INSTRUCTION 01-2017 OF MARCH 1 st, 2017 AMENDING AND SUPPLEMENTING INSTRUCTION 02-2004 OF MAY 13 th, 2004 RELATING TO THE REGIME OF MANDATORY RESERVES Article 1 : This Instruction is to amend the basis for the calculation of mandatory reserves referred to in Article 6 of Instruction 02-2004 relating to the regime of mandatory reserves. Article 2: Article 6 of Instruction 02-2004 relating to the regime of mandatory reserves shall be amended to read as follows: Article 6: Banks must send to the Bank of Algeria -Research Department- a statement showing the basis for the calculation of mandatory reserves, in accordance with canvas attached in Appendix of this Instruction within five days of closing of the reserve constitution period. Article 3 : This Instruction shall repeal and replace the provisions of Instruction 02-2013 of April 23 rd, 2013. Article 4 : This Instruction shall enter into force as from March 15 th, 2017. The Governor Mohamed LOUKAL
INSTRUCTION 02-2017 OF MARCH 1st 2017 SUPPLEMENTING INSTRUCTION 02-2016 OF MARCH 24th, 2016 SETTING THE PROCEDURES OF DISCOUNTING AND REDISCOUNTING OPERATIONS OF GOVERNMENT AND PRIVATE SECURITIES IN FAVOR OF BANKS AND FINANCIALINSTITUTIONS AND OF ADVANCES AND CREDITS TO BANKS Article 1 : Pursuant to Regulation 16-03 of July 28 th, 2016 supplementing Regulation 15-01 of February 19 th, 2015 relating to operations of discount of government securities, rediscount of private paper, advances and credits to banks and financial institutions, this Instruction is to supplement Instruction 02-2016 of March 24 th, 2016 setting the procedures of discounting and rediscounting operations of Government and private securities, in favor of banks and financial institutions and of advances and credits to banks. The supplement shall relate to the Provisions relating to the discount of Government securities representative of domestic borrowings and to the rediscount of private paper representative of long term credits. Article 2 : Article 3 of Instruction 02-2016 mentioned hereinbefore shall be supplemented to read as follows: Article 3: The Bank of Algeria may discount government securities issued or guaranteed by the State, for the benefit of banks and financial institutions. Such securities shall be represented namely by: - Short term Treasury bonds with maturity equal to or lower than one year; - Medium term Treasury bonds with maturity of two to five years; - Securities representative of domestic loans. Article 3: Article 4 of Instruction 02-2016 shall be supplemented to read as follows: Article 4: Discount of Government securities shall include: - Bankable securities (securities with maturity equal or lower than three months); - Securities with residual maturity exceeding three months and lower or equal to three years, for a conventional duration not exceeding sixty days; - Securities representative of domestic loan with residual maturity equal or lower than three years, for a conventional duration not exceeding sixty days. The bank of Algeria may discount (purchase) bankable securities at the market price or take such at a conventional maturity with an assistance capped at 90% of face value The assistance of Bank of Algeria for discounted Government securities at conventional maturity is capped at 90% of face value and at 15% of face value for securities representative of domestic bond. The discount rate on Treasury bills discounted at conventional maturity shall be the rediscount rate in force published by the Bank of Algeria. The discount rate applicable to securities
representative of domestic bond taken at conventional maturity shall be the interest rate fixed for such securities when issued by Treasury, in case such rate is higher than the rediscount rate of the Bank of Algeria. Article 4 : Article 5 of Instruction 02-2016 shall be supplemented to read as follows: Article 5: Short term Treasury bills, not committed in other transactions and eligible to discount are dematerialized and recorded in current accounts of banks and financial institutions opened at the Bank of Algeria or the central depository. Government securities representative of domestic bond issuance, owned by banks and financial institutions or received as collateral for credit operations, must be previously dematerialized and recorded in current accounts of banks and financial institutions opened at the bank of Algeria. Settlement of transactions on discounted Government securities shall occur through the settlement accounts of banks and financial institutions managed by the Real-time gross settlement system for large amounts and urgent payments (RTGS), and opened in the books of Bank of Algeria. Article 5 : Article 6 of Instruction 02-2016 shall be supplemented to read as follows: Article 6: Banks and financial institutions shall enter their request for discount through a written application signed by the person responsible for commitments at the institution concerned, specifying the operations requested and the type of Treasury bonds and /or securities representative of the domestic bond issuance to be discounted. Banks and financial institution non Treasury primary dealers (non SVT) shall declare the name of manager of the securities and submit to the Bank of Algeria an endorsement of the bank managing these securities in order to allow Bank of Algeria to immediately block them on its books or through the settlement accounts opened on the books of the central depository. After the identification and authentication of Government securities that banks and/or financial institutions propose to discount, the Bank of Algeria shall credit settlement accounts of the institutions concerned through RTGS for the amount of securities purchased and/or for the net amount of securities discounted at conventional maturity. At conventional maturity of discounted Government securities, the Bank of Algeria shall debit the settlement account of the bank or financial institution of the amount granted at the time of the conclusion of the discounting transaction, plus interests due, against delivery of pledged securities. The interests due for Government paper taken at conventional maturity are calculated on the basis of actual number of days between the date of delivery of the paper and the maturity date, by applying the discount rate of the Bank of Algeria when dealing with Treasury bonds and the rate of interest fixed by the Treasury at the time of the issuing when dealing with securities representing an issuance of domestic bond, in the case this rate being higher than the rediscount rate of the Bank of Algeria.
Article 6 : Article 8 of Instruction 02-2016 shall be supplemented to read as follows: Article 8: Pursuant to Articles 9 through 12 of Regulation 15-01, as supplemented, the Bank of Algeria may rediscount in favor of banks and financial institutions, four categories of private securities: - Private securities representative of domestic or foreign trade transactions, whose remaining maturity shall not exceed six months and which bear the signature of at least three creditworthy natural persons or legal entities, including that of the transferor; - Financing bills representative of cash loans or seasonal loan that are rediscounted for a period of up to six months, provided that the overall assistance of the Bank of Algeria does not exceed a total duration of twelve months; - Financing bills representative of medium term credits rediscounted for durations of six months, provided that the overall assistance of the Bank of Algeria does not exceed a total duration of three years. - Financing bills representative of long term credits rediscounted for durations of six months, provided that the overall assistance of the Bank of Algeria does not exceed a total duration of five years. Article 7 : Article 9 of Instruction 02-2016 shall be supplemented to read as follows: Article 9: The application for the rediscount of private securities by banks and financial institutions shall include: - The application; - The statement of securities to be rediscounted (model attached in Appendix 1, 2 and 4); - The acknowledgment of debt in favor of the Bank of Algeria, bearing the signature of the bank or the financial institution concerned and of the Bank of Algeria (model in Appendix 3); Pursuant to Article 13 of Regulation 15-01, as supplemented, private securities held on companies shall be rediscounted for durations of up to six months. Private securities are capped at 70% of their face value when relating to trade transactions and at 50% for other transactions. Medium term paper may not be rediscounted during the first twelve months of use of credit; paper representative of long term credits may not be rediscounted during the differed period. In the event of banks and financial institutions submitting individual bills of mobilization of securities, references of the said credit (date of granting, amount of credit and maturity) must be mentioned on the verso of that security. Article 8 : Article 12 of Instruction 02-2016 shall be supplemented to read as follows:
Article 12: In respect of medium and long term credit as provided for in Article 6 hereinabove, banks and financial institutions shall be compelled to submit their application for refinancing along with the information required in Article 7 hereinabove, the following documents : - Information on the activity being funded; - Nature of the funding; - Sources of the financing in case of a partial financing obtained from other banks and/or financial institutions; - Repayment schedule. Article 9 : Article 14 of Instruction 02-2016 shall be supplemented to read as follows: Article 14: The mobilization of private securities subject to rediscount is carried out on the basis of submission by banks and financial institutions concerned of a statement signed by the remitter and established in accordance with canvas attached as Annex 3 of Instruction 02-2016. Each statement which must relate to the same nature of securities shall bear the following information: - Name of the bank or financial institution concerned; - Value date; - Maturity up to six months; - Face value of the security; - Number of days used for the counting of interests. The statement of mobilization of securities endorsed in the order of the Bank of Algeria must be systematically accompanied by a detailed statement of the securities (Appendix 1, 2 and 4 attached) serving as collateral and covering the amount of rediscounted securities. Annex 4 on long-term credits is attached to this Instruction. Article 10 : In the case of early payment of rediscounted credits, the bank or financial institution concerned may either replace the representative securities of repaid loans by securities on other loans or return to the Bank of Algeria the amount of the rediscount of loans repaid in advance plus interests due on the number of days of the rediscount. Article 11 : This Instruction shall come into force as from the date of its signature. The Governor Mohamed LOUKAL
INSTRUCTION 03-2017 OF APRIL 12 TH, 2017 FIXING THE REDISCOUNT RATE Pursuant to the Resolution of the Council of Money and Credit of March 30 th, 2017, the rediscount rate shall be fixed at 3.75%. This instruction shall appeal the provisions of Instruction 05-16 of September 1 st, 2016 and shall enter into force as from May 2 nd, 2017. The Governor Mohamed LOUKAL INSTRUCTION 04-2017 OF JULY 31 st, 2017 AMENDING AND SUPPLEMENTING INSTRUCTION 02-2004 OF MAY 13 th,,2004 RELATING TO THE REGIME OF MANDATORY RESERVES Article 1 : This Instruction is to amend and supplement Instruction 02-2004 of May13th, 2004 relating to the regime of mandatory reserves. Article 2 : Article 3 of Instruction 02-2004 of May 13 th, 2004 relating to the regime of mandatory reserves shall be amended to read as follows: Article 3 : The rate of the mandatory reserves shall be fixed at 4 % of the reserve base as defined in Article 2 above. Article 3 : This Instruction shall enter into force as from August 15 th, 2017. The Governor Mohamed LOUKAL
INSTRUCTION 05-2017 OF OCTOBER 22nd, 2017 SETTING THE PARTICULAR TERMS AND CONDITIONS RELATING TO THE DOMICILIATION OF IMPORT TRANSACTIONS OF GOODS INTENDED FOR RESALE IN THE SAME CONDITION AS RECEIVED Article 1 : Pursuant to Article 29 of Regulation 2007-01 of February 3rd, 2007, as amended and supplemented, this Instruction is to set the particular terms and conditions relating to the domiciliation of import transactions of goods intended for resale in the same condition as received. Article 2 : The domiciliation of any import of goods intended for resale in the same condition as received shall be carried out at least 30 days prior to the shipment of goods. Article 3 : The domiciliation of an import transaction of goods intended for resale in the same condition as received shall be dependent on the constitution of a provision by the importer with the domiciliary bank. Such provision must be of an amount at least equal to one hundred and twenty percent (120%) of the value of the import transaction. Article 4 : This Instruction shall enter into force as from the date of its signature. The Governor Mohamed LOUKAL
INSTRUCTION N 06-2017 OF 26 NOVEMBER 2017 RELATING TO THE ORGANIZATION AND FUNCTIONING OF THE INTERBANK FOREIGN EXCHANGE MARKET Article 1 : Pursuant to regulation 17-01 of July 10 th, 2017 relating to the interbank foreign exchange market and to instruments to hedge foreign exchange risk, this Instruction is to specify the organization and the functioning of the interbank foreign exchange market, spot foreign exchange transactions, forward foreign exchange transactions for hedging foreign exchange risk and foreign currency transactions. I - GENERAL PROVISIONS Article 2 : Authorized intermediaries are allowed to carry out on the interbank foreign exchange market spot and forward purchases transactions of domestic and freely convertible foreign currencies. In this market, participants shall only trade currencies held in bank accounts. Article 3 : The interbank foreign exchange market shall include three categories : - the spot foreign exchange market in which participants shall carry out spot foreign exchange transactions of foreign currencies versus dinar ; - the forward foreign exchange market in which participants shall carry out transactions to hedge foreign exchange risk ; - the foreign currencies market in which participants shall carry lending/borrowing transactions in foreign currencies. Article 4 : The interbank foreign exchange market is an un-located market in which transactions are handled by telephone and other electronic means. Article 5 : The interbank foreign exchange market works continuously. Participants may carry out transactions during business days. Foreign exchange transactions shall be handled over-the-counter. The exchange rates and interest rates shall be freely determined by the market. Transactions with the bank of algeria are carried out continuously from 8:00 AM to 4:00 PM. Article 6 : The value date of a currency is a day when banks are open for interbank transactions in the designed financial center for transactions in the currency in question. If the date of transaction, the maturity date or the payment date are not a business day, the parties shall set the method for determining the value date from the following three options : - the following day: the date of transaction is postponed to the following business day, - the following business day except the end of the month: if the aforesaid date, postponed for the next business day, coincides with the beginning of the next calendar month, the payment date will the previous business day,
- the previous business day: the aforementioned date is brought back to the previous business day. Article 7 : The financial center of a currency is the financial center indicated when the exchange transaction is concluded, and the opening of which is the indicator for the determination of business days or, if there is no indication, the recognized financial center as the largest in the country whose currency of the foreign exchange transaction is the legal tender. Article 8 : Pursuant to the provisions of Article 37 of Regulation 17-01 mentioned hereinabove, spot and forward foreign exchange transactions carried out on behalf of customers shall be backed by payments between residents and non-residents made in accordance with the laws and regulations governing foreign trade and foreign exchange. 2 - SPOT FOREIGN EXCHANGE TRANSACTIONS Article 9 : Authorized intermediaries are allowed to carry out spot foreign exchange transactions for their own account and/or on behalf of their customers. Authorized intermediaries may as well carry out spot foreign exchange transactions with nonresident banks and the Bank of Algeria. Article 10 : Pursuant to regulation governing foreign trade and foreign exchange, authorized intermediaries are allowed to : - Sell to non-resident banks the national currency versus freely convertible foreign currencies; - Sell freely convertible foreign currencies versus the national currency held in convertible dinars accounts; - Purchase and sell freely convertible currencies versus the national currency. Article 11 : Spot transactions handled in the interbank foreign exchange market should be confirmed between the two parties by authenticated messages sent by SWIFT, telex, postal mail or email, within the usual deadlines. Confirmations should contain all standard information related to the transaction to allow the other party to reconcile the transaction. However, non-confirmation of a transaction by a party does not entail its invalidity and does not relieve that party from its obligations under that transaction. Article 12 : Authorized intermediaries participating in the interbank foreign exchange market are required to display the relevant buying and selling exchange rates, on a continuous and indicative basis, versus dinar. The quote is displayed in indirect rate of exchange. Provided that it is clearly specified that the quotation is indicative, the quoted prices shall constitute a firm commitment by the authorized intermediary that has posted them.
3 - FORWARD FOREIGN EXCHANGE TRANSACTIONS Article 13 : Authorized intermediaries are allowed to carry out, for their own account or on behalf of their customers, forward purchase and sale transactions of foreign currencies versus Dinar. These transactions relate exclusively to hedging foreign exchange risk in respect of transactions carried out abroad. These are the operations related to the import of inputs, capital goods and export of goods. Forward purchases and sales may only be carried out from the date of the domiciliation of the foreign trade operations. The coverage period ranges from three (3) days to twelve (12) months at the maximum. The maturity of the forward foreign exchange contract shall coincide with the contractual settlement date of the underlying transaction. Article 14 : The forward exchange transaction is a firm contract between two parties. This contract will allow the freezing, at the time of the conclusion of the transaction of the exchange rate of a currency versus dinar, at a future date and for an amount defined at the conclusion of the contract. Article 15 : Authorized intermediaries shall determine the forward foreign exchange rate versus the dinar, applied to forward transactions with their customers in accordance with standard banking practices, taking into account the foreign currency versus dinar interest rate differential and the spot exchange rate prevailing at the time of the establishment of the contract between the two parties. Article 16 : Authorized intermediaries are required to display in appropriate media the forward exchange rates, by currency and by maturity at which they are willing to deal. The display of forward exchange rate shall be presented in the form of forward points (pips) (premiums and discounts). Article 17 : Premiums and discounts shall represent the interest rate differential on the currencies exchanged applied to the spot rate and the duration of the forward exchange transaction. Premiums shall be the pips to be added to the spot rate to determine the forward rate. Discounts shall be the pips to be deducted from the spot rate to determine the forward rate. Article 18 : The outcome of forward hedging shall be achieved by direct allocation of foreign currencies purchased or sold to the operations concerned by the hedge. Article 19 : In case of early settlement, following unforeseen circumstances, the authorized intermediary is called upon to calculate a new forward exchange rate based on the original exchange rate and the new market conditions. Article 20 : In case of an extension of the forward hedging requested by the customer in the event of unforeseen circumstances, this shall be duly justified and documented. A new forward exchange rate will be determined on the basis of prevailing market conditions on the
day of the request for extension. The extension shall in no case exceed a maximum term fixed in Article 13 ( 2) above. Article 21 : In the event of non-compliance with the contract, the defaulting party shall pay the other party the difference between the contractual rate and the rate prevailing in the market at the time of the finding of default, plus a penalty of 1%. 4 - SPOT PURCHASE TRANSACTIONS OF FORWARD DELIVERABLE CURRENCIES Article 22 : In accordance with the provisions of Articles 19 and 21 of the abovementioned Regulation 17-01, authorized intermediaries are allowed to carry out spot purchases of forward deliverable currencies. These transactions may also be carried out with the Bank of Algeria. The currencies, object of the contract, are remunerated for the period concerned, at the rate fixed by the Bank of Algeria on the basis of rates prevailing in international markets. Article 23 : Spot purchases of forward deliverable currencies shall be for a period of three (3) days to twelve (12) months. These operations are exclusively dedicated to the hedging of foreign exchange risk on import operations of inputs, capital goods and inward processing. Article 24 : Foreign currency amounts purchased on spot basis by authorized intermediaries versus the forward purchase, give rise to freely negotiable remuneration by the parties. In any case, the amount in foreign currency (principal and interest) shall not exceed the amount of the commercial contract. 5 - FOREIGN CURRENCY TRANSACTIONS Article 25 : Authorized intermediaries are allowed to carry out freely convertible foreign currency loan and the placement of amounts borrowed. The borrowed currencies may be subject to deposit with the Bank of Algeria. Article 26 : Deposit transactions with the Bank of Algeria or with authorized intermediaries of currencies borrowed, referred to in Article 25 above shall cover periods between three (3) days and twelve (12) months. Article 27 : Pursuant to Article 7 (4) of Regulation No 17-01 referred to above, the resources held in foreign currency accounts of customers are left at the disposal of banks, authorized intermediaries. However, these are required to keep, at any time, in current account held with the Bank of Algeria, the equivalent of at least 30% of the outstanding amount of their customers' balance in foreign currency accounts.
Article 28 : Authorized intermediaries are allowed to grant foreign currency loans to their clients to cover their commitments. The maturity of these loans shall not exceed twelve (12) months. Article 29 : Authorized intermediaries participating in the foreign currency market are required to display the interest rates applicable to the currencies processed in an appropriate and indicative manner, on a continuous basis. 6 - OTHER PROVISIONS Article 30 : Each party is required to execute the payment imposed to it, in accordance with the terms contained in the exchange transaction. Article 31: Any delay in payment of any amount due in respect of a foreign exchange transaction shall, for the party causing it, result in the payment to the other party of : - late payment interest calculated on the amount between the date of payment originally provided for in the transaction and the actual payment date at the market price plus a 1% late penalty, - the amount of costs borne by the non-defaulting party as a result of this late payment. 7 - STATISTICAL STATEMENTS TO BE ESTABLISHED Article 32 : In accordance with the provisions of Article 30 of Regulation No 17-01 referred to above, authorized intermediaries are required to prepare for information needs of their directorates-general and to meet the needs of internal control, the following statistical statements : - daily statement of exchange transaction, - daily statement of foreign exchange transactions by maturity date, - summary statement of foreign exchange transactions by currency and maturity date, - daily cash position by currency, - periodic cash flow statement by currency. Article 33 : The Bank of Algeria reserves the right to request information on transactions carried out in the foreign exchange interbank market. Article 34 : This instruction shall cancel and replace Instruction No. 79-95 of 27 December 1995 on the organization and functioning of the interbank foreign exchange market. Article 35 : This instruction shall come into force on January 2, 2018. The governor Mohamed LOUKAL