Leaner Days Ahead Under New Algeria Budget as Protests Play Out
Leaner Days Ahead Under New Algeria Budget as Protests Play Out
(Bloomberg) --
Algerians can expect leaner times under a proposed 2020 budget that’s being hammered out while the North African OPEC member remains mired in protests demanding a clean sweep of the old regime.
The budget bill for 2020 is pegged on international oil prices of $50 per barrel, unchanged from the current year, and sees an 8.6% drop in spending and a 7.7% decline in revenue, according to the Finance Ministry. Economic growth is seen contracting to 1.9% from the 2.6% projection for the current year’s budget that was drawn up before the April resignation of President Abdelaziz Bouteflika.
The tightening of the purse strings spotlights the economic challenges confronting the nation, where presidential elections are supposed to be held in December even as thousands demonstrate weekly against the move, keeping up the pressure that forced Bouteflika’s to leave office.
Algeria’s rulers have long relied on subsidies to ensure stability. But volatility in international oil markets has more than halved its foreign reserves, straining its ability to create jobs for the youth-majority country where the public sector is the main employer. Officials recently suggested the foreign debt-averse nation may resort to external borrowing to help plug a budget deficit that’s now projected at 7.2% of GDP, up from 6.9% forecast for 2019.
The spending plans will help ensure the continued funding of key elements such as civil service salaries, social insurance and social safety programs, the Finance Ministry said. In comments carried by the state-run APS news agency, Finance Minister Mohamed Loukal said the country was committed to continuing structural reforms.
The ministry said it will plug financing shortfalls next year using “ordinary internal resources,” without giving details. It noted that any foreign borrowing would be restricted to “specific projects” and be through international development institutions such as the African Development Bank and the Saudi-based Islamic Development Bank.
More details:
- Spending at 7.77 trillion dinars vs 8.50 trillion dinars budgeted for 2019
- Bill projects 500 billion dinars drop in hydrocarbons receipts in 2020 vs 2019
- Inflation seen slowing to 4.1% vs 4.5% projected for 2019
- Creation of around 16,000 new public sector jobs in 2020
To contact the reporter on this story: Souhail Karam in Rabat at skaram10@bloomberg.net
To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Tarek El-Tablawy, Michael Gunn
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