partners ’ currencies, the real effective exchange rate of the dinar remains close to its equilibrium level. therefore, the exchange rate played, to a large extent, its role as an external shock absorber, reflecting its flexibility, supported by the bank of algeria ’ s interventions in the interbank exchange market. third, as a result of the sharp contraction in fiscal oil revenue and the expansion of public spending, the fiscal deficit rose to 16 percent of gdp in 2015 from 7. 3 percent in 2014. however, public debt has remained historically low, representing 13. 6 percent of gdp at end 2015. fourth, the significant reduction in the treasury ’ s financing capacity in 2014 and 2015 is well reflected in the aggregate monetary survey, with the treasury becoming a net borrower in 2015 vis - a - vis the banking system for the first time in many years. on the other hand, the decline in net external assets and the significant slowdown in the growth of credits to the economy more than offset the reversal of the treasury ’ s net position. overall, monetary expansion, as measured by m2 growth, was only 0. 12 percent in 2015, the lowest rate ever, mainly reflecting the magnitude of the impact of the oil price decline. excluding hydrocarbon sector deposits, the money supply increased by 2. 8 percent. bis central bankers ’ speeches the credits to deposits ratio rose from 69. 5 percent by end 2013 to 74. 7 percent by end 2014 and 86. 7 percent by end 2015, indicating a decline in the surplus of banks ’ collected resources compared to extended credits. the evolution of credits, in particular medium and long term credits, in a situation of stable deposits, is the main factor explaining the decline in the public banks ’ short term liquidity ratio. deposits in the banking sector, which rose in 2013 ( 7. 5 percent ) and 2014 ( 17. 5 percent ), slightly declined in 2015 ( - 0. 2 percent ) as a result of the sharp contraction in the deposits of the hydrocarbon sector ( - 41 percent ). consequently, the banking sector ’ s liquidity, in excess since 2002, declined gradually during 2015 to reach dinar billion 1833 by the end of the year ( a decline of 33 percent ), after relative stability in 2014 ( dinar billion 2731 by end 2014 ). with a milder recession in the hydrocarbon sector in 2014 and an upturn as of 2015, economic activity strengthened during these two years despite the external shock. growth was

mohammed laksaci : financial system developments in algeria – resilience and risks in the face of the international financial crisis and its spillover effects speech by dr mohammed laksaci, governor of the bank of algeria, at a meeting with the algerian bankers association, algiers, 22 january 2009. * * * algeria ’ s strong macroeconomic performance over the past nine years and the gradual strengthening of the banking sector ’ s stability have contributed to establishing a relative resilience to external shocks. key achievements include : • sound management of international reserves ( no investments in risky assets ), paying due attention to the strategic objective of safeguarding asset portfolios against any loss of capital ; • significantly reducing external debt, in 2005 and 2006, after strictly limiting external borrowing since early 2000. by end 2008, total medium and long term debt stood at only $ 4 billion ( less than 3 % of gdp ). furthermore, banks ’ external liabilities represent less than 1 % of their total liabilities, and banks are required to deposit their end - of - day foreign exchange balances at the central bank which manages the country ’ s overall exchange position ; • saving part of the fiscal revenue windfalls, with an annual budget saving averaging 23 % of gdp during the period 2005 - 2008. by end 2008, savings in the stabilization fund ( frr ), totaled da 4113 billion ( equivalent to $ 57, 8 billion ) ; • domestically financing the economy ’ s large investments, in the context of excess saving rates over investment rates ; • developing the bond segment of the financial market, with access limited to domestic investors ; • advancing the restructuring of the banking sector following failure and bankruptcy of small private banks which resulted in withdrawing their licences over 2003 - 2006 while compensating depositors through the deposits guarantee fund. the strengthened macroeconomic stability, as evidenced by subdued inflation ( 4. 4 % in 2008 despite the surge in world commodity prices ) and a real exchange rate of the dinar near its equilibrium level, as well as important foreign exchange reserves ( $ 143 billion, by end 2008 ) and low external debt, have constituted sound safeguards against the inherent shocks of the current international financial crisis. in addition, indirect monetary policy instruments ( deposit auctions, marginal deposit facility, … ) have been successfully used to limit the impact of structural excess liquidity on inflation. although the direct contagion impact of the international financial crisis on the algerian banking system is limited, in view of its small