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With the plunge in hydrocarbon prices Algeria’s foreign exchange reserves fell by $35bn to $143bn in 2015 from a peak of $194bn in 2013, the IMF said on 14 March.
The cause is not hard to fathom: Algeria’s oil and gas export revenues fell by 41% to $35.7bn in 2015 from $60.3bn in 2014 (MEES, 29 January). The Algerian economy is one of the least diversified even among Opec countries, with 60% of the state budget dependent on oil and gas revenue and 95% of export earnings derived from oil and gas.
But despite the substantial fall in foreign exchange reserves in 2015, Algeria can still depend on “its fiscal and external buffers accumulated in recent years to provide a window of opportunity” to implement the necessary economic reforms, Jean-Francois Dauphin, head of an IMF mission which visited Algeria earlier this month, says. Mr Dauphin adds that the crash in oil prices, which is expected to be sustained in the medium-term, has prompted the authorities to undertake fiscal consolidation and reforms aimed at “addressing long-standing vulnerabilities.”
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