The Algerian government has decided to reduce the state budget by half due to a financial crisis caused by the global collapse in oil prices and worldwide coronavirus lockdowns .

The government has decided to reduce the budget by “ 50 percent ” for this year , President Abdelmadjid Tebboune ’ s office said in a statement .

Despite this huge reduction, the government also agreed at a cabinet meeting to increase the minimum wage from 18 , 000 dinars ($ 140 ) per month to 20 , 000 dinars, while income tax will be abolished for those earning 30 , 000 dinars or less , the statement said .

The government also postponed from Sunday until 10 May consideration of a finance law , which seeks to frame a response to the coronavirus pandemic .

A collapse in hydrocarbon prices this year — caused by plunging demand due to societal lockdowns designed to combat the spread of the virus and exacerbated by a brief price war between key players Russia and Saudi Arabia – is putting ever greater pressure on Algeria ’ s external accounts.

Even before this year ’ s crisis took hold , Algeria ’ s foreign exchange reserves had fallen to $ 62 billion at the end of 2019 , from $ 180 billion in 2014 .

The draft law factors in a plunge in oil receipts this year to $ 20 . 6 billion , compared to the $ 37 . 4 billion previously anticipated .

Tebboune on Friday ruled out approaching the IMF for a bailout , contending that “ accumulating debt harms national sovereignty” when it is owed to foreign institutions.

He said he preferred to rely instead on domestic borrowing .

AFP