Algeria announces new economic model to reform economy

Algeria, and OPEC member, unveiled the new economic model it will be based on until 2030. The new economic model, published through the Algerian Ministry of Finance, focuses on reforming the tax system to achieve more revenue and reduce dependence on energy exports, in the light of the fall in crude oil prices that has hit Algeria's economy for two and a half years.

The Algerian government is counting on the new economic model to diversify the country's economy and reduce its dependence on oil and gas exports, which currently account for about 95 % of export revenues and 60 % of the government budget, especially in the current financial and economic crisis.

Senior Algerian officials, led by Algerian Prime Minister Abdelmalek Sallal, said the country had lost more than half of its foreign exchange income, which fell from $ 60 billion in 2014 to $ 27.5 billion by the end of 2016, according to official figures.

The new economic model will be implemented in three phases to achieve the desired objectives. The first phase will be between 2006-2019 (the take-off phase), which focuses on developing the added value of the various sectors up to the objectives set for each sector. The second stage is the transitional period between 2020-2025, during which the country will be able to realize the possibility of catching up with the economy. 

While the third phase of 2026 to 2030, in which the economy will be able to recover and exploit the available resources, and the various economic sectors will move towards their equilibrium value. The new economic model presented a number of recommendations, the most important being the need to stimulate Algerian institutions and remove administrative and bureaucratic obstacles.

The new economic model for Algeria aims at reducing the country's budget deficit by 2019 and mobilizing additional resources necessary in the internal financial market. Between 2020 and 2030, a sustainable path of crude domestic output outside hydrocarbons must be maintained at 6.5% annually, in addition to an increase in per capita gross domestic product, which must be multiplied by 2.3 times.

The model also stressed that the contribution of manufacturing industry to the added value of crude domestic output should shift from 5 to 10% by 2030, accompanied by modernization of the agricultural sector to achieve food security of the country and export orientation.

According to the model, the country's annual energy consumption growth should halve from an annual increase of 6 percent now to a 3 percent increase by 2030, accompanied by the diversification of Algerian exports to support rapid economic growth.

The economist Abdel Rahman Mtabul commented on this new economic model of Algeria, saying in a press statement to Arabs Today that it works to control the Algerian economy reorientation of economic and social policy to adapt to the new economic and social revolution.