Algeria on the brink as the epidemic և low oil prices hurt

Standing in front of a bank in Algeria, Slieman took gold necklaces and rings from his bag, his wife’s jewelry, which he hoped to use as collateral for a loan.

During the epidemic, the 46-year-old businessman was forced to close his small advertising material design and production company and release his four full-time employees.

“It was very difficult. “I had the impression that the sky fell on my head,” said Slieman, who did not want his full name released. “The epidemic has forced companies to cut back on business or to shut down altogether, especially in the travel industry I relied on for my customers. The woman asked me to pledge her gold jewelry so we could start a grocery store next door. ”

The coronavirus epidemic has hit Algerians hard, exacerbating the suffering of the state-dominated economy, which has already been threatened by falling oil prices and restrictions on local and foreign investment.

Even before the epidemic, less than a third of Algerian youth were unemployed, with many hoping for change after the massive protests that led to President Abdelaziz Bouteflika’s 2019.

However, with an unchanged economy that relies solely on oil and gas exports and the consumption of foreign exchange reserves, Algeria could soon face an economic catastrophe, analysts warn. Few believe that politicians can make a significant difference, as evidenced by the low turnout in last weekend’s election. Analysts say the first-ever parliamentary election for a military-backed regime has allowed it to predict democratic renewal, while any coalition government won by independent, pro-government parties is unlikely to win the status quo.

“The economic trend is extremely negative,” said Ricardo Fabiani, director of the International Organization for Conflict Resolution, North Crisis Group. “There is a liquidity crisis in banks and local companies. In the construction sector, the largest sector after oil, a record number of bankruptcies were registered. The country can go from social poverty to economic catastrophe.

Volunteers serve food to poor families at Algerian Charity Center © Ryad Kramdi / AFP Getty Images

The economy shrank by 6% last year, according to the IMF, which forecasts 2.9% growth in 2021 due to high oil prices. It predicts that in 2021 the budget deficit will be 18.4% of GDP. However, according to analysts, there is no clarity on how the regime intends to prevent a possible economic catastrophe.

“Politicians say they want to open up and diversify the economy,” said Mabrouk Aybe, a professor at Algeria University and a public policy analyst. “They want a lot. “They say so, but we do not really know if they have a clear strategy for how they are going to do it.”

Even as the fall in oil prices in recent years has tightened government funding, it has limited the ability of its predominantly young population to provide materials for Algerian military decision-makers and create jobs. determinants as it is known, they could not diversify the economy. Instead, successive governments are burning through foreign exchange reserves, which sank from $ 200 billion in 2014 to $ 47 billion in 2020.

The Invarians, who traditionally control key decisions independence from France In 1962, he was reluctant to introduce reforms that could hinder the private sector, stimulate investment, and make transparency in the economic system, which is built on a network of interests, through petrodollars. Under Bouteflika, the capitalist private sector, which benefited from political patronage and a majority in government, was allowed to be ridiculed. Many of these businessmen are now in prison on corruption charges, and some of their companies have been taken over by the state.

“Given the lack of foreign debt and rising oil prices, the Algerian regime could still buy for ‘a year or two,'” Fabian said. This could lead to bilateral borrowing from China or the Persian Gulf. President Abdelmajid Tebboun last year ruled out a loan from the IMF, saying it would limit the country’s ability to pursue an independent foreign policy. “The big question remains, what is the new government going to do?” Said Fabian. “Will they come up with new ideas?”

Rising prices have already led to double demands for wage increases, strikes by various sectors of society, from teachers to doctors to postal workers. Firefighters protested last month in full uniforms and police officers were disbanded using tear gas.

Protesting the protests, the authorities put pressure on the eve of the election, preventing marches by the country’s pro-democracy movement, which overthrew Bouteflika in 2019. ժ Algeria was flooded with police cars. More than 200 people are in jail in connection with the protests.

The authorities may stifle dissent, but they are well aware that living conditions are becoming increasingly harsh for Algerians, who suffer from blockades, business closures and inflation.

“I have a family of seven, but the construction company I worked for has stopped working,” said Samir Efsa, a 50-year-old unemployed man. “The state was our only customer, but the government does not have a construction program now. I do not know what to do. I have problems feeding my family. I can only borrow from family, friends who are retired, living on pensions, because those who are younger are like me. ”

In the Algerian market, Naira, a preschool teacher complained about rising prices and the erosion of her purchasing power. “I swear to you that I have not bought fruit for my children for two months,” he said. “Now there are certain things that are just too expensive for middle- and low-income people.”

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