Algeria : The Rebound In Oil Prices Is Positive But Not Sufficient
BNP Paribas | May 16, 2018 07:16AM ET
Global oil prices have rebounded since the beginning of the year, averaging USD 70 per barrel, up from USD 54 in 2017. If it is difficult to say if the current dynamic will last, it is necessarily good news for the Algerian economy as hydrocarbon sector accounts for almost the totality of exports and provides 40% of budgetary revenues. However, the oil price increase remains insufficient.
The 2018 budget marks a shift in the government’s policy stance. After two years of consolidation, expenditures are planned to increase markedly. Consequently, Algeria will need a barrel at USD 105 to balance its public accounts, i.e. USD 20 higher than in 2017. It is also above regional peer countries, underlying the necessity to pursue reforms dedicated to reduce oil-related dependence. These reforms will start in 2019 in the best case.
by Stéphane ALBY
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