The IMF reviews Algeria while waiting for the return of its president

While Algeria's president, Abdelmadjid Tebboune, is still in Germany with a coronavirus, the North African country continues to live a fairly normal life. The Algerian ministers are continuing to work on their competences and this week the most important thing was the finance minister.

An International Monetary Fund (IMF) delegation met with Minister Aymen Ben Abdel Rahamane after spending two weeks in Algeria assessing the economic situation. The financial landscape in Algeria has been threatened by the coronavirus pandemic and the fall in the price of hydrocarbons. 

The IMF delegation carried out a most curious mission. Due to the pandemic and the total closure of the borders of the largest country in Africa, the mission took place virtually from 9 to 23 November.

The objective, as confirmed in a press release, was to "update the macroeconomic framework and discuss Algeria's prospects and priorities", said the Finance Ministry.
 

According to IMF forecasts, Algeria is expected to experience a 5.2% recession in 2020, as well as a budget deficit that is among the highest in the region due to the fall in oil prices and the health crisis. For his part, the minister estimated the losses of public companies due to the health crisis at around one billion euros.

Algeria is the fourth largest economic power on the African continent, but the country is particularly exposed to fluctuations in oil prices because of its dependence on oil revenues, which account for over 90 per cent of external income.

During his video conference interview, Ben Abdel Rahamane spoke to IMF officials about "the impact of the pandemic on macroeconomic and budgetary aggregates", reads the ministry's communiqué. 

Ben Abdel Rahamane also presented the 2021 finance bill, which was approved by Parliament on Thursday and whose provisions aim to "address the impact of this pandemic and lay the foundation for a post-crisis recovery plan". 

During the video call they also discussed the various "instruments to be considered to contain the budget deficit, stimulate growth and promote diversification of the economy". 
 

In its 2021 finance law, the government forecasts a huge deficit of almost 14 per cent of GDP, or some 2.7 billion dinars (17.6 billion euros), compared to 2.38 billion dinars in 2020.

The country has already exhausted all the possibilities it offers for financing the deficit, including printing, and recourse to external financing will be "inevitable in 18 months", the economist Mahfoud Kouabi warned recently in an interview with the daily Watan. 

Algerian President Abdelmadjid Tebboune, however, at the beginning of May categorically ruled out, in the name of "national sovereignty", contracting loans from the IMF and international financial organisations.

It will be necessary to wait until he recovers and returns to Germany to decide whether or not to retract the previous statements, as the economic crisis is not alone: the new constitution and the Polisario Front's clashes with Morocco are going to create a tense political environment with much work to do.