,000 from my foreign currency account, my bank required that I provide a reason for using this money. What am I going to write? That I have to buy a washing machine? It’s absurd to have to explain why you want to withdraw your own money,” says Leila, a French-Algerian artist living in the country.

Plummeting oil prices coupled with the health crisis brought on by the COVID-19 pandemic has caused an economic slowdown which is impacting the circulation of cash.

Wave of panic

The situation has given rise to a widespread sense of worry and panic, which has pushed bank account holders to withdraw massive amounts of cash, mainly in order for them to stock up on food staples. Just under 400bn dinars have been pulled out each month from post offices.

The most loyal savers have refrained from making the slightest deposit out of fear that they will not be able to use their money when they need it. As for economic operators, most of them have limited their transactions to cash-based ones.

At the end of July, Algérie Poste acknowledged that the slowing of economic activity to a halt had led cash deposits to virtually dry up at bank branches and post offices.

Other issues included additional constraints brought on by new rules governing working arrangements, compliance with social distancing and access to post offices and banks, as well as the absence of a portion of female staff members because of their childcare obligations.

Delayed government intervention

The unprecedented liquidity crisis became apparent as early as March, with the situation growing tense in post offices, which quickly turned into an unmanageable flood of customers on paydays and when retirees and the disabled were scheduled to receive their respective pensions and allowances. Some banks required account holders to submit a request 24 hours in advance beyond a specific withdrawal limit.

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It took two months for the government to admit that there was a problem: on 18 May, finance minister Abderrahmane Raouya alluded to a significant drop in bank liquidity before the lower chamber of Algeria’s parliament. Banks, he added, will soon struggle to provide credit to businesses.

Backing this assertion, a memo from the Bank of Algeria dated 9 June indicated that the overall liquidity of banks in the country had fallen below the symbolic threshold of 1trn dinars.

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