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Algeria bans imports of cell phones, furniture, food to curb trade deficit

Algerians shop at a busy market in Algiers, Algeria on 17 April 2012 [Magharebia/Flickr]
Algerians shop at a busy market in Algiers, Algeria on 17 April 2012 [Magharebia/Flickr]

Algeria has banned the import of 900 products including cell phones, household appliances and vegetables in a bid to cut spending following a drop in earnings from oil and gas, a trade ministry document showed today.

The temporary ban, which took effect on Sunday, is the most drastic action undertaken yet by the North African OPEC oil producer to curb a ballooning deficit caused by the fall in crude oil prices since mid-2014.

Algeria relies on oil and gas for 60 per cent of the state budget but earnings from the sector have halved since oil prices collapsed hitting the state-dominated economy hard.

The restrictions will also apply to furniture, most vegetables, some meats and fruits, cheeses, chocolates, pastries, pasta, juice, bottled waters and some building materials, according to the ministry document which was seen by Reuters and whose authenticity was confirmed by an official.

“The import suspension of those products is limited in time, and will be lifted gradually with or without maintaining or increasing taxes and other duties,” the document said.

Read: Algeria ranked lowest in MENA for economic freedom

The import ban – following a 30 per cent rise in taxes and customs duties already imposed on some of these products from 1 January – risked upsetting Algeria’s younger generation, many of whom struggle to find jobs in an economy where unemployment stands at 12 per cent.

The fall in crude oil prices has put huge strain on the economy and thrown down a big challenge to the leadership around veteran President Abdelaziz Bouteflika, 80, who has been in power for almost two decades. His poor health following a stroke in 2013 has prompted political manoeuvring behind the scenes.

“This kind of restrictions is bad for all consumers as it limit their choices. With the new policies, the black market will also expand, causing higher prices and hurting our purchasing power,” said Ali Diji, a 30-old-year state bank employee.

With the new ban, the government hopes to bring down the import bill to $30 billion this year from a projected $45 billion for all of 2017 and $46.7 billion the previous year.

Read: Trade between France and Algeria declines

Analysts say the measure is just a temporary solution as Algeria needs to get serious about ending its dependency on oil and gas revenues, a plan for years in the works with few results to show.

“It is only with the diversification of the national economy and other reforms that the economic situation can improve,” consultant and economist Brahim Guendouzi told El Watan newspaper.

Oil and gas account for about 95 percent of Algeria’s exports with the government having little success in boosting the non-energy sector. While the oil price has recently rebounded, it is still below $70 a barrel. Algerian officials have said it needs to be above $70 to help balance the budget.

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