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 : impact of the oil price decline on the algerian banking system keynote address by mr mohammed laksaci, governor of the bank of algeria, at a meeting with bank executives, algiers, 26 april 2016. * * * i would first like to point out that in terms of external shocks, the algerian economy, which is closely linked to hydrocarbon sector resources, has particularly suffered from the shock inherent to the sharp and sustained fall in world oil prices. it is therefore from this perspective that i start my presentation. i shall talk first of the macroeconomic implications of this external shock, before outlining its impacts from the perspective of financial stability, in light of the new challenges for the banking system in the financing of non - hydrocarbon growth. 1. macro - economic stance economic and financial performance during 2001 - 2008, particularly the significantly improved external financial position and a substantial accumulation of budget savings, enabled the algerian economy to demonstrate resilience in the face of the severe external shock in 2009 inherent to the intensification of the international economic and financial crisis. following the strengthening of the external financial position over 2010 - 2013, algeria continued to preserve monetary and financial stability during 2014, in a context of persistent fiscal deficit and a return to a balance of payments deficit. the impact of the oil price decline on the algerian economy can be examined through the main recent economic and financial developments. first, following the sharp decline of hydrocarbon prices in 2014, the large contraction of hydrocarbon exports in 2015, in a context of still high imports after the significant increase of imports of goods over the period 2007 - 2014, resulted in a high external current account deficit ( - 16. 4 percent of gdp ). with hydrocarbons remaining algeria ’ s main export, the external shock resulted in a significant contraction in international reserves, from us $ billion 179 in 2014 to us $ billion 144 in 2015. nonetheless, this level remains comfortable, representing 27 months of imports of goods and services, in a situation of historically low medium and long term external debt ( 1. 8 percent of gdp ) and the absence of any external indebtedness of the hydrocarbon sector for more than a decade. second, the exchange rate of the dinar vis - a - vis the us dollar depreciated by 20 percent in 2015, while it depreciated by only 3. 8 percent vis - a - vis the euro. in view of the large depreciation of algeria ’ s main