Algeria has relied on oil and gas revenue to fund its myriad of extensive but expensive social spending programs for decades. But the government’s primary development tool now risks collapsing under the weight of plummeting oil prices and demand due to the COVID-19 pandemic. Since the previous oil and gas price slump in 2014, when export revenues were halved, Algeria’s foreign exchange reserves have dropped from $194 billion to just $62 billion in February of this year. The reserves are likely to continue draining fast as the pandemic continues to rattle global markets and suppress global demand for oil and gas.
Despite being one of the wealthiest countries in the Middle East and North Africa, Algeria’s wealth heavily depends on oil and gas revenue, which accounts for 60 percent of its state budget and nearly all (94 percent) of the country’s export revenue. By highlighting its severe vulnerability to global market...
