Algeria’s Experience with Unconventional Monetary Policies

Abstract

This study aims to introduce the concept of unconventional monetary policy specifically, non-traditional financing as a key response to financial and economic crises since 2008. It highlights the increasingly prominent role of central banks in implementing such policies and programmes to stimulate the financial system and foster economic growth, particularly in light of the limitations of conventional monetary tools. In the case of Algeria, the oil shock of 2014 precipitated a severe shortage of financial resources, resulting in deficits in both the general budget and the balance of payments. In response, the Algerian government adopted a policy of nontraditional financing to address these deficits and avoid external borrowing. The research employs a descriptive and analytical methodology, focusing on the Algerian economy through the examination of statistical data and annual reports issued by the Bank of Algeria for the period 2017-2023. The findings indicate that unconventional financing was not an effective mechanism for covering the deficit or restoring equilibrium to the general budget and balance of payments. This ineffectiveness is largely attributed to the Algerian economy’s heavy reliance on oil-based fiscal revenues