Oil prices will keep on falling in the short-term, according to analysts, undermining the finances of a group of countries heavily reliant on oil income.
But where does Algeria, a member of Opec, sit among this group? The effect of this decline is likely to weigh heavily on the North African country’s economy and its social and political stability.
For now, the Algerian authorities maintain that the country’s foreign exchange reserves can cushion any short-term shock. Yet, the memory of the 1980s oil glut – with its political and social consequences – still lingers in people’s minds.
The 1986 oil price collapse put Algeria on the verge of bankruptcy and triggered riots and instability. The question now is could history repeat itself?
Algeria has the 10th largest reserves of natural gas in the world and is the sixth-largest gas exporter globally. Every $1 drop in the price of crude oil results in a loss of $560 million per year to the country. The hydrocarbon sector accounts for 98 per cent of the country’s total exports and 58 per cent of its total fiscal revenues.
The decline in oil revenues is likely to cause difficulty for a country that is already experiencing economic and social tension.
Oil reserves helped the Algerian government avoid the worst effects of the 2011 uprisings that spread through the region by offering benefits and assistance to its citizens: the government granted zero-interest loans to thousands of unemployed young men and battalions of public sector employees received a salary increase irrespective of their performance.
However, the current slump in oil prices has complicated matters. The chatter among some Algerians is that Abdelaziz Bouteflika, the country’s president, has squandered Algeria’s oil riches to placate his people and enrich the elite, but has not built an alternative economy to oil.
Corruption has risen too and the Transparency International Corruption Perceptions Index ranks Algeria 100th in its 175-country league table.
That ranking is not helped by the allegations surrounding Chakib Khelil, who held the job of oil minister between 1999 and 2010 and is a close ally of the president. Mr Khelil is wanted by an Italian court in connection with a corruption case involving both Algeria’s state oil company Sonatrach and Italy’s Eni.
To shore up its revenues by arresting declining production, the Algerian government is encouraging investment in unconventional resources such as shale gas, despite serious reservations from several oil experts and civil society. Nevertheless, the authorities are determined to start shale gas production by 2022.
Besides six shale gas basins that Sonatrach has already listed in the Sahara desert, drilling operations are about to start offshore for the first time.
Critics contend that Algeria’s oil income has been used as a political tool to mask long-term economic mismanagement by the government.
But will the government survive the drop in the oil price?
As one analyst put it: “Authoritarian regimes, although displaying a facade of strength, are fragile in crisis.”
Dr Abdelkader Cheref is a professor at the State University of New York at Potsdam
Game Changer
Director: Shankar
Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
Rating: 2/5
Famous left-handers
- Marie Curie
- Jimi Hendrix
- Leonardo Di Vinci
- David Bowie
- Paul McCartney
- Albert Einstein
- Jack the Ripper
- Barack Obama
- Helen Keller
- Joan of Arc
Ibrahim's play list
Completed an electrical diploma at the Adnoc Technical Institute
Works as a public relations officer with Adnoc
Apart from the piano, he plays the accordion, oud and guitar
His favourite composer is Johann Sebastian Bach
Also enjoys listening to Mozart
Likes all genres of music including Arabic music and jazz
Enjoys rock groups Scorpions and Metallica
Other musicians he likes are Syrian-American pianist Malek Jandali and Lebanese oud player Rabih Abou Khalil
A list of the animal rescue organisations in the UAE
Start-up hopes to end Japan's love affair with cash
Across most of Asia, people pay for taxi rides, restaurant meals and merchandise with smartphone-readable barcodes — except in Japan, where cash still rules. Now, as the country’s biggest web companies race to dominate the payments market, one Tokyo-based startup says it has a fighting chance to win with its QR app.
Origami had a head start when it introduced a QR-code payment service in late 2015 and has since signed up fast-food chain KFC, Tokyo’s largest cab company Nihon Kotsu and convenience store operator Lawson. The company raised $66 million in September to expand nationwide and plans to more than double its staff of about 100 employees, says founder Yoshiki Yasui.
Origami is betting that stores, which until now relied on direct mail and email newsletters, will pay for the ability to reach customers on their smartphones. For example, a hair salon using Origami’s payment app would be able to send a message to past customers with a coupon for their next haircut.
Quick Response codes, the dotted squares that can be read by smartphone cameras, were invented in the 1990s by a unit of Toyota Motor to track automotive parts. But when the Japanese pioneered digital payments almost two decades ago with contactless cards for train fares, they chose the so-called near-field communications technology. The high cost of rolling out NFC payments, convenient ATMs and a culture where lost wallets are often returned have all been cited as reasons why cash remains king in the archipelago. In China, however, QR codes dominate.
Cashless payments, which includes credit cards, accounted for just 20 per cent of total consumer spending in Japan during 2016, compared with 60 per cent in China and 89 per cent in South Korea, according to a report by the Bank of Japan.
UAE currency: the story behind the money in your pockets
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Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
At a glance - Zayed Sustainability Prize 2020
Launched: 2008
Categories: Health, energy, water, food, global high schools
Prize: Dh2.2 million (Dh360,000 for global high schools category)
Winners’ announcement: Monday, January 13
Impact in numbers
335 million people positively impacted by projects
430,000 jobs created
10 million people given access to clean and affordable drinking water
50 million homes powered by renewable energy
6.5 billion litres of water saved
26 million school children given solar lighting
Museum of the Future in numbers
- 78 metres is the height of the museum
- 30,000 square metres is its total area
- 17,000 square metres is the length of the stainless steel facade
- 14 kilometres is the length of LED lights used on the facade
- 1,024 individual pieces make up the exterior
- 7 floors in all, with one for administrative offices
- 2,400 diagonally intersecting steel members frame the torus shape
- 100 species of trees and plants dot the gardens
- Dh145 is the price of a ticket
