· The Algerian economy is passing through one of its worst trajectories thanks to Covid-19 and ephemeral movements in the oil prices
· Economists are calling for strong interventions on the part of the government to set right the present challenges. With the revenue flows drying up, the huge debt of the country is getting swelled up
The Algerian economy is passing through one of its worst trajectories thanks to Covid-19 and ephemeral movements in the oil prices. Economists are calling for strong interventions on the part of the government to set right the present challenges. With the revenue flows drying up, the huge debt of the country is getting swelled up. Many feel that if the situation is allowed to slip, the North African country would be caught up in a debt trap soon.
According to World Bank estimates, which www.trendsnafrica.com published recently, the remittances into Algeria will be hit this year since a number of Algerians working in Middle East may have to end up as unemployed and returned home or work at lesser salaries due to economic lockdown in the US, UK, Germany etc, where a number of them are working. .
The National Office of Statistics of Algeria has reported a 3.9 percent fall in Gross Domestic Product in the first quarter of 2020 alone. Worst still is the unemployment rate threatening to breach the 15% mark. This would translate into a GDP loss of US$ 250 million, according to Algerian Finance Minister Aymen Benabderrahmane. Experts feel that it is an alarming situation given that the immediate revival of the economy is not possible since the pandemic impact is still lingering on.
Hydrocarbons will remain the main revenue source for the next 5-10 years for the country. The IMF has forecast that Algeria’s economy will shrink by 5.2 percent this year. In April, the IMF approved US$3.4 billion worth of emergency financial assistance to Nigeria to tide over its financial challenges as a result of Covid-19 and oil price drop. Many feel that Algeria also can seek a similar package from the IMF.
But Algerian President Abdelmadjid Tebboune has already ruled out seeking loans from the IMF or any other international financial bodies. The reason for such a step is that such loans, he feels, would compromise the national sovereignty. His apprehensions stem from the painful memories of Algeria’s 1994 deal with the IMF. The conditions imposed while granting the loans were very stiff. The structural adjustment plan carried out by the country had resulted in massive job cuts, shutdowns and privatizations.
The Algerian government said that it will launch an economic recovery plan, which will preserve the social characteristics of the country and protect the purchasing power of citizens, especially the most vulnerable groups. President Tebboune is optimistic that Algeria’s financial capacity is sufficient to support speedy implemntatio0n of the plan he is envisioning.
