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As he stood in front of a bank in Algiers, Sliman pulled gold necklaces and rings out of his bag, hoping to use his wife’s jewelry as collateral for a loan.
During the pandemic, the 46-year-old employer had to shut down his small business by designing and producing advertising material and releasing four full-time employees.
“It was very hard. It seemed like the sky was falling on my head, ”said Sliman, who did not want to publish his full name.“ The pandemic has forced companies to reduce or completely close their businesses, especially in the travel sector where I relied on customers. My wife asked me to peonize the gold jewelry so I could set up a grocery store in our neighborhood. ”
The pandemic of the coronavirus has hit Algerians hard, exacerbating the problems of a state-dependent economy that have already led to falling oil prices over the years and cuts in domestic and foreign investment.
Before the pandemic, just over a third of Algerian youth were unemployed and many expected change in 2019 following huge protests that led to the ousting of President Abdelaziz Bouteflika.
Analysts warn that Algeria could soon face an economic catastrophe, but that its economy is not only diversified, relying solely on oil and gas exports and depleting foreign currency reserves. Few believe that politicians can bring about significant change, as the low turnout in last weekend’s election has made it clear. For the military-backed regime, analysts say the parliamentary referendum, the first since the protests, allowed for the projection of democratic renewal, and as a result, a coalition government made up of independents and pro-regime parties is unlikely to activate the status quo.
“The economic trend is very negative,” said Riccardo Fabiani, North Africa’s director of the International Crisis Group’s conflict resolution organization. “There is a liquidity crisis in banks and local businesses. Construction, the largest sector after oil, has had a record number of failures. The country could face economic catastrophe at great social cost. “
The economy shrank by 6% last year, according to the IMF, which expects 2.9% growth in 2021 due to high oil prices. In 2021, it forecasts a budget deficit of 18.4% of gross domestic product. To balance the budget, the lender said Algeria needs oil for every $ 169.6 a barrel of oil, twice the current price of $ 72. However, analysts say there is no clarity about the potential economic catastrophe the regime intends to prevent.
“Politicians say they want to open up and diversify the economy,” said Mabrou, a professor at Aib University and an Algerian public policy analyst. “They want a lot of things. That’s what they’re claiming, but we really don’t know if they have a clear strategy on how to do that. ”
Even the fall in oil prices in recent years has tightened government finances and provided handouts and limited the ability of mainly young people, Algerian military decision-makers, or job creators. decisions as they are known, they have not diversified the economy. Instead, successive governments have been burned through foreign currency reserves, which sank in 2014 to $ 200 billion and in 2020 to $ 47 billion.
The military has traditionally controlled key decisions Independence from France In 1962, he was reluctant to liberate the private sector, spark investment, and implement reforms that would lead to transparency in an economic system built on a network of petulant interests and clientelism. Under Bouteflika’s command, it was supported by a nice capitalist private sector, taking advantage of the political patronage and generosity of the government. Many of these businessmen are currently in jail on charges of corruption and some of their businesses have been taken over by the state.
Given the lack of foreign debt and rising oil prices, the Algerian regime could still buy “a year or two,” Fabiani said. Bilateral loans could be made from China or the Gulf. President Abdelmadjid Tebboune rejected an IMF loan last year, suggesting it would limit the country’s ability to pursue an independent foreign policy. “The big question is, what will the new government do,” Fabiani said. “Will they come up with any new ideas?”
Already, rising prices have led to repeated demands for wage increases and strikes among different sectors of society, from teachers to doctors for postal workers. Firefighters protested in full uniform last month and police laughed using tear gas.
Beware of the protests, the authorities opposed the elections, blocked the march of the democratic movement in the country that ousted Bouteflika in 2019, and flooded central Algeria with police cars. More than 200 people are in jail in connection with the protests.
Authorities may stifle dissent, but know that living conditions are becoming increasingly harsh for Algerians who suffer from the combined impact of blockades, business closures and inflation.
“I have seven families to help, but the construction company I worked for has closed,” said Samir Yefsa, a 50-year-old unemployed man. “The state was our only customer, but the government now has no construction program. I don’t know what to do. I have trouble feeding my family. I can only borrow from relatives and friends who are retired and living on pensions, because others who are younger are in a similar situation to me. ”
In a market in Algiers, Naima, a primary school teacher, complained about rising prices and the erosion of purchasing power. “I swear to you that I haven’t bought fruit for my children in two months,” he said. “There are now some items that are too expensive for those with medium or low incomes.”
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