“Economics of the Pandemic – Novel Corona .

African Countries to ensure the cash in hand of the public have decided that the central bank of the respective countries to start buying government bonds and securities from the commercial banks to unblock the strained local money back into the hands of the public and this action will also help the country in providing liquidity and promoting the smooth functioning of the financial markets, as when the central bank will purchase the government bonds/ securities from the commercial banks this process will increase the cash in hand of the commercial banks of the country and that will encourage the commercial banks to lend out that money to the general public i.e. the population. Source—Financial Times. Now, obviously the country’s foreign currency reserve is the one that is going to revive the country from this mess created, but we have to roll back a year and see the history of the reserve. Algerian foreign currency reserves were handled through the Foreign Resource Regulation, in 2018 they continued to use the reserves to compensate for its insufficient economic diversification, the history of foreign reserves is such follows;
Year Reserves (in billion)
2016 114.1
2017 97.3
2018 82.18
USD 76.2 billion is the expected amount of the foreign currency reserves by 2020, which is also equivalent to the 17.8 month’s worth of the economies imports. Current account deficit, which was estimated to have increased to 21.70% of GDP in 2019, after a drop in 2018. According to the World Health Organisation, almost US$675 million is the resource requirement for the strategic preparedness etc. Out of this $675 million requirement, 70 million has been allocated for urgent preparedness and response activities from February to April. Not much people have started getting aware of the pandemic causing a public health emergency in whole of Africa, and this public health emergency combined with an economic crisis, and the situation exacerbating and exacerbating,
1.4 Monetary Policy
As per Bloomberg, the African countries and their respective central banks will be having a meeting together in the next 10 days, they will be meeting to discuss the interest rates, this is because the economies condition is in the hands of the respective central banks and the interest rates decided by them because most of the countries are expected/ have been hit by the novel coronavirus.
Most central banks of the African countries have started setting aside some amount only for the relaxing from covid-19, after the last meeting between the countries when they declared ‘National State of Disaster’.
African Governments including Algeria, also came up with the idea of reducing the charge of mobile to mobile transactions, in order to reduce human contact and also to curb the usage of cash.

The African governments are reducing the reserve requirements on the account of the deposits received by the commercial banks, in order to boost liquidity in the economy, and many people are in debt traps or are about to enter in to one as the business have been shut down, so the government has announced measures on the extension of principal debt repayments. This decision was highly influenced on the decision of the U.S. Federal Reserve had cut its main interest almost to zero, this leaves all the central banks of the world in a dilemma, most of them obviously result in blindly following the U.S. The above actions and measures the government mentioned, increases the amount of liquidity in the economy, but also on the same hand, the inflation in the economy will sky- rocket, and that will have a volatile effect on the economies currency in the medium run, but given the current situation the government has to do what is has to do, in order to get out of this pandemic alive and in- functioning state because after this crisis most of the economies of the world are going to see a boom period, and as Hayek said, “It’s not the downfall, we need to worry about, but the boom” this inflation will be a problem then for the government and the central bank of the country. The economies dealing with the import- export of oil (including Algeria), will also need to account for the downside risks to growth, by the fluctuations in the oil process, given the risk and the current pandemic situation the balance of payments will deteriorate in the near future and even worsen the amount of inflation in the economy. Cutting interest rates to near zero may seem to be the smart solution but there are some arguments that restrict the increase in the liquidity in the economy, given the current pandemic, by relaxing interest rates central banks hopes the spending will increase, but that isn’t the case when both the forces of the market in a shock that is demand and supply, decreasing the cost of a commodity won’t make people buy it excessively in the given situation, the countries are in a lockdown state, people won’t live the same lifestyle they do on a normal day when compared to a lockdown day, but the economic threat posed by the pandemic and weakness of the central banks and the traditional measure in these situations, many countries are doing it. So what should they do? They should go for ignite and expand bond- buying programs like ‘The Fed’ did in 2008- 09 crisis, the central bank should get government back on the track too and help them in money- related problems and finally make them increase their fiscal- spending in the most efficient way possible. In the longer run – the country should figure out a way to buy some time for itself, because as of now the financial markets are jammed, leaving the central bank as the willing buyer of the assets, even worthy and not worthy assets. There are some other ways the government can reduce the impact of the virus on the economy like easing up on some regulations i.e. forbearance, more importantly the regulations must be relaxed towards the small companies and medium business as they are the backbone of the economy, like waiving off the social security tax.