Following a recent u-turn on accepting foreign loans, Algeria became a member of the European Bank for Reconstruction and Development.
Algeria’s oil and gas industry is expected to plummet by $10 billion in revenue this year compared to 2019. The crash in energy revenue will send shockwaves through Algeria’s already precarious economy.
Speaking to state media on Tuesday, July 22, Algerian Energy Minister Abdelmajid Attar said he expects oil revenue to fall to $23 billion in 2020, a 30.3% decrease from $33 billion in 2019.
“We are in a difficult economic situation,” Attar admitted to state radio.
Algeria’s oil and gas industry is the cornerstone of the North African country’s economy and the crash in energy revenue could devastate the already financially struggling country.
Attar reassured listeners, however, that the government is working on legislation to implement the energy law Algeria passed in November 2019. He said foreign investors may be waiting for the legislation to be formalized before deciding to invest in Algeria.
“Foreign firms are welcome to work with (Algerian state energy company) Sonatrach on these fields,” he added.
The recent crash in Algerian oil and gas revenue is another blow to the country’s embattled energy sector. In 2014, oil and gas revenue in the country had reached $60 billion, plummeting to hit only $33 billion last year.
In early May, Algerian President Abdelmajid Tebboune announced plans to cut the national budget by 50% in a bid to manage the financial crash caused by the COVID-19 lockdown and the global tumble of oil prices.
Algeria was already facing an economic decline before COVID-19 struck hard, with foreign exchange reserves down to $62 billion, compared to $180 billion in 2014, and the global economic dip has left many Algerians struggling to afford basic necessities.
Tebboune announced this month that he will reveal the government’s plan to revitalize the Algerian economy “soon.” What the plan will look like, however, remains to be seen as Algeria’s oil and gas industry continues to plummet.
At the start of the COVID-19 pandemic, Tebboune refused point-blank to consider accepting foreign loans. “I personally think that the absence of international debt is a strengthening mechanism amid the COVID-19 crisis,” the president said on May 1, after ruling out using IMF funds to bail out Algeria’s struggling economy.
Algeria is a “free country,” the president underlined. Debts to international actors compromise this freedom, he argued.
However, in a recent u-turn as Algeria’s oil and gas industry hit an all-time low, Tebboune’s government applied for membership of the European Bank for Reconstruction and Development (EBRD). Membership of EBRD includes accepting advisory services as a condition of the funding.
The application to join EBRD, alongside the Algerian government’s May 26 changes to Algeria’s iconic 51/49 law on foreign investment suggest that Tebboune and his ministers are now laying aside their pride to look for solutions to Algeria’s failing economy in the international community.