ALGIERS, Algeria—Algeria’s foreign exchange reserves currently stand at $42 billion, down from $60 billion in the first quarter of 2020, President Abdelmadjid Tebboune said on Monday.
The country’s decline in foreign reserve is attributed to the drop in global crude oil prices.
Algeria replenishes its foreign currency reserves from oil and gas exports, which account 60 percent of the state budget and 94 per cent of total export earnings.
The country’s reserves steadily declined for years, dropping from $178 billion in December 2014 to $97.3 billion in December 2017, official data show.
In December 2018 it increased to $79.88 billion and then recorded a drop to $72.6 billion in April 2019.
The Organization of the Petroleum Exporting Countries (OPEC) member uses its reserves predominantly to pay for imports of goods and services, estimated annually at $45 billion.
The government of the North African country has been trying to cut spending on purchases from abroad to ease the financial pressures caused by the decline in oil and gas revenues.
Algeria unveiled a bold plan to diversify its economy away from oil and gas when oil prices slumped in 2014, aiming to cut imports, slash subsidies and expand the role of the private sector in the economy. However, reforms stalled and painful economic policy adjustments failed to take effect with the government eyeing presidential elections.
As a result, the president stated on Monday that the government will import only what the country actually needs effective immediately.
Today (March 2), Oil prices have declined more than 1 per cent, extending losses that began last week, as investors unwound long positions on concern that OPEC may agree to increase global supply in a meeting this week and Chinese demand may be slipping.