Algeria economy rocked by one-two punch

A file photo taken on July 04, 2020 shows Algerian Prime Minister Abdelaziz Djerad (L), Finance Minister Aymane Benabderrahmane (C) and Governor of Bank of Algeria (Central Bank) Rosthom Fadli, all wearing protective masks amid the COVID-19 pandemic, presenting samples of new banknotes. (AFP)
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Updated 10 August 2020

Algeria economy rocked by one-two punch

  • The construction sector, a major provider of jobs, has been paralyzed for months

ALGIERS: Currency depreciation, inflation, negative growth, businesses closed: Algeria’s economy has been battered by the one-two punch of the coronavirus crisis and tumbling oil revenues.

And unless remedial action is taken on a massive scale, a slide into foreign debt will become inevitable, economists warn.

The National Office of Statistics (ONS) has reported a 3.9 percent fall in the gross domestic product in the first quarter alone, with unemployment nearing 15 percent — “alarming” figures, according to Mansour Kedidir, associate professor at the Higher School of Economics in Oran.

Excluding the energy sector, the GDP fell by 1.5 percent year-on-year in the 1st quarter, against an increase of 3.6 percent last year compared to Q1 2018.

With confinement measures in place since March 19 to curb the spread of the novel coronavirus, sectors such as services and freight have come to a virtual standstill.

The construction sector, a major provider of jobs, has been paralyzed for months.

Finance Minister Aymen Benabderahmane estimates the losses of state-owned enterprises at nearly €1 billion ($1.17 billion).

Private sector losses have yet to be assessed, but many closed businesses, including restaurants, cafes and travel agencies, risk bankruptcy.

Algeria faces an “unprecedented economic situation,” said Prime Minister Abdelaziz Djerad, who has also blamed mismanagement under the rule of ousted longtime President Abdelaziz Bouteflika.

Due to a lack of diversification, the Maghreb region’s largest economy is highly dependent on oil revenues and exposed to fluctuations in crude prices.

The International Monetary Fund (IMF) forecast that Algeria’s economy will shrink 5.2 percent this year.

Kedidir predicts that unless reforms are brought in, “a Pandora’s box will be opened ... riots, irredentism, religious extremism.”

President Abdelmadjid Tebboune has already ruled out seeking loans from the IMF or other international financial agencies, in the name of “national sovereignty.”

Algeria has painful memories of its 1994 recourse to the IMF and a structural adjustment plan that resulted in massive job cuts, shutdowns and privatizations.


Saudi Arabia to host ‘virtual’ G20 meeting on oil markets

Updated 27 September 2020

Saudi Arabia to host ‘virtual’ G20 meeting on oil markets

  • Energy ministers will also discuss plans for ‘green’ economic recovery from ravages of coronavirus pandemic

DUBAI: Energy ministers from the G20 countries under the presidency of Saudi Arabia will meet virtually on Sunday to discuss volatile oil markets and plans for a “green” recovery from the economic shock of the COVID-19 pandemic.

The Kingdom is strongly backing a “circular carbon economy” strategy to remove harmful greenhouse gas emissions from the atmosphere.

The two-day event is the second time this year that energy policymakers have come together, following the historic meeting last April that helped stabilize crude markets in meltdown.

Markets have since recovered and the price of benchmark Brent crude has more than doubled, but doubts about their resilience have resurfaced amid fears of a “second wave” of economic lockdowns.

Prince Abdul Aziz bin Salman, the Saudi energy minister and chairman of the G20 event, has highlighted the need for tight discipline by members of the OPEC+ oil producers’ alliance to combat market “uncertainty.” 

“If we are serious about mitigating the impact of the shock and navigating through these extraordinary times, this is our only path,” he said.

The G20 said ministers would discuss ways to “strengthen collaboration toward market stability and security and discuss promoting and advancing sustainable energy systems through the Circular Carbon Economy platform,” and address “advancing universal access to energy and clean cooking for all.”

There is consensus on the need to mitigate harmful emissions, but some European countries and nongovernmental organizations are believed to be pressing for a stronger stance on fossil fuels.

The Saudi strategy, supported by the US and Russia, is for a more inclusive stance on hydrocarbon resources, while simultaneously promoting renewable sources such as solar and wind.