Algeria's Bouteflika Urges Support for Economic Reforms to Offset Cheaper OilSource: www.export-egypt.com 7/5/2017, Location: Africa |
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Algerian President Abdelaziz Bouteflika called for broad support for new economic reforms to help the country through the impact of three years of low oil prices that have eroded the OPEC nation's revenues.
The North African state has already cut spending, but it is in the early stages of reforming a massive subsidy system and attempting to ease the country off dependence on oil and gas by developing its non-energy industries. Bouteflika's message came after the government announced a new plan to overhaul subsidies, a sensitive move for a state that spends $30 billion a year on a welfare system from cheap fuel to housing that helped keep social peace in the past. "Our country faces a huge reduction in its external earnings and deterioration in its balance of payments, even if it retains its sovereignty in social and economic decisions," Bouteflika said in a written message on the anniversary of Algeria's independence from France. "I renew my call for the people to work for and implement in a sovereign manner, the necessary economic reforms." Bouteflika, 80, has been in power for nearly two decades. He is still praised by many for bringing Algeria out of the "dark years" of a 1990s war with Islamist militants and into an era of high oil prices and spending . But he has rarely been seen since he suffered a stroke in 2013 that left a question mark over who will follow him and what reforms the country will enact in transition if he steps down before the end of his fourth term in 2019. Oil and gas sales account for 60 percent of Algeria's budget, and energy revenues have been at times halved by the fall in crude prices. Foreign reserves, while still high, have fallen to $108 billion from $178 billion three years ago. The government is working on a plan to reduce broader social spending for a more targeted system. But reform comes slowly in Algeria, where many people are wary of unrest after the upheaval that triggered the 1990s war, in which 200,000 people died. The International Monetary Fund has praised Algeria's initial steps to tackle its budget deficit, including reducing spending and looking to diversify its oil-reliant economy. But most analysts say the government has so far taken only cautious steps to overhaul an economy that is still mostly state controlled and whose bureaucracy has been an obstacle to drawing more foreign investment to develop non-oil sectors. Prime Minister Abdelmadjid Tebboune wants to hold consultations with social groups and political parties to get a consensus on the sensitive task of subsidies. His plan also calls for new taxes and Islamic finance for revenues. |
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