Brussels, 18/11/2015 (Agence Europe) - Algerian media are making much of the downward long-term forecasts for capacity to supply Europe with gas which, according to Algeria's business sector, makes administrative and economic reforms urgent - as it does reforms for moving towards diversification.
Over recent months, various forums and roundtables have been the scene of demands for such reforms - reforms which also form the mainstay of Europe's expectations in its cooperation with Algeria. The reforms are the condition for enhancing cooperation (especially trade cooperation) and for Algeria joining the WTO.
The EU is Algeria's biggest trading partner, receiving 54% of its exports. Algeria's exports to the EU are made up of 96.7% of hydrocarbons (oil and gas) and minerals (for a value of €28.41 billion).
These forecasts, published on Monday 16 November by the financial news agency Bloomberg, and quoting qualified experts, are of concern to Algeria. “Our country's major challenge for the coming years is the urgent need to diversify its economy”, said head of Algeria's business leaders' forum FCE, Ali Haddad. On 16 November, Haddad organised Business Days in Algiers in order “to mark the urgency” of diversifying the economy. The country is currently experiencing a drop in its income from trade in hydrocarbons.
According to FCE, Algeria has “an economy totally pegged to income from hydrocarbons exports (98% of income from exports, 30% from GDP)” and the financing of its budget is dependent for over 60% on oil taxes. “The first signs of the national economy's vulnerability are therefore known and the reserves constituted over the period of high oil prices started back in 2014”, says FCE, warning that “these reserves are not likely to be renewed if the price of oil stays at the current level”.
“Our objective is to transform an economy that depends structurally on oil income, and we can only achieve this through deepening reforms, restructuring the national economy, and transforming the mode of growth - which will give the private sector its legitimate role in building a modern economy”, FCE states.
Several figures from economic and academic circles have already questioned the 51/49 rule, which is frequently criticised by the EU and which weighs into the negotiations for Algeria joining the WTO. Algeria still obliges investors to maintain a majority Algerian share in the capital of companies to be set up. However, the country is in need of investment - especially in the energy sector. “It's not about a way out by turning inwards, but by committing to determined and ambitious reforms that will ensure the long-term development of our economy”, said Haddad. (Original version in French by Fathi B'Chir)