Algeria aims to put its finances on a sustainable path

Significance

The prime minister and finance minister, Aymane Benabderrahmane, has loaded some substantive policy reforms into the 2022 budget law, including a provision for reform of the subsidy system, revisions to the investment law and changes to income tax.

Impacts

• There is a high risk that within the next five years there will be a slump in oil and gas prices.
• Algeria’s heavy reliance on hydrocarbons makes it particularly vulnerable once momentum builds up for global decarbonisation.
• Subsidy reform will entail price increases, even if they are gradually applied.