TEBBOUNE faces a productive fabric weakness and foreign exchange reserves declining, dire imports restrictions, and exports awkward regulations.

The challenges for the new Government of Algeria will be such that it will probably be before budgetary tensions between 2017 and 2020 with the current outflow of hard currencies (goods and services – legal transfer of funds) of approximately $60 billion by end of 2017, and very limited revenues to account for.  Except for blind restrictions which are likely to lead to great social tensions by a push of the inflationary process, the amount of foreign exchange reserves only $109 billion in February 2017, whereas the importance of the renewed governance, shared sacrifice, and an urgent reorientation of the entire socio-economic policy adapting to the new global changes.

1 – On June 9th, 2017 morning, the price of Brent is $47.65 and the WIT at $45.42.  Pondering in retrospect on the negative experience of the war economics of the years 1991/1993, leading the country right to the IMF, a discourse of truth is needed for as much as realism is concerned but away from bureaucratic injunctions of the past.

In 2017 rather than in the 1970s, the economic situation is made up of 83% of small business / enterprises, the industrial sector representing less than 5% of the Gross Domestic Product, (97% of small innovative SMI/SMEs); the informal sphere holding more than 50% of the economic life and 97% of Dollar revenues are directly and indirectly hydrocarbons related.  And above all, the lack of vision of adaptation is noticeable while the world is at the dawn of the fourth economic revolution of 2017/2030 with major geostrategic upheavals including Africa and the Middle East (1).

Taking data from the ‘Office National des Statistiques’ (ONS) for the first four months of 2017, imports of goods will roughly be about $46/47 billion.  According to data from the IMF for 2017 outflow of hard currencies on services would be of $10.5 billion, against $9.9 billion for 2016 and between $3.5 and 4 billion of legal transfers of capital (this amount is bound to increase with the rule of 49 / 51% according to the IMF to $7/8 billion by 2019/2020) and giving us single reference document at the level of the balance of payments, and not trade balance, an extrapolated outflow of about $60 billion.

However, currency entries would vary between $30/32 billion, if the average price of 2017 were between $50/52 a barrel.  Impact of the fall in the price of hydrocarbons, presumably being of long term, disturbing forecasts growth for Algeria by the IMF and the World Bank (WB) dated June 5th, 2017 for the years 2017 and 2018, are below the rate of population growth.  This would bring the official unemployment of 11% in 2016 to more than 13% in 2018. So the WB brought back its growth projections for Algeria in 2017 to 1.8% against 2.9% as projected in its report last January and for 2018, real GDP growth is expected to be even lower at 1% down from 1.6% compared to the 2.6% as anticipated in January.

According to Jean François Dauphin, the head of mission of the IMF, Algeria has the capacity to diversify its economy through ambitious structural reforms that would allow it to move out of its dependence on hydrocarbons. And, one of the tasks facing the new Government Tebboune would be to put these reforms into the works, through a pedagogical format, requiring a return to confidence without which no development is possible, in the direction of the population on rail.

The most important, for the Government will be to cope with the economic and social situation which will have to face an exceptional crisis with the long-lasting low prices of hydrocarbons and deepen a comprehensive reform, reconcile economic efficiency and bring some necessary social cohesion to which I am deeply attached.  We can hypothesize that it is the State which is lagging behind society that produces rules that allow functioning.  An economic model that is not represented by political, economic and social forces would have no chance of being operationally carried through.

It will be to first identify the different stakeholders in the process of economic reforms, whether favourable or unfavourable, be they national or foreign. In a second step, it will be to proceed with the analysis of the strategies that they are implementing to support reforms, block them or, in default, slow them down, in assessing the means put at the service of these strategies.  This is a good chance for Algeria, where it will manage all structural reforms between 2017 and 2020 perhaps difficult in the short term but hopefully fruitful in the medium term by 2019/2020 .

Summarising, in 2017, a blind import restriction may paralyze the economic machine, 70% of the needs of public and private companies are indeed from overseas with a rate of integration exceeding not 15% and eventually lead to social tensions. There is above all a matter of lowering costs, especially in services, improve on management and fight off corruption so as not to penalize the disfavoured and by the same prevent a dumbing down of the middle classes.

I would recommend meditating the Venezuelan experience, one of the largest oil reserves in the world or the Romanian ex-Communist camp experience that with a zero foreign debt has left an economy in ruins. For my part, I am convinced that Algeria has significant potential to confront this multidimensional crisis which it is facing.  For this, there is an urgent need for a political will for change represented by social forces for the development of economic, social and political freedoms.

In the recent history of Algeria, the issue of reform – be it economic or political gave rise, because of the worth that they represent, to the development of conflicting strategies that work to the defence and promotion of these or, instead, their blocking and, failing that, to their perversion or their slowdown.

  • – Conference of the Professor Abderrahmane Mebtoul at the invitation of the European Parliament (2013) -“the Maghreb the geostrategic challenges” – Dr. Camille Sari (2 volumes 1080 pages – edition L’Harmattan Paris 2015).
  • – Conférence at the ‘Direction Générale Sûreté Nationale Ecole Supérieure de Police,’ Algiers may 2015 “Global changes, fall of the oil prices and its impact on macroeconomic and macro-sociaux balance.”
  • – On the same theme, May 2016 at ‘l’Ecole Supérieure d’Administration de la 2ème Région Militaire’ – Oran, Algeria.
  • – interview on 28/12/2016 by American Herald Tribune: “Assessment of the Algerian economy its prospects: destabilisation of Algeria having geostrategic repercussions on African and Mediterranean space.”