As Oil Lifeline Withers, Protest-Wracked Algeria Vows Cost Cuts

(Bloomberg) --

Algeria will crack down on tax and customs evasion, scrap plans for external borrowing and cut food imports as the protest-wracked OPEC member rushes to contain the effects of the oil-price collapse on its budget.

The instructions by President Abdelmadjid Tebboune to his government come at a sensitive time for the North African nation that relies heavily on energy sales to Europe. Authorities are already confronting a yearlong peaceful protest movement demanding the dismantling of an army-backed elite that’s ruled since independence almost six decades ago.

“The state has sufficient means” to cover imports until the end of 2021, but those shipments need to be “smartly managed” to ensure they continue, Tebboune was quoted by the state news agency APS as saying, following a meeting late Tuesday.

Algeria, where oil and gas makes up more than 85% of exports, had based its budget for the current year on $50 per barrel of crude. That was before this month’s oil-price war erupted between Saudi Arabia and Russia.

Tebboune ordered the Agriculture Ministry to boost local production and slash food and livestock feed imports, including corn and red meat, by half. No time-frame was fixed for the move.

The president, who was elected in December as the successor to veteran ruler Abdelaziz Bouteflika, also called for the establishment of more private banks. He said a recently floated idea of borrowing from abroad would now be shelved and that printing more money isn’t an option.

A “corrective annex” to the 2020 budget bill will be drafted and directed at the collection of “pending fiscal and customs revenue,” he said. The central bank must “help this revival of economic activity” and ensure that private investors repay their loans, Tebboune said, without describing how.

To contact the reporter on this story: Souhail Karam in Rabat at skaram10@bloomberg.net

To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Michael Gunn, Hilton Shone

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