While inflation on staple food products remains strong, the oil wind is once again giving the Algerian management a fresh breath.
Algeria had not known of such an accident since Abdelaziz Bouteflika’s third term. In 2008, the average price per barrel a record high of $ 147, driven by several factors, including tensions in the Middle East, a fall in the value of the dollar and China’s unprecedented growth rates. For many years, this influx of cash allowed the force then in place to absorb social tensions like a sponge.
As a direct consequence of the war Russia was waging in Ukraine, the barrel of oil again crossed the $ 100 limit in March. After peaking at $ 123.7 on March 8, black gold traded at $ 110 per share. barrel on March 22, enough to allow Algeria to resume a more generous social policy?
“This increase will definitely have a positive impact on public finances. If this were to continue, the increase in oil taxation would lead to growth in budget revenues. The latter are usually sufficient to adapt to the current level of public expenditure, which includes almost 20% of the operating budget for social transfers “, analysis for Young Africa economics professor Brahim Guendouzi. Also, according to him, we must expect that the economic efforts that the state allocates in favor of the fragile and average social strata will be maintained. “This favorable situation for hydrocarbon exports, both in volume and in terms of prices, gives management room to maneuver the economic and social balance intact, weakened by inflationary tensions in 2021.”
Several measures have already been adopted by the public authorities to appease the social front
After the country started the year with a staggering rise in consumer prices, which in mid-February forced President Abdelmadjid Tebboune to suspend the use of new taxes and duties provided for in the Finance Bill, the rise in the price of the barrel represents a lifeline. Especially since wages were revised upwards at the same time – between 14% and 16% – thanks to the reduction in income tax (IRG), which was applied from the beginning of the year.
The government’s efforts continue with the payment, from March, of an unemployment benefit of 13,000 dinars (almost 82 euros) intended for first-time jobseekers aged 19 to 40 years, which also opens the right to social protection – 800,000 people are affected by this allowance, according to the director general for the National Employment Service, Abdelkader Djaber.
These expenses are covered by the Finance Act of 2022, assured Abdelmadjid Tebboune, while several measures have already been adopted by the public authorities to appease the social front. But the total amount of this policy to increase purchasing power has not yet been quantified.
Targeted the poorest
Should we expect other initiatives during this year? The future social arbitration will affect more “the subsidy system, which is likely to change in its form, social housing and the creation of new jobs for young people”, predicts Brahim Guendouzi. Other initiatives are likely to be launched in the framework of the Supplementary Finance Act for 2022, which is expected at the end of this semester. “However, the financing of this social policy raises the question of Algeria’s ability to maintain it.
Let us hope that with the increase in hydrocarbon revenues, Algeria will not repeat the mistakes of the past.
“As long as there is oil interest, short-term social tensions are artificially mitigated thanks to hydrocarbon revenues. These allow subsidies and social transfers, representing 23.7% of the general state budget and 9.4% of GDP already for the year 2021. But poorly managed and poorly targeted, these measures do not always benefit the most disadvantaged, ”moderates economist Abderrahmane Mebtoul.
“Let us hope that with the increase in hydrocarbon revenues, Algeria will not repeat the mistakes of the past. These revenues will be allocated to sectors that directly promote development and indirectly to the education and health sectors,” warns the specialist.
Breakdown in wage value
For the time being, however, the country is facing emergencies that it must deal with, according to a source in the executive branch. Starting with inflation, which weighs on households, especially small and medium-sized stock markets, while the upward trend, observed from the beginning of the first quarter of 2021, has not slowed its curve. The price of certain foods is sometimes more than doubled, such as pasta, milk, oil, vegetables, fruits and meat, with a recurring shortage of edible oil and semolina, which form the basis of the local diet. A comparative study conducted by the Consumer Association between the average prices in 2010 and those today shows that Algerians’ wages have lost 50% of their value due to price increases.
It is also from the social malaise and the frustration of the young people that the anger against the political system was born in March 2019.
“If the financial means allow, support our source in the executive branch, the government will continue its policy of social support. Hirak’s sociology was largely influenced by the presence of students, unemployed and low-income families. It is also from the social inequality and the youth’s frustration that anger at the political system was born in March 2019.