Algeria must undertake “prudent” economic policies and launch “structural reforms” of its export sector for the energy-dependent state to cope with a sharp drop in global oil prices, an IMF official said.
Zeine Zeidane, a former International Monetary Fund chief of mission for Algeria who is now advising the IMF’s Middle East and Central Asia Department, said the country must enact “prudent macroeconomic policies” such as improving its competitiveness and moving towards greater fiscal consolidation.
“These policies will allow for a reduction in imports and strengthen... external competitiveness,” Zeidane said, according to remarks published by Algeria’s domestic news agency APS.
The IMF official, who was making a regular visit to the country for meetings, also called for “structural reforms that diversify the export sector and make it more competitive”.
Revenues from oil exports fell almost 43 percent in the first four months of 2015 compared to the same period a year earlier thanks to falls in world oil prices, according to official figures.
Energy sales account for more than half of Algeria’s government budget.
Boost Food Crops
At Ahmed Bekhi’s cereal farm outside Algiers, there are clear signs of Algeria’s campaign to increase food production to help curb billions of dollars in imports and offset a sharp fall in world oil prices, Reuters said.
New irrigation lines are in the works and wells have appeared to compliment a steady flow of government supplies of seeds, fertilizer and pesticides. But in an economy emerging from decades of centralized control, farmers complain they are bumping up against restrictive state bureaucracy.
OPEC member Algeria is still highly dependent on energy revenues that supply 95 percent of its exports and 60 percent of the state budget. With oil prices down by half over the past 12 months, the North African state is feeling the pinch.
The country has around $180 billion in foreign currency reserves to ward off any crisis, but Algeria’s state spends about $60 billion a year on imports for everything from cars to medicines, and it is looking to reduce this sum.
Food stuffs represent 20 percent of the value of imports.
