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The Austerity Policy in Algeria


   The Algerian economy is a fundamentally dependent on hydrocarbons to 98% of exports and imports 75% of the needs of households, public and private enterprises. Since 2000, Algeria has benefited from the increase in the price of crude oil in the financial situation that is improved considerably as a result of the increase in the price of oil barrel. However, this highly dependence on oil costs Algeria a lot. As a consequence, the Algerian government is on the path of austerity in the event of an economic crisis and their revenues have dropped dramatically in a brief period (2016). In the absence of reforming its economy, Algeria enters into the vicious circle of austerity. 

   Austerity is a governmental program of an economic nature which imposes itself on the private and public sectors when incomes are low and insufficient to cover expenses. The option of reducing costs is used to balance them and between the revenues. Its aim is to reduce excessive expenditures and encourage saving, close the door of employment, mitigation of infrastructure projects to alleviate the financial burdens incurred by the public treasury. Thus, austerity is unpopular among people, as the poor often pay the price of austerity more than others. 

     With the sustainable drop in hydrocarbon prices, Algeria is forced to enter the austerity phase at the beginning of the year at the risk of exploding the anger on the street. 

     On 4 October 2016, in the Council of Ministers, the Algerian government presented a draft budget law, focused on controlling public spending. On the program: reduction of capital expenditure and rising commodity prices. This text already promises a heated debate in the Assembly. The grumbling began in the public service. As austerity measures pile up and prices rise, officially rising by 6.2% in November 2016, the daily life of the Algerians darkens and many are threatened in their jobs and thus the become afraid of tomorrow. In January 2017, Algerians will have to pay more for everyday consumer goods. In addition to raising some prices, the draft budget bill includes a series of tax increases, several projects, planned in the five year program 2014-2019 have already been frozen. In order to cope with the fall in oil prices , the austerity plan seems to be engaged; project proposals will also be limited to the sectors of education, health and higher education, and an end to recruitment in the civil service, the freezing of subsidies and the structuring projects already announced. Anger rises against the policy of austerity. When the 2017 finance law confirmed the inevitable deterioration in the standard of living of Algerians, the anger exploded. The riots started in the Bejaia city, in Kabylia, then the violence spread to several towns of the country .The Algerian authorities are afraid of a scenario similar to that of January 2011, when, in the insurrectional context of neighboring Tunisia. The inevitable threats of "repression" of the Minister of the Interior were then added a "campaign of explanation" in the official media ensuring that subsidies for products of wide consumption would be maintained in 2017.

   The government continues to show its confidence. "Despite the collapse of the oil market and the reduction of half of the oil tax, Algeria resists and continues to improve its economic performance," said Prime Minister Abdelmalek  Sellal in September, in order to calm the population. The state did nothing when the barrel was at 110 dollars. So how do we make believe that it is going to do something now with less revenue!? If nothing is done within two years, absolutely ,we are going to find ourselves in a much worse situation than Egypt. 
                                                                                                (Written by ARAB Sabrina)

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