November 23, 2017 / 12:04 PM / 24 days ago

UPDATE 1-Algeria should pay debts owed to foreign and local firms -presidency

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ALGIERS, Nov 23 (Reuters) - Algerian President Abdelaziz Bouteflika ordered his government to settle debts owed to foreign and local companies immediately, the presidency said on Thursday.

The debt amounts to around 400 billion Algerian dinars ($3.50 billion) and most of the affected firms have done construction projects but were not paid, a government official told Reuters.

Algeria is a member of OPEC and its economy has been under pressure since crude oil prices started falling in mid-2014. This hit oil and gas earnings, which account for 60 percent of the state budget.

The decline in energy revenue forced the government to cut spending over the past two years, causing the freezing of projects and complaints from firms about delayed payments.

“The head of state instructed the government to take appropriate measures to ensure without delay the payment of claims held by public, private and foreign companies,” the presidency said in a statement after a cabinet meeting chaired by Bouteflika late on Wednesday.

The North African country plans a 25 percent rise in spending for 2018, saying the extra expenditure will come from a legal amendment to allow the central bank to lend directly to the public treasury.

$1 = 114.4260 Algerian dinars Reporting by Hamid Ould Ahmed; Editing by Ulf Laessing and Matthew Mpoke Bigg

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