- Algeria set to cut electricity subsidies
- Government to strengthen the economy through subsidy cuts
In a bid to strengthen its economy and cut government spending, the Algerian government will implement subsidy cuts from 2022. Algeria, a major crude oil producer plans to cut subsidies in the electricity and domestic gas sectors. In its draft 2022 Budget, Algeria will cut subsidies for electricity and replace the subsidies with direct payments to the most vulnerable households.
The International Monetary Fund had stated that Algeria was in “urgent need for a recalibration of economic policies.” The country has seen a sharp 4.9% decline in its Gross Domestic Product (GDP) following the 2020 pandemic and the global oil price crash. However, with the rise in global oil prices, the Algerian economy is beginning to pick up with a 3% forecast for economic growth.
“Indeed, despite the rebound in economic activity and the significant improvement in the external balance in 2021, it remains urgent to restore macroeconomic stability and policy space while protecting the most vulnerable and supporting the recovery,” the IMF said.
“The mission recommends a comprehensive and coherent package of fiscal, monetary, and exchange rate policies to reduce Algeria’s vulnerabilities,” the IMF added.