Algeria eyes subsidy reforms to help close budget deficit in 3 or 4 years

DUBAI - 10 February 2018: Algeria’s government is looking at reforms to its subsidy system as it seeks to eliminate the state budget deficit within about three to four years, its finance minister Abderrahmane Raouia said on Saturday.

The government may cut gasoline subsidies in 2019 and other subsidies in 2020, Raouia told reporters on the sidelines of a meeting of Arab finance ministers and International Monetary Fund officials to discuss fiscal reforms in the region.

He declined to specify what subsidies might be cut in 2020, beyond saying the current subsidy system kep prices low for a wide range of goods and services, from electricity to bread and cooking oil.

Raouia stressed that subsidy cuts would occur in the context of reforms to make the system more efficient and more supportive of lower-income Algerians.

Algeria depends heavily on oil and gas revenues, and its finances have been helped by a rebound of global oil prices in recent months, as well as by cuts in state spendingf. The IMF estimates it ran a fiscal deficit of 3.2 percent of gross domestic product last year, against 13.5 percent in 2016.

Raouia said the government did not expect to need to borrow money this year, although borrowing could not be ruled out next year.