Algeria cuts its 2015 budget

Algeria’s spending when oil revenues are down by 50%.

La Grande PosteIn its new budget 2015, Algeria will trim spending by 1.35% as it expects energy earnings to fall 50% due to the seemingly permanent slump in world oil prices persist in their downward trends.

Unsurprisingly, Algeria’s oil and gas account for 95% of its exports and all related revenues make up 60% of its budget that is now based on an oil price of $60 a barrel, much lower than the $90 initially anticipated.

Despite huge and costly attempts of diversification of the economy over the last decades, the government candidly seems to be expecting economic growth outside the hydrocarbon sector to reach 5.1%.  This remains unchanged from an initial forecast announced early this year and inflation is expected to be 4% in 2015, up from the 3% as initially expected.

These days, budgeting became a difficult exercise in many oil producing countries, whereby the oil has led to a crony capitalist culture which only serves a powerful elite, crushing most human rights and destroying the local environment.

Indeed, Saudi Arabia petroleum resources led to a certain false power perception that became an influencing factor through its skilful alliance with other GCC countries within OPEC.

For Nigeria however as for Algeria, oil resources have instead become a “curse” with the worst results of development that are generally much lower than in those countries with less or none of these natural resources.  Corruption therefore came to be assimilated as the norm by which every aspect of life would have to go through.

In these oil producing countries, ‘elite’ policy became so dependent on this crucial sector, that it was eventually left to exercise excessive power, dominate the political space and even siphoning off and / or suck up the energy of the other economic sectors over long period of time.



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