The economic crisis in Algeria: The warnings of an expert

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TheMaghrebTimes.com
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Since the outbreak of the coronavirus pandemic, the Algerian economy has faced a recession of historic proportions. That is why sector specialists are sounding the alarm and calling for urgent structural reforms.

One of them, Abdelarhmi Bessaha, an international expert in macroeconomics and adviser to several governments around the world, believes that Algeria’sAlgeria’s economic situation is experiencing a level of recession “never reached” since the country’s independence in 1962.

A finding that has not been denied by the Algerian government, which announced at the last Council of Ministers devoted to the examination of the preliminary draft finance law 2021, that the deficit in the balance of payments was estimated at $ 21.7 billion.

Experts call for urgent structural reforms

Abdelarhmi Bessaha calls on the Algerian authorities to put in place “serious mechanisms” to manage this economic crisis. In a statement given to the daily El Watan, he explains that the country has experienced a recession of -4% during the first quarter of the current year and a recession of -7% during the second quarter. Moreover, he underlines that based on the estimates for the year 2020 and 2021, the overall balance of the balance of payments “will show a deficit of approximately 20 billion dollars annually”.

In addition, the Bank of Algeria underlined that since the fall in oil prices in 2014, the country’s foreign exchange reserves had fallen from 180 billion dollars at the end of 2014 to 63.8 billion dollars in December 2014. Revenues hydrocarbons, the country’s main foreign exchange resources, have declined substantially.

A collapse which resulted in the fall of foreign exchange reserves, which dropped to $53.5 billion at the end of June 2020. The same expert explains that foreign exchange reserves “would thus drop from $63.8 billion at the end of 2019 to 43.8 billion at the end of 2020 and to 23.8 billion in 2021.” Without structural reforms, Algeria’sAlgeria’s overall budget deficit would stand, on average, at -15.1% of GDP over the period 2020-2023.