Algiers, Algeria | – Algeria’s foreign exchange reserves fell $35 billion in 2015 to $143 billion because of the drop in global oil prices, an IMF representative said on Monday.
Energy earnings, which make up 95 percent of Algeria’s exports and 60 percent of the budget, plunged 41 percent to $35.72 billion last year, and officials expect them to fall to $26.4 billion this year.
The oil price slide has forced Algeria to trim its budget, adjust state subsidies and suspend infrastructure projects while turning to China for funding. But the government says its reserves can help shield its economy.
“The foreign exchange reserves remain, certainly, at a high level but they have fallen $35 billion in 2015 to $143 billion, against $194 billion in 2013,” IMF representative Jean-Francois Dauphin told reporters, according to APS state news agency.
He said the impact of the oil price drop on Algeria had for the moment been “limited” but the budget and exterior trade balances were “considerably deteriorated”.
The IMF estimated the budget deficit for 2015 would widen to 16 percent of gross domestic product (GDP) with growth at 3.7 percent and 5 percent for the non-oil sector and inflation at 4.8 percent, APS said.
The government has reported a trade deficit of $13.71 billion in 2015, reversing a $4.306 billion surplus in 2014.
Algeria’s foreign reserves were $178.94 billion in December 2014 and $159.03 billion in June 2015. The government expects them to fall to $121 billion by the end of this year.
Algeria relies heavily on its oil and gas income to cover its imports bill and to pay for a wide range of subsidies, from food and fuel to free housing and cheap loans that have helped the government ease social tensions and protests in the past.