Economists have warned that if no action is taken to confront the situation on a large scale, resorting to external borrowing will become inevitable.
The National Bureau of Statistics announced "worrying numbers" from a decrease of 3.9% in gross domestic product in the first quarter of 2020 to an unemployment rate approaching 15% in July after it was fixed at 11.4% at the end of 2019, Mansour revealed. Kadyeer, Associate Professor at the Higher School of Economics in Oran.
Excluding the energy sector, gross domestic product decreased by 1.5% in the first three months of the year against an increase of 3.6% for the same period in 2019, according to the Bureau of Statistics, a government agency.
With the quarantine measures, state-owned companies suffered losses amounting to about one billion euros, as a result of the health crisis, according to estimates by Finance Minister Ayman bin Eid al-Rahman.
The private sector losses have yet to be assessed, but many stores, including restaurants, cafes and travel agencies have closed. It is facing bankruptcy due to its closure since 19 March.
The Algerian Prime Minister Abdelaziz Jarad admitted that "Algeria is experiencing an unprecedented difficult economic situation resulting from a structural crisis of previous governments, in addition to the collapse of oil prices and the crisis of the Corona virus."
- shrinkage -
The largest economy in the Maghreb region depends on oil revenues, which exposes it to price fluctuations due to the lack of diversification of resources.
According to International Monetary Fund projections, the Algerian economy will contract by 5.2 percent this year, with the budget deficit being the highest in the region.
Kadeer stressed that unless reforms are carried out, "the Algerian economy will inevitably enter a recession phase, and resorting to foreign borrowing will become inevitable."
"The country will be quarantined, the gates of Hell will open on it, and all evils will come out: riots, unitariness and religious extremism," he added.
President Abdelmadjid Tebboune had ruled out borrowing from the International Monetary Fund or other international financial institutions in the name of "national sovereignty."
Algeria has painful memories of its 1994 refuge with the International Monetary Fund and the structural reform plan that led to massive job cuts, the shutdown of public companies and the privatization of part of them.
- 'Structural work' -
However, the Algerian government prepared a plan for economic recovery, and at the beginning of May decided to cut the state management budget in half.
In the Supplementary Finance Act of 2020, it was decided to reduce budget revenues to about 38 billion euros, compared to 44 billion euros that were expected in the original budget.
The economic expert, Abdel-Rahman Matboul, predicted that "foreign exchange reserves will decline to 37.21 billion euros, compared to initial estimates of 43.44 billion euros."
According to experts, solutions are available to avoid deflation, but any solution will require radical reforms.
Kadeer suggested lowering interest rates, while attracting funds circulating in the informal sector and reducing taxes, depending on the number of new job opportunities that are created.
He called for launching major projects such as using the desert to build agricultural industrial areas with an infrastructure for processing, in addition to expanding the railway network to the south, all by using qualified local workforce.
Matboul admitted that hydrocarbons will remain the main source of revenue for the next five or ten years, indicating that the exit plan from the economic crisis must be based on new and decentralized governance based on five regional economic poles.
He called for "a symbiosis between the state and the citizens that includes elected officials, companies, banks, universities and civil society in order to fight the bureaucracy" that is paralyzing the country.
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