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Algeria Plans To Move Away From Fossil Fuel Export Dependency

Algeria Plans To Move Away From Fossil Fuel Export Dependency

Algeria has been for one reason or the other, faced with a liquid cash crunch. The main reason has been its inability to sell its oil and natural gas reserves to the world. Its leadership that has been accused of serving the elite has not been very affective when it claimed it will bring about change and growth in the economy.

But as of now, the old President Abdelmadjid Tebboune is moving towards privatization of banks as well as air and sea transport companies for goods and passengers. His aim is to reduce spending and contain the money in the country itself. Algeria’s economy depends on its fossil fuel exports. As such, the oil and gas output and exports have been falling in recent years.

This has been primarily for domestic factors like a growing domestic consumption. Further, there has been lack of foreign investment too. This has significantly hit energy earnings, the main source of Algeria’s state finances.

In a bid to reverse the trend, the government late last year approved an energy law offering attractive contract terms including tax incentives to foreign investors. However, with the pandemic having hit the economy, the interest in their fossil reserves has been dwindling. Currently, there aren’t too many takers, a trend which is upsetting the economies for a lot of countries that are dependent on earnings accruing from fossil fuel exports.

The trend is going to be here for a while, as the pandemic settles in and a vaccine can be made widely available. Meanwhile, Tebboune is trying to shift the focus of the African country from just being energy export dependent. He plans to bring up the non energy sector exports from $2billion to $5billon by 2021.

Algeria’s foreign exchange reserves have fallen to $57 billion from $62 billion in January, while energy export revenues are expected to reach $24 billion this year compared with $33 billion in 2019, Tebboune said while addressing a meeting attended by government officials, businessmen and unions.

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