Algeria’s impending economic disaster

According to political observers, Algeria is heading towards an economic disaster with its mounting domestic consumption of oil and gas nearing to the levels of its production of oil and gas. Algerian governments ‘revenue collection has fallen drastically due to the declining oil available for exports. Since 2007, Algeria’s consumption of oil and natural gas rose by more than 50 percent while its oil production fell by 25 percent. With less oil available for export, the government’s revenues have been hit hard, Oil and gas accounts for 95% of Algeria’s exports and 75% of state revenues. There has been widespread agitation in the country against the corrupt regime that caused the drain of its resources. It also pays a heavy import bill particularly for food products which currently stands around $135 billion.

The fall in revenues due to depletion of oil and gas, soaring unemployment, widespread corruption, rising inflation, lack of structural reforms, terrorism and uncertain political future has put Algeria on the brink of break down.

A report by the Oxford Institute for Energy Studies  “Algerian Gas: Troubling Trends, Troubled Policies points out that“Algeria would be left with only 15 bcm/year to export by 2030. In a lower production or high demand scenarios, it will cease exporting all together, therefore importing gas beyond any such a point,” said the report.”