The Algerian government decided on Sunday to reduce the state budget by half due to a financial crisis caused by the global collapse in oil prices and worldwide coronavirus lockdowns.

The government has decided to reduce the budget by “50 percent” for this year, President Abdelmadjid Tebboune’s office said in a statement.

Despite this huge reduction, the government also agreed at a cabinet meeting to increase the minimum wage from $140 (18 000 dinars) per month to $156 (20 000 dinars) while income tax will be abolished for those earning 30 000 dinars or less, the statement said.

The government also postponed from Sunday until 10 May consideration of a finance law, which seeks to frame a response to the coronavirus pandemic.

A collapse in hydrocarbon prices this year – caused by plunging demand due to societal lockdowns designed to combat the spread of the virus and exacerbated by a brief price war between key players Russia and Saudi Arabia – is putting ever greater pressure on Algeria’s external accounts.

Even before this year’s crisis took hold, Algeria’s foreign exchange reserves had fallen to $62 billion at the end of 2019, from $180 billion in 2014.

The draft law factors in a plunge in oil receipts this year to $20.6 billion, compared to the $37.4 billion previously anticipated.

Tebboune on Friday ruled out approaching the IMF for a bailout, contending that “accumulating debt harms national sovereignty” when it is owed to foreign institutions.

He said he preferred to rely instead on domestic borrowing.

By Dr Mercy Alu

I am a mother, HR consultant, author, Goodwill Ambassador with Globcal (a partner with UN on SDG's in Africa), coordinator with International Association of African Authors/Scholars, a songwriter/recording artist, researcher, and social anthropologist of sorts! I believe we should all live our best lives, and enjoy helping organizations and individuals perform better. I and my guest authors love to share information about the world around us; African events & Entertainment, plus lots of good information about Health, Wellness, Family, Book Publishing, Business, Relationships, Culture, Folk Stories, and much more. I speak several languages including French and Igbo (a West African Language). I enjoy research, writing, reading, singing and finding out lots of things about, well, lots of things! Knowledge is power. So information and knowledge gained from experiences, observation, all flavor the things I write about in the exciting blog portion of this website. Feel free to drop me a line or two, I also want to hear from you!

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