ALGERIA: GROWING FINANCING NEEDS MAY FINALLY IMPEL EXTERNAL BORROWING

ALGERIA: GROWING FINANCING NEEDS MAY FINALLY IMPEL EXTERNAL BORROWING

   Wed, 19 January 2022

The Algerian economy is gradually recovering from the initial impact of the pandemic and the oil price shock. The health crisis has witnessed improvements, most containment measures have been lifted, and with the rebound in hydrocarbon production and prices, growth has resumed. However, economic growth is expected to remain volatile and highly dependent on hydrocarbon activity, especially on gas. Algeria's economic prospects are further undermined by over-centralised management and an opaque business environment. In addition, a wide fiscal deficit, rapidly diminishing reserves, and limited room for fiscal reform due to high levels of social instability mean that Algeria can be forced to borrow externally in 2022, initially from bilateral allies, and eventually from the IMF.