The oil-rich Algeria’s state-dominated economy has weathered six months of turmoil well. But the cliffhanger of directionless economic pathway is refusing to go away, even after the resignation of President Abdelaziz Bouteflika and an interim government taking charge overseen by the military. Protests are still going on unabated mostly led by workers, politicians and, of course, common man, who want the tycoons who were close to the earlier president to be put behind the bar. While investigations against them drag on, five big firms having varied business interests -sugar to cars- are almost paralyzed since they cannot import materials or for making any other transactions since their bank accounts have been frozen. Thousands of employees are sacked by the cash strapped firms on the ground that the employer does not have the money to pay salaries. In the meantime, the Interim government which is working under the supervision of the military says that the problems will be resolved soon and the government is taking appropriate steps to address the chronic problems of industry.
But the ground level realities are different. Elections for a successor for Bouteflika have been put on hold indefinitely, despite the demand for an early election by the opposition parties and others. The non-party government orchestrated by army chief Lieutenant General Ahmed Gaed Salah is not giving any importance to the clamoring of the people’s voice. The interim government has held back reforms, initiated towards the end of Bouteflika’s 20-year rule, to reduce subsidies, open the economy to investment, create jobs in the private sector and to reduce the importance of the public sector. In the ongoing melee of political and economic turmoil, one major casualty is Algeria’s sprawling state energy company –Sonatrach- which is hoping to boost production by linking up with oil majors. The output of the oil major is not affected but everything else is completely frozen including talks with Exxon and Chevron for investment and technical tie-ups. In order to attract private investment, there should be a stable government and a permanent president and not a caretaker: that seems to be the view of the potential investors.
Algerian economy revolves around Oil and gas, which provide 94% of export earnings and 60% of the revenue. But earnings fell 6.3% to US$17.65 billion in Jan-June with rising energy consumption eating into gas exports. Algeria imports almost everything incurring an annual import bill of US$50 billion a year. With the depleting income from oil and gas and the reluctance of the present and past regimes not to go aggressively for attracting FDI into other sectors like manufacturing, agriculture and services, it may be difficult for the country in future to pull on since commodity prices can be highly volatile and tricky to base its future growth
