ALGIERS (Reuters) – OPEC member Algeria plans to increase spending to 4,322 billion dinars ($64.2 billion) in its 2008 budget, Finance Minister Karim Djoudi said on Saturday, following a planned outlay of 3,623 billion in 2007.
Outlining the spending rise, which equates to 19 percent, Djoudi told parliament he forecast inflation at 3.0 percent and gross domestic product (GDP) growth at 5.8 percent. He estimated GDP in 2008 would stand at 6,864 billion dinars, assuming an average oil price of just $19 a barrel.
The budget of the oil- and gas-exporting north African country is expected to be voted on by parliament in coming weeks with all eyes on measures to create jobs and protect purchasing power in a society of 33 million suffering deep unemployment.
“Our economy will continue its stabilisation thanks to the important plan of revival,” Djoudi said, referring to a multibillion dollar economic revival plan aimed at stimulating jobs and growth following years of political strife.
“We based the budget on $19 to support our monetary policy and fight inflation,” Djoudi said, referring to the government’s oil price assumption, widely seen as conservative in view of record high prices on the international market.
Soaring oil prices have helped the government launch a five-year plan worth $140 billion to upgrade infrastructure damaged in the conflict.
Algeria plunged into violence in 1992 when the military cancelled elections that a radical Islamic party was set to win. Up to 200,000 people were killed in the violence.
President Abdelaziz Bouteflika, serving for a second term, has urged the government to create more jobs for the young to cut the unemployment rate, currently estimated at 12 percent.
Joblessness among adults under 30 is estimated by experts at about 70 percent.
The government hopes to bring the overall unemployment rate down to 10 percent by 2010 and has estimated it needs to create roughly 2 million jobs and build 1 million houses by then.
The government has said it plans to carry out a range of salary increases among public sector employees in 2008 to shore up living standards, which have been hard hit by increases in the prices of many foodstuffs.
Algeria is one of the world’s major wheat importers.
National wealth as measured by GDP stood at 6,233 billion dinars, according last year’s budget statement for 2007.
Inflation for the full year 2006 was 2.5 percent.
“The spending increase is due to the salary policy. It is also aimed at supporting some economic and social activities,” Djoudi said without elaborating.