The president of Algeria Abdelmadjid Tebboune on Thursday approved a 2021 budget which foresees a deficit of around 14 percent of GDP, the presidency said, as the oil-rich country struggles with economic challenges.
The North African country’s economy has been heavily hit by tumbling crude oil prices, a liquidity crisis, inflation, as well as the coronavirus pandemic which has brought many economic sectors to a halt.
Algeria, which is Africa’s third biggest oil producer, has also faced negative growth, with the International Monetary Fund (IMF) forecasting that the country’s economy will shrink 5.2 percent this year and that it will have one of the region’s highest budget deficits.
Oil and gas account for around 90 percent of Algeria’s total exports, and the revenue generated from this export is used to subsidise fuel, water, health care, housing and basic goods.
Early in 2020, the president of Algeria Abdelmadjid Tebboune acknowledged that the country was vulnerable due to its failure to diversify its oil dependent economy for decades.
The budget which was approved by President Tebboune on Thursday, after it was passed by the two chambers of parliament, forecasts a deficit of 2,700 trillion dinars (around $20.4 billion, 17.6 billion euros), or 14 percent of GDP.
Furthermore, the country’s hard currency reserves have taken a plummeted from more than 162 billion euros in 2014 to less than 57 billion euros as at late 2019.
President Tebboune has already ruled out seeking loans from the IMF or other international financial agencies, but pledge to launch an economic recovery plan.
President Abdelmadjid Tebboune returned to the country on Tuesday after a two-month absence in Germany, where he received treatment for Covid-19, just in time for the signing off on the 2021 budget.
The country has recorded just close to 100,000 cases of the novel coronavirus of which 2,756 have resulted in deaths.
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