Algeria Set For 11th Straight Deficit In 2019

Algeria plans to cut spending in 2019 in a modest reversal of 2018, when a blowout budget was planned but in reality spending undershot. Algiers is no closer to ending a run of budget deficits stretching back to 2009; it would need an improbable $88/B to balance its 2019 finances with the budget anticipating a $17.4bn deficit.

Algeria has run up cumulative budget deficits of over $100bn since 2009, with deficits recorded even in 2011-14 when oil prices were over $100/B.

They have ballooned since as oil prices tanked (see charts 1 &2). 2017 was the closest Algeria has got to balancing the budget in recent years, with a deficit of ‘only’ $10.8bn (8.8% of GDP). But austerity was reversed in the 2018 budget as Algeria embarked on plans to stimulate the economy through counter-cyclical spending funded by the central bank printing money ( MEES, 13 October 2017 ).

Actual spending for 2018 appears to have undershot that in the budget. Coupled with oil prices which rose to average $71/B for Algeria’s Saharan Blend for 2018, a four-year high, MEES estimates that Algeria posted a deficit of around $12bn for 2018, well below the $17bn budget figure, though up on 2017. (CONTINUED - 1288 WORDS)

DATA INSIDE THIS ARTICLE

chart Algeria Recorded Deficits Even In 2011-13 When Oil Prices Were Over $100/B As Spending Mushroomed To Head Off 'Arab Spring' Contagion; Deficits Ballooned As Oil Prices Slumped From 2014
chart Breakeven Vs Actual Oil* Prices ($/B): Even Based On Optimistic 2019 Budget Assumptions Algeria Will Need $88/B To Balance The Books; For 2018 It Would've Needed $104/B
table Algeria: 2019 Budget & 2013-2018 Finances
chart Algeria's Foreign Currency Reserves Fall To 12-Year Low Of $82bn At End-Nov As Imf Forecasts Further Slump ($Bn, End Period)