Algeria is on the brink as a plague with low oil spoils
Standing in front of a bank in Algiers, Slimane pulled out gold beads and rings in a bag, his wife’s jewelry, which he expected to use as collateral.
In the midst of the epidemic, a 46-year-old businessman shut down his small production and production company and left four full-time employees.
“It was very difficult. It was like a sky falling on my head, ”said Slimane, who did not want to be named. “The epidemic has forced companies to cut back on business or to shut down completely, especially in the areas where I rely on customers. My wife told me to roll up gold gemstones so we could start a grocery store in our area. ”
The coronavirus epidemic has had a profound effect on Algerians, exacerbating the problem of the state-run economy which has already been devastated by falling oil prices and declining local and foreign exchange rates.
Even before the epidemic, one in three Algerian youths was unemployed and many were expecting change after major protests led to the ouster of President Abdelaziz Bouteflika in 2019.
But with a stable economy, dependent on oil and gas sales, and a reduction in foreign exchange, Algeria could face economic hardship, experts say. Few believe that politicians can change things, which has been made public by those who did not participate in elections last week. To the military, analysts say parliamentary scrutiny, the first since the protests, has allowed it to help restore democracy, while any coalition of independent political parties and pro-governments does not seem to be happening.
“The economic crisis is huge,” said Riccardo Fabiani, director of North Africa’s International Crisis Group, a conflict resolution agency. “There is a financial crisis in the local bank and industry. In construction, for the most part after oil, there has been a great deal of good experience. The world is heading for a recession and financial crisis. ”
The economy fell by 6% last year, according to the IMF which is up 2.9% growth in 2021 behind rising oil prices. It shows a budget deficit of 18.4% of gross domestic product by 2021. In assessing its budget, the lender said Algeria needed $ 169.6 per barrel of oil, more than the current $ 722 price tag. they will prosper.
“Politicians say they want to open up the economy and change,” said Mabrouk Aib, a university professor and government analyst in Algeria. “They want more. That’s what he says, but we don’t know if he has any ideas on how to achieve this. ”
Although falling oil prices in recent years have reduced government spending and hampered donations and employment for people especially young people, Algerian elections, or the elect as is well known, they have failed to distinguish wealth. Instead, successive governments have been burning foreign currency, falling from $ 200bn in 2014 to $ 47bn in 2020.
The Soldiers, who have been legally in charge of major elections since then independence in France in 1962, they do not want to initiate reforms that would disrupt private institutions, raise funds and bring about financial exposure built on the preferences and customer page run by petrodollars. Under Bouteflika, a state-owned money-making company was allowed to do well which benefited from political support and more government funding. Many of these traders are now in prison on fraud charges and some of their companies have been taken over by the government.
Due to the lack of foreign debt and rising oil prices, the Algerian government could buy “a year or two”, Fabiani said. It can be rented by two countries from China or the Gulf. Abdelmadjid Tebboune, President, last year ordered the IMF to borrow money, saying it would prevent the country from having a foreign policy. “The big question remains, what will the new government do,” Fabiani said. “Have they come up with new ideas?”
Meanwhile, rising prices have led to repeated demands for pay rises and strikes in various categories, from teachers to doctors and postal workers. Firefighters protested in full uniform last month and were dispersed by police using tear gas.
Fearing protests, the authorities protested the elections, blocking protests by a pro-democracy group that ousted Bouteflika in 2019 and flooded between Algiers and police vehicles. More than 200 people are in jail for protesting.
Leaders may be able to stem the tide of unrest, but they are well-aware that Algerian living is becoming more and more difficult because of closures, business closures, and rising prices.
“I have a family of seven to take care of, but the company I work for is closed,” said Samir Yefsa, a 50-year-old unemployed man. “The government was our only client, but the government now has no construction program. I do not know what to do. I have a hard time feeding my family. I just borrow from relatives and friends who are retired and have a pension fund, because some of the young people are in the same situation as me. ”
In a market in Algiers, Naima, an elementary school teacher complained about rising prices and the decline in his purchasing power. “I swear I haven’t bought my children fruit for two months,” he said. “There are some things now that are very expensive for those who earn less or less.”