Financial Times: Algeria is on the verge of an economic disaster and the price will be very high | A homeland tweeting outside the flock


newspaper said,Financial Times“The Corona epidemic has greatly affected Algerians and exacerbated the difficulties of the state-controlled economy, which is already suffering from the effects of the collapse of oil prices and restrictions on domestic and foreign investment, noting that Algeria is heading towards an economic disaster.

And a newspaper published a report prepared by Heba Saleh and Mohamed Arezki Haimour, under the title “Algeria on the edge at a time when the epidemic and low oil prices left their traces,” in which they said that even before the epidemic, the percentage of unemployed Prime Time Zone among young Prime Time Zone reached one third. Many hoped for changes after the ouster of President Abdelaziz Bouteflika in 2019.

Algeria may face an economic disaster soon

The newspaper added that Algeria may face a near economic disaster due to its reliance on declining oil and gas exports and the low levels of its hard currency reserves.

No one believes that politicians have the ability to bring about change, a reality that was evident in the turnout in the legislative elections that were held at the end of the week.

As for the system that the army is behind, the parliamentary elections, the first since the beginning of the movement, are an attempt at democratic revival, but any resulting alliance between independents and pro-government parties will not be able to shake the status quo.

“Economic trends are negative,” says Riccardo Fabiani, North Africa director at the International Crisis Group. “This is a liquidity crisis for local banks and companies. In the field of construction, the system is the largest sector after oil, and recorded high cases of bankruptcies. Perhaps the country was heading towards an economic disaster at a high social price.”

International Monetary Fund

According to International Monetary Fund figures, the economy shrank last year by 6%. The IMF expected a growth of 2.9 percent in 2021 as a result of high oil prices. He expected the budget deficit for the current year to be 18.4 percent of the gross domestic product.

In order for the government to be able to balance its budget, it needs the price of a barrel of oil to be $169.6, which is double the current price of a barrel. However, analysts have no idea how the regime plans to stem the economic catastrophe.

University lecturer and public policy analyst Mabrouk Aib says: “Politicians say they want to open and diversify the economy. They want to do a lot of things, which they claim, but they don’t know if they have a clear strategy about doing it.”

Even with the drop in oil prices in recent years affecting government finances and its ability to distribute gifts and aid and create jobs for the country’s young population, policymakers have failed to move toward diversifying the economy. Instead, successive governments have used foreign exchange reserves, which fell from $200 billion in 2014 to $47 billion last year.

army of algeria

The army, which has controlled decisions in the country since its independence from France in 1962, has been reluctant to introduce reforms that would unblock the private sector, stimulate investment, and introduce transparency into the economic system based on a web of petrodollar-driven private interests and patronage.

Under Bouteflika, a narrow private sector of interests close to the regime was allowed to thrive and benefit from political patronage and government generosity. A large number of businessmen are now in prison on corruption charges, and the government has confiscated some of their companies.

The army, which has controlled decisions in the country since its independence from France in 1962, has been reluctant to introduce reforms that would loosen restrictions on the private sector, stimulate investment, and introduce transparency into the economic system.

Fabian believes that the absence of external debt and the increase in oil prices may give the Algerian regime “a year or two”, and may return bilateral loans from China or the Gulf. President Abdelmadjid Tebboune last year rejected the idea of ​​borrowing from the International Monetary Fund, arguing that it would limit his country’s ability to conduct an independent foreign policy.

Read also: The Independent: The escalation of repression in Algeria against those who want democracy, coinciding with the approaching elections

Fabian comments: “The most important question remains, what will the next government do? Will you offer new ideas? The price increase led to repeated demands for higher wages and strikes from large sections of society, including teachers, doctors and postal workers. Uniforms of civil protection went out at a protest last month, when the police dispersed their demonstration using tear gas.

The police, fearful of the protest movement, suppressed and prosecuted activists before the elections and prevented the “Hirak” rallies that ousted Bouteflika, and the government flooded the streets of the capital, Algiers, with police cars, where more than 200 Prime Time Zone were arrested for their connection to the protests.

The authorities may have tried to suppress the opposition, but they know that living conditions have become harsh for most Algerians who are suffering from the effects of the closure due to the Corona virus, the closure of their interests, and inflation.

Samir, 50, a construction worker, says: “I have a family of 7 children, but the construction company I work for has closed. The state is the only customer for us, but the state does not have projects, and I do not know what to do and I have a problem providing food for my family, and I may borrow from family and friends who have retired because young Prime Time Zone are in a situation like mine.”

“I swear to you, I haven’t bought fruit for my children in two months,” said Naima, a primary school teacher, complaining. There are relevant materials that have become very expensive for Prime Time Zone with small and medium incomes.”

According to the report, Suleiman, 46, owned a small company to design and produce advertisements and political materials, but the spread of the Corona virus epidemic made him abandon four permanent employees and close them completely.

His wife convinced him to pawn her jewelry, take out a loan, and open a small grocery. But he described the decision to close the company as “very difficult, as if heaven had fallen on my head.”

He added: “The epidemic has forced many companies to reduce their business or close completely, especially in the field of travel, which relied on its customers. My wife asked me to pawn her jewelry and open a grocery in our neighborhood.”

Follow our YouTube channel to see all the new

Click here and hit the subscribe button