Algerian energy sector's success hinges on investment

Subject

Algeria's economic outlook.

Significance

The ongoing political crisis which led to the resignation of former President Abdelaziz Bouteflika has not yet made any measurable impact on the economy. Yet whoever ends up taking charge of the country’s affairs will face the challenge of galvanising an economy beset with deep structural flaws, amid growing financial pressures as oil and gas revenue is in decline and popular demands for higher public spending have become more insistent.

Impacts

• Oil companies will remain engaged, although they may delay new major investments until there is more clarity on policy.
• Pressure on the dinar will mount, although thus far the exchange rate has remained stable despite the political turbulence.
• The government and other political stakeholders’ stance not to seek external financing may not be tenable for much longer.