Falling oil prices and weak demand in 2020 have severely affected revenues from the marketing of Algerian oil. This situation will increase the pressure on the country’s foreign exchange reserves.
In a note published on Sunday, Algeria’s energy ministry revealed that oil revenues have collapsed, exacerbating the economic crisis that was already persisting due to low fuel prices.
As a reminder, in addition to the low price of a barrel, last year was marked by a record drop in demand. Weak demand has also led to a decline in production in the country. However, the country relies heavily on this revenue to finance the budget. The sale of hydrocarbons alone accounts for 60% of the budget’s funding share.
“The overall volume of hydrocarbon exports reached 82.2 million tonnes of oil equivalent in 2020, worth $20 billion, down 11% and 40% from 2019,”the ministry said.
Despite forecasts of a recovery in prices this year, the IMF expects Algeria, Africa’s fourth-largest economy, to experience one of the highest budget deficits in the region, according to the state-run APSnewsagency.
Under the 2021 Finance Act, foreign exchange reserves will fall to less than $47 billion, before a gradual recovery over the next two years. In 2014, when high oil price volatility began, it was $178 billion.
Source: Agence Ecofin