Mohsen Abdelmoumen: What is your assessment of the coronavirus epidemic in Algeria?
Prof. Abderrahmane Mebtoul: In Algeria, the epidemic is combined with a more structural factor, which is the increase of the geopolitical risk. The coronavirus epidemic affects all continents where the total population by geographical area in 2019 is distributed as follows: Asia (59.7%) with 4,504,428,000 inhabitants, Africa (16.6%) with 1,256,268,000 inhabitants, Europe (9.8%) with 742,074,000 inhabitants, South America (5.3%) plus North America (4.7%) and Oceania (0.5%) with 645,593,000 inhabitants. This epidemic is causing an irreversible economic crisis for 2020, whose repercussions are expected to last with shock waves for 2021, if the disease is contained before September/October 2020, the majority of experts foresee a second wave, or even a third wave in case the containment is not respected. Hence, as a matter of urgency, many countries have introduced or expanded unemployment schemes and social assistance, with some economists and politicians advocating a universal minimum income. The current crisis of 2020 has shown the vulnerability of world economies to unpredictable external shocks, especially countries relying on ephemeral resources whose price depends on exogenous factors beyond the control of internal decisions. Comparable to a war with a faceless enemy, the coronavirus epidemic has an impact on the world economy which will experience three shocks in 2020, a supply shock with the recession of the world economy, a shock of demand due to household psychosis, and a liquidity shock. This crisis will have an impact on the entire architecture of international relations in the future. But if the impacts of the coronavirus epidemic are a danger for the present, they are a source of hope for the future of humanity, an opportunity through our capacity to innovate through different governance and for a more just and united world. We must objectively acknowledge that the presidency of the republic and the Algerian government have managed this epidemic despite the difficult conditions, an epidemic that affects major economic powers such as the USA, Europe and China. As I have just reported in French on France 24 television this 20/04/2020, the Algerian government is not responsible for the current situation which is the result of a heavy liability, while according to international data, Algeria has earned a foreign exchange revenue of more than 1000 billion dollars between 2000 and the end of 2019 with a foreign exchange outflow of more than 935 billion dollars, the difference being the balance of foreign exchange reserves as at 31/12/2019 of approximately $62 billion with a modest annual average growth rate of 2.5-3% whereas it should have been 89% per year to avoid social tensions and enable a sustainable non-hydrocarbon economy if the economic trajectory had been changed.
What about employment through this crisis?
There is a universal law for all countries, with the employment rate being a function of the growth rate and productivity rate structures. Algeria is strongly connected to the world economy, particularly through its hydrocarbon exports, more than 98% of foreign exchange earnings with derivatives from hydrocarbons and importing a large part of the needs of households and businesses, and any recession in the global economy impacts the Algerian economy. Thus, the IMF report of 14 April 2020 shows that the year 2020 will be a year of recession with a slight recovery in 2021 if the epidemic is contained in September 2020. Note that the growth rate is always calculated in relation to the previous period Q1 - Q0. Thus, under a favorable scenario, by specifying that weak growth in 2020, i.e. Q0, results in relatively weak growth overall in 2021 - Q1, the world economy will have a growth rate of less than 3.0% in 2020 and 5.0% in 2021, and, on average, the advanced countries less than 6.1% in 2020 and 4.5% in 2021, with the following repartition : United States less 5.9% in 2020 and 4.7% in 2021; Euro zone less 7.5% in 2020 and 4.7% in 2021; Germany less 7% in 2020 and 5.2% in 2021; France less 7.2% in 2020 and 4.5% in 2021 ; Italy less 9.1% in 2020 and 4.8% in 2021; Spain less 8% in 2020 and 4.3% in 2021; Japan less 5.2% and 3.0% in 2021; United Kingdom less 6.5% in 2021 and 4.0% in 2021; Canada less 4.6% in 2020 and 4.2% in 2021 ; other advanced countries less 4.6% in 2020 and 4.5% in 2021. For emerging and developing countries, the overall average is less 1.0% in 2020 and 6.6% in 2021 distributed as follows: China 1.2% in 2020 and 8.5% in 2021; India 1.9% in 2020 and 9.2% in 2021; ASEANS 1.9% in 2020 and 7.4% in 2021 ; emerging and developing countries in Europe less 5.2% in 2020 and 4.2% in 2021; Russia less 5.3% in 2020 and 3.5% in 2021. As for the other regional areas, we have: Latin America - Caribbean less 5.2% in 2020 and 3.4% in 2021; Brazil less 5.3% in 2020 and 2.9% in 2021; Mexico less 6.6% in 2020 and 2.9% in 2021; Middle East and Central Asia less 2.8% in 2020 and 4.0% in 2021; Saudi Arabia less 2.3% in 2020 and 2.9% in 2021; Sub-Saharan Africa less 1.6% in 2020 and 4.1% in 2021; Nigeria less 3.4% in 2020 and 2.4% in 2021; South Africa less 5.8% in 2020 and 4.0% in 2021; Low Income Developing Countries 0.4% in 2020 and 5.6% in 2021. According to the IMF and international agencies, if the pandemic does not subside in the second half of 2020 through an extension of containment measures, we would see deteriorating financial conditions and further disruptions in global supply chains, in which case global GDP would fall even further: by an additional 3% in 2020 compared to the baseline scenario if the pandemic continues into 2020, and by an additional 8% in 2021 if the pandemic continues into 2021.
Are the measures taken by countries appropriate in the face of this growing debt?
The IMF and the Institute of International Finance (IIF) estimated global world debt at $184 trillion (at the end of 2017) and $244 trillion respectively (estimated at the end of the third quarter of 2017). The amount, before countries increased this debt in the first quarter of 2020, was $250 trillion at the end of 2019, with the size of the bond market reaching $115 trillion, this debt, including household, corporate and government debt, accounted for around 320% of world GDP. Driven by low interest rates and weak financial conditions, according to the IIF, total global debt will exceed $257 trillion in the first quarter of 2020, mainly due to debt in the non-financial sector. This situation has an impact on social and therefore on employment. Also, despite the mobilization of 5,000 billion dollars by the G20, including 2,200 billion dollars for the USA adopted by Congress in the course of March 2020 (the latest estimates of 15 April 2020 giving 2,700 billion dollars with the specific amounts), more than 2,200 billion dollars for the euro zone, 1,000 from the ECB, 500 from related institutions and 500 from the States according to Professor Elie Cohen of the CNRS, the impact for 2020 will be limited in view of the scale of the crisis. And all these amounts that will have to be repaid one day require an accelerated return to growth with the indispensable social cohesion requiring new social protection mechanisms, especially given that the structure of GDP shows an increase in non-market GDP, which reduces the GDP of value-creating activities that increase the budget deficit, otherwise a drastic fall in wages will have to be expected. For example, according to the Committee for a Responsible Federal Budget (CRFB), for the United States, and by playing on the dollar as an international currency representing more than 60% of global transactions, the deficit could reach 3800 billion dollars (3.480 billion euros) in 2020, or 18.7% of gross domestic product (GDP). According to the French daily Le Monde, "in Italy, the debt currently stands at 135% of GDP and could rise to 181% by the end of 2020, according to the most pessimistic hypothesis of Jefferies analysts, or 151% for the most optimistic, the same black scenario predicts a 15% recession in 2020, with France falling from 101% to 141% of GDP, and Spain to 133%, the official target for the euro zone of the European Stability Pact, which was to have a debt of less than 60% of GDP, no longer being respected". "This is unprecedented, according to Stefano Scarpetta, Director of the Employment and Social Affairs Division of the OECD... A lot of R&D (Research and Development) is needed on treatments and tests. We are living in an unprecedented crisis where social, economic and health policies are linked". Despite the bailout plan, more than 9% of US GDP where we saw more than 10 million new registrations at the end of March 2020 in just one week, far more than the peak of 800,000 reached in 2008 with 3.3 million additional unemployed, or 2% of the labor force, a historical record five times higher than the maximum ever recorded, the world's largest economy could soon have 10% of unemployment, according to Fitch Ratings. The same in Canada with 2.13 million registrants. In Europe, in Great Britain, we had 950,000 new requests between 16 and 31 March, ten times more than normal. In Germany, nearly 500,000 companies made the request in March, twenty times more than after the 2008 crisis, and in France, requests concern 5.8 million workers, more than one private employee out of four. In Norway, the unemployment rate increased from 2.3% of the labor force to 10.4% in one month, a record since the Second World War. In Austria, 163,000 new registrants came to the employment services in ten days, a jump of 40%. In Sweden, in the single week of 16-22 March, 14,000 employees received notice of dismissal, compared to the usual average of 3,000 per month. The situation is more dramatic in Spain and Italy. Hence, as a matter of urgency, many countries have introduced or expanded unemployment schemes and social assistance, with some economists and politicians advocating a universal minimum income.
What is the impact on the price of hydrocarbons that determines the employment rate via growth in Algeria?
The current crisis of 2020 has shown how vulnerable the world economies are to unpredictable external shocks, especially in countries relying on an ephemeral resource whose price depends on exogenous factors beyond the control of domestic decisions. The price of the Brent on 17-18/04/2020 is quoted at $28.27 and the Wit at $18.20, making unprofitable the marginal deposits which are the most numerous of American shale oil and prefiguring, according to some experts, a new global energy transformation based on renewable energies to avoid a planetary catastrophe due to global warming. Regarding the OPEC/no OPEC meeting, after the decision to cut 10 million barrels/day, the market has not reacted favorably so far, with pre-crisis production approaching 100 million barrels/day. The reduction approved will take place from 1 May to 30 June for 9.7 million barrels per day (the second tranche of 8 million barrels per day from July to the end of December, and a third tranche of 6 million barrels per day from 1 January 2021 to 1 April 2022) where Algeria will see a reduction of 240,000 barrels per day for the first tranche, 193,000 barrels per day for the second tranche and a reduction of 145,000 barrels per day for the last tranche, is based on the assumption that world demand has fallen by only 10-11%, while the coronavirus epidemic has caused a drastic drop in world demand of 33%, about 30 million barrels per day (bpd), with some experts estimating it at more than 40 million barrels/d, as transport for large oil consumers being in hibernation. The evolution of oil prices will depend on the duration of the epidemic and the return to growth of the world economy, bearing in mind that before the crisis and for China alone, its imports were 11 million barrels per day.
What is the impact of Covid-19 on global employment?
In its April 2020 report on the health and social ravages of Covid-19, the International Labor Organization (ILO) notes that out of a working population of 3.3 billion people, more than four out of five are affected by the total or partial closure of workplaces. The pandemic causes a double economic shock of supply and demand, due to the containment and stoppage of production lines. Underemployment is expected to increase significantly as the economic consequences of the epidemic translate into reductions in working hours and wages. According to different scenarios, the economic crisis caused by the coronavirus epidemic could destroy millions of jobs worldwide, adding to the global ranks with an estimated 190 million unemployed. We have the optimistic scenario of 5.3 million unemployed, the middle scenario of 13.0 and the pessimistic scenario of 24.7 million with reference to the base figure of 188 million in 2019. The ILO focuses on the sectors most at risk: transport, hotel and restaurant services, manufacturing and retail trade, which affect 1.25 billion workers exposed to layoffs, loss of activity and income. The decline in the number of jobs will result in massive income losses for workers. The organization therefore calls for urgent measures to protect workers in the workplace, boost the economy and employment and support jobs and incomes. These measures require the extension of social protection, support for job maintenance (e.g. part-time work, paid holidays or other assistance) and tax and financial relief, including for micro, small and medium-sized enterprises. Asia, Latin America and Africa with a high number of jobs in the informal sphere will be the most affected areas. ILO Director-General Guy Ryder estimates that 6.7 % of the world's working hours could disappear in the second quarter, or 195 million full-time equivalents for a 48-hour week, of which 125 million are in Asia, 24 million in the Americas and 20 million in Europe. It is the consequence of the disruption of regional and global supply chains with declining economic activity and constraints on the movement of people that is affecting the particularly fragile service, tourism, travel and retail sectors. An initial assessment by the World Travel and Tourism Council (WTTC) predicts a decline in international arrivals of up to 25% in 2020, which would endanger millions of jobs. Overall losses in labor income are expected to be between $860 billion and $3,440 billion. But it is above all the most fragile strata that will be the most affected, as some international institutions estimate that there will be 8.8 million more working poor in the world, contrary to what was originally planned (i.e. an overall decline of 5.2 million working poor in 2020 compared to an estimated decline of 14 million before VIDOC-19). Under the medium and pessimistic scenarios, there would be between 20.1 and 35.0 million more working poor than in the estimate made for 2020 before Covid-19. These studies identify several groups: frail and elderly people have the highest risk of developing serious problems related to the disease, young people, who are already experiencing high rates of unemployment and underemployment, women are over-represented in the most affected sectors (such as services). The ILO estimates that worldwide, 58.6% of women work in the service sector compared to 45.4% of men, where women have less access to social protection, unprotected workers, including the self-employed, precarious workers and those in the odd job economy, who do not have access to sick leave and paid holiday schemes, and finally migrant workers. All are less protected by conventional social protection mechanisms and other forms of income stabilization.
What about the structure of the population and employment in Algeria?
Algeria's population increased from 11.9 million in 1965 to 34,591,000 on 1 July 2008, to 37.5 million in 2010, 39.5 million on 1 January 2015, 40.4 million on 1 January 2016 and 43.9 on 1 January 2019. The increase in the volume of the total resident population is explained by a relatively large increase in the volume of live births, rising from 500,000 in the 2000s to more than one million between 2017/2019. In May 2019, according to an ONS survey, the current labor force, as defined by the International Labor Office (ILO), is estimated at 12,730,000 people at the national level, with an increase to 267,000 compared to September 2018 and 304,000 compared to April 2018. The female labor force reached 2,591,000, i.e. 20.4% of the total labor force. The labor force participation rate of the population aged 15 and over (or economic activity rate) reached 42.2%, registering a gain of half a point (0.5) compared to September 2018. Declined by sex, it is estimated at 66.8% for men and 17.3% for women. This increase in the active population recorded between September 2018 and May 2019 is the result of a significant increase in the volume of the current employed population (+280,000), combined with a slight decline in the population looking for work during this period (-13,000). The current employed population is estimated at 11,281,000, of which 2,062,000 are women. The employed female population represents 18.3% of the total labor force. The employment rate (or employment-to-population ratio), defined as the ratio of the employed population to the population aged 15 years and over, is 37.4% at the national level. Nearly seven out of ten employees are salaried (67.6%). This share is higher among women, reaching 78.6%. The results of the survey show in particular that 16.8% of the total workforce is employed in the construction sector, 16.1% in public administration excluding the health sector, 15.7% in trade, 14.9% in health and social work and 11.5% in manufacturing. Significant disparities are observed according to gender, since 77.9% of female employment is concentrated in the public administration, health and social work sectors and in manufacturing industries. The breakdown by legal sector shows that the private sector absorbs 62.2% of total employment, with a volume of 7,014,000. Female employment is characterized by a greater concentration in the public sector, which absorbs 61.1% of the total female labor force. The unemployed population, as defined by the ILO, is estimated at 1,449,000 persons, the unemployment rate having reached 11.4% at national level. The unemployment rate fell substantially among men, from 9.9% to 9.1% between September 2018 and May 2019. On the other hand, the female unemployment rate increased over this period from 19.4% to 20.4%. The youth unemployment rate (16-24-year-old) fell from 29.1% to 26.9%, which represents a decline of 2.2 points over this period. On the other hand, the distribution of the unemployed according to the degree obtained shows that 663,000 unemployed people have no degree at all, i.e. 45.8% of the total unemployed population. Higher education graduates constitute 27.8%, while vocational training graduates constitute 26.5%. On average, more than six in ten (62.9%) of the unemployed are long-term unemployed who have been looking for work for a year or more. Unemployed persons who have worked in the past are estimated at 683,000, making up 47.1% of the unemployed population, the majority of whom are men (72.6%). Almost three-quarters of this population worked as non-permanent employees and 72.5% were in the private sector, 41.8% were employed in the market services sector, 23.2% in administration and 22.4% in construction. 67% left their last job for reasons of termination of contract, cessation of the company's activities or redundancy. These are the results of the May 2019 study, as the structure did not change fundamentally in April 2020, since we saw a constant structure between the May 2018 and May 2019 studies, i.e. before the 2020 crisis. According to the 2020 report of the International Monetary Fund (IMF) on the economic outlook for Algeria in 2020, the situation is expected to deteriorate sharply in 2020, with an inflationary trend that is being supplemented by the creation of very low value-added jobs. National Statistics Office (NSO) studies confirm the tertiarization of the economy and its correlation with employment. But this concerns small businesses and services representing 83% of the economic area with very low productivity not comparable to that of developed countries where the tertiarization of the economy through information and communication technology services creates opportunities for economic growth and generates productive jobs and the correlation with employment. In this context, let us not forget the number of public servants who number more than two million and for whom public service reform, a very sensitive subject, is a challenge for any government. A 2016 study provided the following structure: central State administrations 15.50%, decentralized State services 41.57%, territorial administration 15.4%, public administrative establishments 22.24%, and public scientific and technological establishments 5.25%. It should be mentioned that the under -30s represent 274,074 agents, the 30-40s 735,756 agents, the 41-50s 668,725 agents, the 50-59s 92,580 and the over -60s only 20,944 agents. By major sectors, the Interior and local authorities account for 29.22% and National Education for 29.34%, with a female workforce of 297,394 out of a total of 592,831, Public Health 13.19% with a female workforce of 138,581 out of a total of 266,525, Higher Education 8.50% with a female workforce of 95,118 out of a total of 171,761, Finance 4.15%, Professional Training 2.80%, Justice 2.16% and other sectors 10.64%. In short, it should be asked whether the young promoters approved by ANDI, ANSEJ and other bodies responsible for promoting employment have the qualifications and, above all, the experience needed to manage the projects, as is the case around the world, if they can run a business in a competitive environment in order to have competitive cost/prices, because, generally speaking, the results of the bodies responsible for employment (ANDI, ANSEJ, CNAC), with reference to the projects carried out and not in intention, are limited despite the many advantages granted. According to some sources, more than 50% of the projects carried out are abandoned after having benefited from the advantages granted, which leads to numerous disputes with the banks for non-reimbursement. Before embarking on a costly operation for the country in the long run, it is necessary to make a calm assessment which implies answering certain questions in a precise and quantified manner: what is the record of the ANDI-CNAC, ANSEJ since their existence in the effective implementation of these projects? how much time is allowed for projects to be completed between the time of filing and actual completion, bearing in mind that the main challenge of the 21st century is time management? for completed projects, how many went bankrupt according to the rules of the commercial code? what is the share in foreign currency and dinars of the projects carried out by drawing up the currency balance? what is the level of bank indebtedness of the projects carried out with the amount of doubtful receivables? what is the breakdown of bank loans by project? what is the exact amount of tax benefits granted for both projects and completed projects? Depending on the quantified and dated results, adaptation strategies will have to be put in place at both the economic and social levels and in terms of solidarity policy.
What are the prospects for the Algerian economy with this crisis?
According to the IMF report of 14 April 2020, Algeria's real gross domestic product (GDP) should contract by 5.2% during the year 2020 and should recover in 2021 by 6.2%, a rate calculated with reference to the year 2020 (negative growth rate) and giving an overall growth rate of between 1 and 2% at a constant rate, the IMF estimating economic growth at 0.7% in 2019, this rate being lower than the rate of demographic pressure. This still refers to the hydrocarbon income which determines both the employment rate and the foreign exchange reserves estimated at the end of March 2020 at around 58/60 billion dollars, giving a respite of 18 months. In addition to the decrease of its quota between 145,000/240,000 barrels per day with an annual average shortfall of between 3/4 billion dollars for 2020, in this case of economic recession, Sonatrach's revenue forecast of 35 billion dollars for 2020 as well as the forecast amount of foreign exchange reserves of 51.6 billion dollars at the end of 2020 will not be reached, as the price of oil and gas has collapsed by more than 50%. Revenues must be at least halved compared to 2019, when revenues were $34 billion, less operating costs and the reduction in quota, which was initially about 1 million barrels/day. This raises the question of whether or not it would be useful for Algeria to remain within OPEC. This has a negative impact on the unemployment rate due to the slowdown in the growth rate dominated by the impact of public expenditure via the Sonatrach annuity. Before the crisis, the unemployment rate was forecast at 12% for 2020, and still according to the IMF, it will reach 15.5%, the forecast for 2021 being unchanged at 13.5%, and this, with the proviso that this rate does not take into account the use of rents, making and remaking pavements and overstaffing in the administration. The informal sphere controls, according to the Bank of Algeria, more than 33% of the money supply in circulation, more than 40/45% of the employment concentrated in trade, services, seasonal workers in agriculture, and more than 50% of the value added of the hydrocarbon assets. In addition, according to some employers' organizations, there will be more than two million job losses in the real sphere out of approximately 12.5 million of the working population of nearly 44 million in March 2020. Out of some 40/45% of the working population, about 5/6 million people are without social protection, which makes it urgent to provide them with care. Many who have ceased their activities are without income. According to the spokesperson of the Algerian Confederation of Employers (CAP), the construction sector is going through a period of unprecedented crisis. Indeed, after the bankruptcy of 50,000 companies in the sector, a further 350,000 are in danger of going bankrupt, a situation with serious repercussions on employment, with 1,700,000 jobs threatened. In 2019, according to CARE and the CJD, an unprecedented deterioration in the economic situation has already led to a 30 to 50% drop in activity in some sectors. The resulting low level of recoveries has put corporate cash flow in a catastrophic state. Potential job losses are estimated at between 714,000 and 1,490,000, mainly in the private sector. The lack of recent official economic statistics increases operators' sense of insecurity and maintains uncertainty, making it difficult to assess the effects of containment on employment and value added by sector. The Forum, ex-FCE, the main employers' union, also listed a series of proposals to help the private sector: "There are measures that need to be put in place urgently, such as the postponement of tax deadlines or the revision of bank credit deadlines". But there are also measures to be taken for the long term, for example, to create a more digitalized economy, because this crisis must be an opportunity to make a very bureaucratic system more fluid. With reference, for example, to France, which has more reliable statistics, the administrative closures decided on 14 March resulted in 10.9% of the working population (trade, accommodation and catering, transport, culture and leisure) ceasing work. The transport sector is the first to be affected by the coronavirus crisis. So, the most sensitive sectors are, in particular, firstly electronics and IT (both highly technical and where China's market share is very high), but also textiles and clothing, automobile (where the supply chains are very complex). According to the French Observatory of Economic Conditions (OFCE), the sectors most affected by the pandemic and containment measures in France are accommodation and catering (by far the most affected activity), transport equipment, transport, business services, coking and refining, as well as household services, trade and construction. “7 branches, out of the 17 retained, represent 20% of actual household consumption but concentrate around 80% of the shock (-14 percentage points of contribution out of -18% in total). The drop in demand and the fall in household consumption (-90% if confined to one month) in this sector explains the impact for accommodation - catering in particular. Agri-food industries, real estate services and household services are the sectors most affected by school closures. The manufacture of other industrial products and the manufacture of electrical, electronic and computer equipment - manufacture of machinery, are among the sectors moderately impacted (between 25 and 49%). At the other end of the scale, agriculture and agri-food, the energy/water/waste sector, information and communication, and financial, real estate and non-market services are expected to suffer much less.”
The Algerian people, the government and national solidarity
First of all, I should like to pay tribute to the immense spirit of national solidarity in these difficult times on the part of the vast majority of the Algerian population and to pay great tribute to the medical profession of all categories for its self-sacrifice. Despite the difficult situation, the Algerian state still guarantees, during and after confinement, the subsidies and social transfers contained in the 2020 finance law but which will have to be targeted in the future to benefit only the most deprived strata. Without being exhaustive, I shall list the various forms of subsidies: subsidies on the price of bread, semolina and milk, fuel and electricity subsidies, Algeria being ranked among the countries with the cheapest fuel prices in the world. But maintaining this policy is becoming more and more expensive, as subsidies for water, health and transport, subsidies to support social housing and employment, and other subsidies such as scholarships and the financial burden of student transport, food and lodging for boarding students indiscriminately affect the management of university works. Article 95 of the finance bill (PLF) 2020 proposes to amend Article 109 of the Finance Act 2018 on the solidarity contribution. Thus, in addition to a wealth tax and a customs tax which will increase from 1 to 2%, a tax applicable to the import operations of goods released for consumption which is intended to supply the National Pensions Fund (CNR) in difficulty, the 2020 Finance Act has kept the budgeted social transfers almost unchanged compared to 2019 as an act of national sociatry. They amount to DA 1,798.4 billion, i.e. 8.4% of GDP, and more than 21% of the total state budget, more than DA 445 billion of which is allocated to family support, while nearly DA 290 billion will be allocated to pensions, to which will be added a support endowment of DA 500 billion to the National Pension Fund (CNR) which, since 2014, has experienced a deficit that continues to grow from DA 155 billion in 2014 to DA 664 billion in 2019, an amount that would reach DA 680 billion in 2020, the number of pensioners at the end of 2019 being 3.2 million with an annual cost of nearly DA 1,282 billion. These social transfers also include nearly DA 336 billion for public health policy and more than DA 350 billion for public housing policy, in addition to nearly DA 300 billion mobilized for this sector by the National Investment Fund.
What are the lessons of this epidemic for the future?
We must learn from the past so that we do not make the same mistakes in the future. We have witnessed a veritable planetary hecatomb and the world will never be the same again. It is in perpetual movement and a relative order, positive or negative depending on governance, replaces disorder after a certain time. The health lesson is the urgency of reviewing the health system at the global level and especially in the poorest regions that have seen their brains drain away, with individual skills having limited impact without a global vision. Investment in the health system linked to that of education, as recommended by the United Nations Development Programme (UNDP) for the human development index, is not antinomic with the economic one. For the politician, it will be a question of avoiding a return to a second or even third wave, which would be catastrophic with unbearable pressure on the health institutions, the broken-down economy and the social with the psychological effects on the confined people, especially the most vulnerable. The greatest concern in Africa is that WHO and scientists are predicting an explosion of cases of coronavirus contamination with dramatic impacts, with a deficient health system despite the many individual skills, but with a massive brain drain and no social protection. In some countries, the informal sphere represents more than 70/80% of the employed population. The impact will therefore be health, social and economic. As for the impact on the social and political environment in the face of this epidemic on a planetary scale, we are witnessing anxiety, fears, uncertainty and sometimes mass narcissism, both for ordinary citizens and at the level of corporate behavior, as evidenced by the panic on the world's stock exchanges. Unlike in the past, in the 21st century, new technologies through social networks such as Facebook are helping to reshape social relationships. The relationship between citizens and the State, through the manipulation of crowds, can be positive or negative when it tends to want to make societies a homogenous whole when there are social specificities of Nations throughout their history. This can lead to the obliteration of any spirit of citizenship through the virtual, the imaginary, the dictatorship of words and the dissemination of images, with the consequence of an increased mistrust of official information, when politicians formatted in the old culture do not know how to communicate. However, in geostrategic terms, the 2020 crisis does not prefigure the end of globalization, but rather a new architecture of relations between the regulatory State and the regulated market for certain public services (health, education), with major impacts on international political and economic relations. The current crisis implies rethinking the functioning of society, and more generally the world economy, where the confinement has shown the maladjustment of institutions and the economy to crises and the mysteries of new technologies, despite the praiseworthy efforts of its actors. During this exceptional crisis, it is necessary to reconsider society and to adopt new behaviors towards more decentralization (not to be confused with deconcentrating) involving all local actors with the primacy of civil society, and to focus the exit from the crisis on a large Ministry of National Economy. Post-confinement will have to be done in a progressive manner, and take into account the psycho-sociological effects, especially from those who have been confined to two to three rooms with many children. In this period of crisis, national solidarity is essential, as well as competence and experience in the new management of political and economic affairs. And given the complexity of understanding our societies, this poses the limits of a strictly economic analysis. This refers to the urgent need to integrate behaviors by means of complex multidisciplinary teams in order to understand the evolution of our societies and act on them. The world will never be the same again. This is a crisis unlike any since the crisis of 1928-29, when the interdependence of economies was low, and it is not comparable to the crisis of 2008. No expert, who can only develop scenarios, can predict whether consumption and investment activities will be able to rebound once the quarantines are lifted, as the global economy experiences a demand shock due to household psychosis, a supply shock and a liquidity shock. In the future, this crisis will have an impact on the entire architecture of international relations, which must be prepared to face other more serious crises, water warfare linked to food warfare, biological warfare, digital warfare and ecological warfare, with significant migratory flows due to global warming (drought, floods, strong winds, cyclones) and territorial recompositing, these types of warfare having health, economic and security implications. Thus, if the impacts of the coronavirus epidemic are a danger for the present, they are also a source of hope for the future of humanity, an opportunity through our ability to innovate. The various components of global society through decentralized civil society networks will constitute the third force in the 21st century, alongside States and international institutions, and have to transcend their differences in order to find the reasons to build together a more just and united world based on the two fundamentals of the 21st century: good governance based on morality and the valorization of knowledge.
Interview realized by Mohsen Abdelmoumen
Who is Professor Abderrahmane Mebtoul?
Professor Abderrahmane Mebtoul is a State Doctor in Economics and a member of several international organizations. He's a Professor at the Universities. He is the author of 20 books on international relations and the Algerian economy and more than 700 national and international contributions. He was Director of Studies at the Ministry of Energy – Sonatrach (from 1974 to 1979 – from 1990 to 1995 – from 2000 to 2007) and led the first audit on Sonatrach. He was Director General and High Magistrate at the Court of Auditors (first Counselor) from 1980 to 1983, independent Expert in the Economic and Social Council from 1997 to 2008, president of the National Privatization Council from 1996 to 1999 at the rank of delegate Minister, independent expert to the Presidency of the Republic from 2007 to 2008, and independent expert not paid to the Prime Minister from 2013 to 2016. Professor Mebtoul has been in charge of several important files on behalf of successive Algerian governments from 1974 to 2019 and State institutions and was recently the leader of the Algerian delegation for the 5+5 civil society forum in 2019.
Prof. Mebtoul led the first audit on Sonatrach between 1974 and 1976, the balance of industrialization from 1977 to 1978, the first audit for the central committee of the FLN on the private sector between 1979 and 1980. He led the demurrage and surcharge audits at the building and public works industry level in conjunction with the Ministry of the Interior, the 31 Walis and the Ministry of Housing in 1982, carried out in the Court of Auditors, the audit on employment and salaries on behalf of the Presidency of the Republic in 2008, the audit of the global changes and the axes of the socio-economic revival of Algeria by 2020/2030 for the Prime Ministry in February 2014, assisted audit of Sonatrach Executives, Independent Experts and Ernest Young Consulting “The price of fuels in a competitive environment” for the Ministry of Energy in Algiers in 2008, and the “shale oil and gas, opportunities and risks” audit for the Prime Ministry in Algiers in January 2015.
Published in American Herald Tribune April 23, 2020: https://ahtribune.com/interview/4103-abderrahmane-mebtoul-planetary-hecatomb.html