While efforts to form a new government in Algeria are still underway, an uphill task of fixing the North African country’s struggling economy is awaiting it.
Its economy has been affected by the coronavirus pandemic, as well as a fall in oil prices.
Following the June 12 elections, President Abdelmadjid Tebboune has appointed outgoing Finance Minister Ayman Ben Abdelrahman as the prime minister. He will succeed Abdelaziz Djerad.
The double whammy of COVID-19 and oil price collapse has caused a historic $22 billion deficit in the 2021 budget.
It forced the authorities to cut down spending by almost half, and stall projects in several sectors.
The new administration will also have to address unemployment – at least half a million jobs lost since the start of the pandemic.
Besides, a skyrocketing increase in the prices of consumer goods amid a fall in purchasing power due to the devaluation of the Algerian currency has made matters worse. The dinar’s exchange rate against the dollar has reached 134. It was 119 before the pandemic.
It is expected to rise to 142 by the end of 2021, and 149 in 2022.
Signs of hope
But there are signs of hope for the new government.
An important indication is a rise in non-oil exports in the first five months of 2021 – from $694 million to $1.14 billion.
President Tebboune has said that the current year will see exports worth $5 billion in non-hydrocarbons, besides recovery in agricultural production.
Meanwhile, the Finance Ministry in June announced a rise in foreign exchange reserves for the first time since 2015. It did not any give further details.
Forex reserves amounted to $42 billion in February 2020, down from $194 billion in 2014.
Farid ben Yahya, an Algerian economist, said the new Cabinet must be formed on merit, and should not have political appointees.
“The new government must undertake an accurate assessment of the suffering in various sectors, including agriculture, industry, trade, health and tourism,” he told Anadolu Agency.
He called on the new administration to come up with an action plan with clear goals and a timetable, and avoid repeating the mistakes of previous governments, which lacked a clear vision and solutions.
*Writing by Ibrahim Mukhtar in Ankara
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