The African Development Bank said the Algerian economy is the third worst hit in Africa at a time the country faces a multipronged political, economic and social crisis worsened by lack of political reforms.
The bank said the contraction of the Algerian GDP by at least 6.4% this year was due to its heavy dependence on oil and gas. The IMF expects the fiscal deficit to hit 20% as a result of the uncontrolled subsidies policy, key to the country’s social peace.
Algerian finances were dealt a blow by sluggish demand coupled with historically low oil prices and lack of reforms to diversify the economy.
The Algerian President has announced a plan to relieve dependence on hydrocarbons but analysts say it is all vague and expressing intentions rather than providing for concrete measures that address the country’s real problems.
Control of the economy remains in the DNA of the Algerian military junta, Mabrouk Aib, public policy analyst at Nabni, an Algerian think-tank, told the Financial Times recently.
“There are no new policies to open up the market or make business easier. They are doing the same thing and waiting for the price of oil to go up again,” he added.
Algeria’s reserves shrunk from nearly $200bn in 2014 to near $62bn just before the coronavirus outbreak with the real prospect they could run out within two years.