Algeria is among the direct beneficiaries of the economic fallout from the war in Ukraine, the most important of which is the rise in the price of hydrocarbons, the country’s main currency resource.
However, these dividends are accompanied by disadvantages such as the increase in the food import bill due to the fact that the prices of the main agricultural raw materials have also soared, in particular those of which Algeria is a net importer, such as cereals and seeds. oilseeds.
The financial upturn also raises fears of another shelving of the economic reform project in Algeria.
In an analysis devoted to the subject, the newspaper Le Monde recalls the forecast of the International Monetary Fund (IMF) concerning Algeria’s revenues for the year 2022: 58 billion dollars, i.e. the same level of 2014, the year during which oil prices had begun to fall.
This is a nice jackpot for a country emerging from a long period of low oil prices. Algeria exported 34 billion dollars of hydrocarbons the year behind, and even less the year before, just over 20 billion dollars. It was the lowest revenue in the country in two decades.
During the current financial year, Algeria will garner triple that. Whatever the most to pay for imports of wheat and other basic food products, the balance is clearly positive, especially since the government has just put in place strong restrictions on the importation of several products.
Beyond these dividends, the new global energy map also benefits Algeria. Europe is resolutely determined to reduce its dependence on Russian oil and gas and to do without them in the long term.
Algeria is one of the potential alternatives and is on the path of the passage of African gas to Europe. The use of this card has already resulted in the agreement to increase deliveries to Italy. Visiting Rome at the end of May, President Abdelmadjid Tebboune offered to sell Algerian electricity to Europe and expressed Algeria’s readiness to supply the necessary quantities of gas to Italy and other countries. Europeans.
“ The European quest for alternatives to Russian gas raises Algeria’s strategic profile on the regional scene. Increasingly courted, Algiers seeks to project itself as a reliable partner,” writes Le Monde.
What fate for the reforms?
Already a major supplier of Europe with 11% of the Old Continent’s gas needs, Algeria should ship larger quantities in the future, which is synonymous with even more substantial revenue.
The only downside to the analysis of the French newspaper is the fact that this financial upturn “risks deterring attempts to diversify the economy”.
A quest behind which the country has been chasing for decades, but never achieved. As oil prices fluctuate, hydrocarbons provide almost all of the country’s foreign exchange earnings and nearly half of its tax revenues.
Many specialists agree to explain the slowness of reforms and economic diversification by the financial ease generated by the export of hydrocarbons, especially over the past two decades.
There was a slight improvement in 2021 with the export of more than 4 billion dollars of non-hydrocarbon products and the objective for the current financial year is to reach 7 billion dollars.
The reform project is also beginning to be launched with, in particular, the recent adoption of a new Investment Code to which is assigned the objective of initiating a real diversification of the economy. But many other reforms (banking, taxation, etc.), just as vital for the economy, are still waiting.
