Rabat - The Algerian government needs to implement further economic reforms to deal with the budgetary effects of two years of low oil prices, according to Jean Francois Dauphin, the head of the International Monetary Fund (IMF).
Rabat – The Algerian government needs to implement further economic reforms to deal with the budgetary effects of two years of low oil prices, according to Jean Francois Dauphin, the head of the International Monetary Fund (IMF).
After meeting with Algerian Minister of Industry and Mines Abdessalem Bouchouareb earlier this week, Dauphin recommended that the government shrink public expenditures and “reform the current economic model” by strengthening the role of the public sector.
A 2014 report by the IMF on the Algerian economy shows the North African government employs 113 people per 1,000 citizens – a figure far higher than the international average of 70 per 1,000.
Reducing the number of government jobs to the international average would bring national spending on employment down from 11.5 percent of GDP to 7.1 percent. In its current state, the private sector is not strong enough to hire the fresh batch of unemployed Algerians if the nation cut jobs as severely as recommended.
The two-year oil price crisis has severely affected Algeria’s national budget because oil and gas revenues account for two-thirds of government revenues. The country has been on the forefront of urging the Organization of Petroleum Exporting Countries (OPEC) to cut back production, forcing the market to correct the current oversupply and causing prices to jump upwards.
However, instead of reducing output, the industry cartel has been ramping up activity ahead of a production freeze that should be finalized at the end of November, during the OPEC summit in Vienna.
Algeria itself exported an all-time high volume of crude oil last month, which means the country has increased production by eight percent over the past year.
