ALGIERS (Reuters) - Algeria, under pressure to ease the impact on its public finances of a drop in oil and gas earnings, aims to save $20 billion this year through reforms and by lowering its imports bill, the government said on Monday.
The OPEC member has already cut public spending and postponed planned investment projects for 2020 in several sectors, including energy, which accounts for 60% of the state budget and 93% of total export revenues.
Failure to implement reforms aimed at diversifying the economy away from oil and gas means the North African country’s non-energy sector is still underdeveloped.
The government said in a statement that a cabinet meeting chaired by President Abdelmadjid Tebboune had discussed the need for urgent steps to reform the banking system and attract money from the informal market. Ministers also discussed reducing the cost of imports through measures including using the national fleet to ship imported goods.
Algeria spends an estimated $45 billion annually on imports of goods including food because domestic output is insufficient to meet growing demand from the country’s 44 million people.
The meeting also discussed speeding up a long-delayed plan to launch an Islamic finance sector to provide a new funding source for the economy.
The government hopes Sharia-compliant financial services would attract local savers who distrust state banks and often choose opt to keep large sums of money at home.
“All these measures would enable Algeria to save about $20 billion before the end of this year,” the statement quoted Tebboune as saying at the meeting.
It described the steps discussed as part of a government “economic and social revival plan” aimed at reducing reliance on the energy sector and opening up the economy to investors who have stayed away due to bureaucracy and a lack of incentives.
Analysts believe reaching the goal will require more government steps on the ground.
“This may be achievable, but on conditions, including generalizing the use of bank cards as part of the banking reforms,” said economics professor Abderrahmane Aya. “Most payments are currently made in cash.”
Reporting by Hamid Ould Ahmed; Editing by Catherine Evans, William Maclean