Algeria will raise the price of gasoline and diesel to reduce its consumption and imports as the economy comes under pressure due to a sharp fall in energy revenue, according to a revised 2020 budget plan drawn up by the cabinet and seen by Reuters.
The new plan, which follows a 2020 budget that was already approved late last year, must now be approved by parliament. Financial pressure will cause the economy to contract 2.6% this year after growing 0.8% in 2019, according to the cabinet document, which outlines a comprehensive review of the country’s financial policies after the drop in energy earnings.
The cabinet did not mention the new coronavirus in the document, but the global pandemic has added to a tumble in oil prices, forcing the government to cut spending and investment planned for this year in several sectors including hydrocarbons. The North African country has reported about 530 deaths related to the virus so far.
Under the new measures outlined by the cabinet, the budget will be based on an oil price of $30 a barrel, down from $50 in the previously approved plan. In a bid to find new funding sources for the oil-reliant economy, the government plans also to impose taxes on some imported goods. But Algeria, which is trying to diversify its economy away from oil and gas, may exempt some businesses from taxes and customs duties to help boost its non-energy sectors and attracting foreign investors.
State finances, already reduced by a fall in oil prices since 2014, have been hit hard this year by the collapse of the energy market as a result of the global pandemic.
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