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Algeria Plans Investment to Reduce Reliance on Oil

Source: Algeria Times 8/30/2014, Location: Africa

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The Algerian government plans to spend $262 billion over the next five years in a bid to revive the country’s flailing economy and move away from its traditional focus of oil and gas.

According to a report from Reuters, the Algerian government said projects to be included in the 2015-2019 plan – designed to “develop a productive and diversified economy” would be finalised by the end of the year.

Algeria has found itself in the economic doldrums as dwindling gas production and significant growth in demand have begun to pressure exports. Domestic gas production fell by 3.3% in 2013 to 78.6 billion cubic metres, according to BP statistics.

Hydrocarbons account for 97% of Algeria’s export revenues, 60% of its tax receipts and 40% of its GDP.

According to Mansouria Mokhefi, special adviser on North Africa and the Middle East at the French Institute of International Relations, European nations would be wise to reconsider the notion that Algeria represents a reliable gas supply partner.

“The notion that Algeria can continue to guarantee regional security in partnership with Europe is questionable given Algeria’s many and growing vulnerabilities,” Mokhefi said in a policy memo for the European Council on Foreign Relations.

Any sense Algeria could be used as a supply substitute for Russia in the aftermath of the Ukraine crisis may also be some way shy of the mark, Mokhefi added.

“Given that Algeria’s dramatic rise in domestic energy consumption and simultaneous decline in gas production will soon substantially reduce the country’s exports, however, EU member states should not assume that Algeria could fulfil that role,” she said.

The re-election of Algeria’s 77-year-old President Abdelaziz Bouteflika earlier this year left the majority of Algerians feeling “deeply alienated” from the system, said Mokhefi.

The promise of a rise in spending to quell social unrest is nothing new, however. When demonstrations swept the country in 2011, the government’s first response was to increase public spending and salaries by approximately 25%. Massive subsidy increases have followed – in 2012 the government increased subsidies by approximately 60%.

Public spending for 2014 is expected to reach $98 billion, according to Mokhefi, up by 11.3% on 2013 levels.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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