ALGERIA is world’s tenth-largest proven natural gas reserves, the third-highest technically recoverable shale gas resources and the third-largest proved crude oil reserves in the region.
It is a pioneer and leader in LNG exports, Europe’s second-largest natural gas supplier after Russia and a key hydrocarbon provider to Southern Europe. Algeria is an Opec member and an active promoter of the Gas Exporting Countries Forum.
Algeria is the region’s wealthiest country in terms of purchasing power parity with the per capita income of $13,823 on purchasing-power parity basis. Hydrocarbons account for a quarter of GDP, 60pc of budget revenues, and over 95pc of export earnings. But, having peaked in 2005, Algeria’s oil and gas output has been steadily declining.
Algeria’s economy was able to maintain respectable growth in 2015 at 3.9pc due to the first increase of hydrocarbon output in a decade and a stable non-hydrocarbon growth. In 2016, its economy grew at a slightly slower rate of 3.6pc.
Over the next two or three years, the growth is expected to decelerate as the government implements fiscal consolidation measures. In 2017 and 2018, a substantial increase in hydrocarbon output, as new oil wells start to produce, will mitigate the negative effect of the projected oil price decline on the real non-oil sectors.
The government is committed to breaking away from the oil-based economy over the next decade with a focus on industry, agriculture and tourism. The country is experiencing a major housing crisis, high consumer prices, low salaries and a widening gap between social classes.
Sustained growth has been achieved at the cost of a widening fiscal deficit, which more than doubled to 16.2pc of GDP in 2015. Despite narrowing, the deficit remained large at over 13pc in 2016 but is expected to narrow gradually to 8pc in 2018.
With fiscal savings depleted, the deficit is expected to be financed by the issuance of new debts with the debt-to-GDP ratio projected to rise from 13.6pc of GDP in 2016 to 25.1pc in 2018.
Foreign exchange reserves have fallen to an estimated $108bn in 2016 from $178bn two-years earlier and are projected at $60bn in 2018. Despite the decline, these reserves are still high at above 20months of import-cover.