Coronavirus: Algerian government to reduce state budget by half

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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 18,000 dinars ($140) per month to 20,000 dinars, while income tax will be abolished for those earning 30,000 dinars or less, the statement said.

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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.

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