Trade deficit looms over Algerian dinar depreciation
Significance Plunging oil and gas revenue have created a dauntingly large budget deficit and the rapid erosion of foreign exchange reserves. To deal with the situation, the government on July 22 approved a package of measures in its mid-year interim budget, the Complementary Finance Law (LFC). They include changes to the tax system to incentivise productive activity and penalise importers, as well as a fiscal amnesty aimed at bringing the informal sector into the regular economy. Impacts The fall in fiscal and export revenues will heavily deplete the budgetary and foreign exchange reserves, albeit from relatively high levels. The government will have to consider more vigorous cost-cutting and revenue-raising measures in the 2016 budget. The resulting economic pressure will exacerbate the tense political situation regarding the ailing president's future and succession.