Tebboune returned to Algeria on Tuesday after a two-month absence in Germany, where he received treatment for Covid-19, just in time to sign off on the 2021 budget. ©AFP/File –

Algiers (AFP) – Algerian President Abdelmadjid Tebboune on Thursday approved a 2021 budget which foresees a deficit of around 14 percent of GDP, the presidency said, as the oil-dependent country grapples with economic woes.

Algeria’s economy has been clobbered by tumbling crude prices, a liquidity crisis, inflation, and the coronavirus pandemic which has brought many economic sectors to a standstill.

Africa’s third biggest oil producer has also faced negative growth, with the International Monetary Fund forecasting that its economy will shrink 5.2 percent this year and that it will have one of the region’s highest budget deficits.

Oil and gas represent around 90 percent of Algeria’s total exports, and it uses the resulting revenues to subsidise fuel, water, health care, housing and basic goods.

Earlier this year Tebboune acknowledged the economy’s “vulnerability” due to its failure for decades to diversify its oil dependent economy.

The budget Tebboune approved on Thursday, after it was passed by the two chambers of parliament, forecasts a deficit of 2,700 trillion dinars (around $20.4 billion, 17.6 billion euros), or 14 percent of GDP.

Furthermore, its hard currency reserves have dropped from more than 162 billion euros in 2014 to less than 57 billion euros late last year.

Tebboune has already ruled out seeking loans from the IMF or other international financial agencies, but pledge to launch an economic recovery plan.

The president returned to Algeria on Tuesday after a two-month absence in Germany, where he received treatment for Covid-19, just in time to sign off on the 2021 budget.

Algeria has recorded just shy of 100,000 cases of the novel coronavirus and 2,756 deaths.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.