Algerian government calls for less street pressures to cope with ‘multidimensional crisis’

Algeria’s foreign currency reserves stand at around $60 billion, the equivalent of two years of reduced imports.
Sunday 15/03/2020
A man walks past Algiers Stock Exchange. (Reuters)
Tough times. A man walks past Algiers Stock Exchange. (Reuters)

TUNIS - Algeria is facing an “unprecedented, multidimensional crisis” but its government said it will tap into financial reserves to avoid austerity measures that could expose the population to hardship and disrupt the economy.

“The president has instructed the trade minister to observe an intelligent management of imports without depriving the citizens and the economy of anything,” said the office of President Abdelmadjid Tebboune after a March 10 ministerial meeting addressing repercussions of oil price decline and the coronavirus outbreak.

Analysts said the oil price slump will slash Algeria’s earnings from oil and gas exports by one-third this year if larger oil exporters pursue an “output war.”

Algeria’s oil output has declined since 2008, limiting export revenue.

Analysts said the government will use foreign currency reserves to offset falling earnings from oil and gas sales abroad, gambling that the crisis not last longer.

Tebboune’s office said the president rejected the idea of resorting to “foreign borrowing and unconventional monetary policy.” That policy, known as quantitative easing, was used by former Prime Minister Ahmed Ouyahia in 2017 to tackle a financial crisis.

Quantitative easing is a method through which a central bank buys government bonds and other securities from the market to expand the money supply and energise lending and investment.

“The state has sufficient resources for the years 2020 and 2021 to avoid shortages of inputs for the economy and necessities for the population,” the president’s office said.

Algeria’s foreign currency reserves stand at around $60 billion, the equivalent of two years of reduced imports. The value of imports was $41 billion last year, when the value of total exports stood at around $35 billion.

Algerian Prime Minister Abdelaziz Djerad urged citizens to demand less from the government because the country faced an “unprecedented multidimensional crisis.”

“It would be wiser to reduce the tendency to make demands and the overblown occupation of public roads, which would only aggravate the current situation more,” Djerad told the official news agency APS after the ministerial meeting.

His remarks were apparently aimed at mass protests demanding an overhaul of the government. Algerian authorities have publicly praised the protests but also pressured demonstrators by policing the gatherings and arresting leading opposition figures.

In addition to protests each Friday, there have been smaller demonstrations demanding better living standards and public services.

“Given the seriousness of the current economic and social situation, all parties are expected to be mobilised to get out of this multidimensional crisis,” Djerad said.

Elected in December in a vote largely rejected by demonstrators, Tebboune has repeatedly vowed to meet protesters’ demands by changing the constitution and establishing a “new republic.” He pledged to improve living standards, build schools and construct better transport infrastructure around the country.

The government approved a 9.2% cut in public spending for this year compared with 2019 but kept its subsidy policy unchanged to avoid social unrest. Algeria has the biggest subsidy scheme in the Maghreb, covering sectors from education to health care to fuel and housing.