Foreign exchange reserve management in Algeria

5.Conclusion

At the end of this paper, some recommendations are presented as conclusion, intended to strengthening Algeria policy frameworks for reserve management so as to help increase its resilience to shocks that may originate from global financial markets .these recommendations includes the following areas:

-Algeria reserve management policy should ensure the development of sound governance structure in line with the best international practices, improved accountability, a culture of risk awareness across all operations and efficient allocation of resources.

-The bank of Algeria must apply stringent credit criteria for selection of counterparties. And the financial strength of counterparties must constantly under watch in order to assess whether counterparty's credit quality is under potential threat.

-The bank of Algeria should make available in the public domain data relating to foreign exchange reserves, its operations in foreign exchange market, position of the country's external assets and liabilities and earnings from deployment of foreign currency assets and gold through periodic press releases of its weekly statistical supplements, monthly bulletins, annual reports, etc...

- In order to encourage transparency and disclosure in the reserves management policy it will be necessary the setting up of an entity at the bank of Algeria responsible for reserve management ,named for example " the department of external investments and operations " . This entity may also have a range of policy responsibilities and functions that focus on design of appropriate reserve management policy in accordance with best international practices .

- The Bank of Algeria must closely monitors the portion of the reserves which could be converted into cash at a very short notice in order to meet any unforeseen or emergent needs. -To insure the following of international best practices on transparency in monetary and financial policies, the bank of Algeria should adopted the Special Data Dissemination Standards (SDDS) template of the IMF [12] ,in order to provide detailed data on foreign

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exchange reserves to the public. Such data should be available on monthly basis on the central Bank's website.

- Thinking about the the best way to prepare the post-oil stage, to transform the Nonrenewable oil wealth to other forms of renewable wealth on the ground, through the using of these huge foreign reserves to diversify the production system on a competitive basis (in price and quality), this diversification is also the guarantee of greater economic and

political independence.
- Given that the foreign reserves are a public savings, our believe is that the framework for its deployment must be in accordance with the Algerian people religion (which is Islam) However, it should respect the Islamic finance principle, where the interest rate is prohibited.

References

[1] International monetary fund.(2004). Guidelines for Foreign Exchange Reserve Management. Washington, DC: International monetary fund.

[2] Mudher, M. S.(2009,June). Official foreign exchange reserves management tasks and the national economic security. Iraq Central Bank working paper. (Original work published in arabic)

[3].Reserve Bank of India.(2009). Half Yearly Report on Management of Foreign Exchange Reserves April - September. Department of External Investments and Operations, Central Office , Mumbai.

[4] International Monetary Fund. (2000). Debt- and Reserve-Related Indicators of External Vulnerability, Retrieved from http://www.imf.org/external/np/pdr/debtres/index.html

[5] Laksaci, M.(2011,October 16). Développement économiques et monétaires en 2010, et éléments d'orientation du premier semester 2011. Retrieved from http:// www.bank of algeria.dz.

[6] Bank of Algeria.(2011). Evolution économique et monétaire en Algérie en 2010. Retrieved from http://www.bank of algeria.dz

[7]International Monetary Fund.(2011, February). Algeria: 2010 Article IV Consultation-- Staff Report, IMF Country Report No. 11/39. Washington, DC.

[8]Benissad, H .(2008,december 5). Les avoires exterieurs officiels ne sont exposés qu'aux pertes de change .ELWATTAN, p.5.

[9]Benissad, H. & Benachenhou A.(2008,december 6). l'impact de la crise financière mondiale sur l'Algérie. La Tribune, p.4.

[10]World Bank. (2004, July). Algeria Financial Sector Assessment. Retrieved from: http://www.world bank.org/

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[11]Udaibir, S. D., Mazarei, A., & Hoorn, H.V. (Eds.).(2010). Economics of sovereign wealth funds: issues for policymakers., Washington, D.C: International Monetary Fund.

[12] Kester,A.Y.(2000,june) .Improving the Framework for Reporting on International Reserves. Finance and development , 37 (2).