Resources for the state fund intended to cover Algeria’s budget deficits had declined by 59.5 percent at the end of 2016 from the previous year because of falling oil prices, Finance Minister Hadji Baba Ammi said.
State finances were already under pressure in Algeria, where the government had forecast foreign exchange reserves would reach $114 billion by the end of last year, from $144 billion in 2015 and $178 billion the previous year.
Oil and gas earnings make up 94 percent of total exports and 60 percent of the state budget in the North African state.
Algeria set up its oil savings fund, the Fund for the Regulation of Receipts (FRR), 17 years ago. It allocates revenue calculated from the difference between a reference price for oil of $37 a barrel and the market price at which it is actually sold.
Algeria’s government had maintained high levels of public spending and domestic subsidies before crude oil prices started sliding in mid-2014.
Resources for the fund reached 840 billion dinars in December last year, down from 2,072 billion dinars in 2015, Baba Ammi told the parliament finance committee on Monday, according to the state news agency APS.
The government had expected oil and gas earnings to drop to $27.5 billion by the end of 2016 from $35.7 billion in 2015 and $60 billion in 2014. The government has approved a 14 percent cut in its budget for 2017 and endorsed higher taxes in a bid to cope with lower energy revenues. It also promises to maintain a subsidy system, a sensitive issue, that will cost $18 billion this year.