Algeria aims to slash deficit


OPEC member Algeria plans to cut spending by 11.2 percent in 2013 to reduce its budget deficit, according to a draft budget, after the government spent extra money this year to soothe public grievances and avoid unrest.

The draft budget, obtained by Reuters, is based on a world oil price of $90 per barrel, and projects next year’s deficit at 18.9 percent of gross domestic product, down from 28 percent of GDP projected for this year. Algeria has financed its deficit with cash from oil and gas sales.

The oil-reliant economy is expected to grow by 5 percent, slightly more than the 4.7 percent forecast for 2012, while the inflation target is unchanged from this year at 4 percent.

The draft budget envisages that the Algerian dinar will fall 2.7 percent against the dollar.

The government had approved a budget of 7.745 billion dinars ($104.6 billion) for 2012, including extra spending on public sector wage rises, infrastructure and housing – a particular problem in the north African nation of 36 million people.

The draft budget set 2013 spending at 6.879 billion dinars, with no new salary increases planned, although the government will maintain subsidies on basic foodstuffs.

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