In this situation characterized by the global crisis and a fundamentally rentier economy with, moreover, the lack of visibility, economic instability, the tendency, and this is a universal law, is not towards productive investment but towards actions speculative to protect both the money capital value and purchasing power for households. How do you expect an operator, whatever his ideological tendency with this monetary instability, to invest in the long term knowing that the value of the dinar will fall by at least 50% in two to three years.

Indeed, the devaluation of the dinar on the official market where the purchase price went from 5 dinars to one dollar in 1974 and on December 2, 2020, one euro was exchanged for 154.5528 dinars and the dollar for 129.4737 dinars, the PFL 2021 projecting for 2023 about 185 dinars per euro and 156 dinars per dollar. In the event of non-dynamization of the productive apparatus, taking a difference of 50% of the official rate compared to the parallel market, we will have approximately 300 dinars one euro against 200 dinars at the end of November 2020, and in the event of non-control of inflation with a rate of only 10/15%, the difference would be greater by at least 100%, ie 350/400 dinars per euro. These monetary measures, for Algeria, contradict the elementary laws of the economy where any devaluation in principle should boost exports. However, between 1970/2020, 98% of exports still come from hydrocarbons, including derivatives. In Algeria, the slippage of the dinar has produced the opposite effect, showing that the blockage is systemic and that monetary measures without synchronizing them with the real sphere will have no effect. However, the bitter observation is the inconsistency by various contradictory decisions of the Ministry of Finance to integrate the informal sphere, being an illusion of encouraging Islamic finance without the stability of the dinar. 1.- For the period 1970 to the government forecasts at the end of 2023, we have the following quotation with an administrative quotation until the end of 1992: -1970, 4.94 dinars one dollar, -1980: 5.03 dinars one dollar, - 1985: 5.03 dinars one dollar, -1990: 12.02 dinars one dollar, -1991:
18.05 dinars one dollar, -1994: 36.32 dinars one dollar, -1995: 47.68 dinars one dollar, -1999: 66.64 dinars one dollar. For the period from 2001 to the end of November 2020, we have the following quotation: -2001: 77.26 dinars one dollar 69.20 dinars one euro: -2005, 73.36 dinars one dollar, 91.32 dinars one euro: – 2010, 74.31 dinars one dollar and 103.49 dinars one euro: -2015, 100.46 dinars one dollar and 111.44 dinars one euro: -2016: 100.46 dinars one dollar and 111.44 dinars one euro: -2017: 110.96 dinars one dollar and 125.31 dinars one euro: – 2018: 116.62 dinars one dollar and 137.69 dinars one euro: -2019: 119.36 dinars one dollar and 133.71 dinars one euro :-December 2, 2020, one euro was trading at 154.41/5528 dinars and the dollar at 129.4737 dinars. For the PLF2021: the rate would be 142 dinars for one dollar in 2021, 149.71 dinars in 2022 and 156 dinars in 2023, subject to the control of inflation and the revitalization of the productive apparatus within the framework of the international values. The PLF 2021 forecasts budgetary expenditure (operating and equipment expenditure) at approximately 8,113 billion dinars, while overall tax revenue (ordinary and oil) is estimated at 5,328 billion dinars, i.e. a budget deficit record of 2,784.8 billion dinars, i.e. at 128 dinars a dollar more than 21.75 billion dollars against 18.60 billion dollars at the end of 2020.

The expected overall treasury deficit is 3614.4 billion dinars or 28.26 billion dollars, or 17.6% of GDP. We are also witnessing an increase in the operating budget and an increase in social transfers estimated by the PLF 2021 at 1,927.5 billion dinars, i.e. 15.06 billion dollars, an increase of 79.98 billion dinars compared to the Law. 2020 Finance Law. In this context, the 2021 Finance Law projects a rate of 142 dinars for one US dollar in 2021, 149.71 dinars in 2022 and 156 dinars in 2023. This is in fact an accounting trick for fill the budget gap. The Bank of Algeria proceeds with the slippage of the dinar against the dollar and the euro, which makes it possible to artificially increase hydrocarbon taxation (reconversion of hydrocarbon exports into dinars) and ordinary taxation (via imports both in dollars and 'in euros converted into devalued dinar), the latter accentuating the inflation of imported products (equipment, raw materials, final goods), amount accentuated by the customs tax applying to the dinar value, being borne at the end of the course , by the consumer as an indirect tax, the company can only support these measures if it improves its productivity.
2.- It is necessary to identify the essential causes of the distortion between the official value of the dinar and that of the market, to attack the essence of the evil and not the appearances presenting seven reasons which led to this situation by specifying that the price on the parallel market would be much higher than currently with a spread of 50/60% in the event of control of the coronavirus epidemic and control of the internal inflationary process. First, the gap which is explained by the weakness of production and productivity, the injection of money without productive counterparts generating the level of inflation. Added to this is the non-proportionality between public expenditure and the low impact, the average growth rate despite an importation of goods and services in foreign currencies having exceeded 1,000 billion dollars, not counting internal expenditure in dinars between 2000/ 2019 on average 3% when it should have exceeded 8/10%: poor management and corruption. For 2020, growth will be negative minus -5% according to the IMF. Secondly, the gap is also explained by the reduction in supply due to the fact that the world crisis, combined with the death of many Algerian retirees, has largely wiped out emigration savings. This decrease in the supply of currencies has been offset by the fortunes acquired regularly or irregularly by the Algerian community locally and abroad who irregularly or regularly transit currencies in Algeria, clearly showing that the parallel currency market is much more important than savings from emigration. These amounts functioning as communicating vessels between foreign countries and Algeria, reinforce the offer. Third, the demand comes from ordinary citizens who travel:

Tourists, (those who seek treatment abroad and the hadjis) because of the derisory weakness of the foreign exchange allowance. But before the coronavirus epidemic, travel agencies which, failing to benefit from the right to exchange, also resorted to black market currencies as they were importers of services. For the most part, they export currencies instead of importing them, as tourist logic would have it, as in Turkey, Morocco or Tunisia. Fourthly, the strong demand comes from the informal sphere which controls 40/50% of the monetary mass in circulation (with a concentration for the benefit of a rentier minority) and 65% of the segments of the different markets, fruits/vegetables, meat red/white, fish market, and through imports using small retailers the textile/leather market. Fifthly, the difference is explained by the transition from remdoc to credoc, introduced in 2009, penalized small and medium-sized enterprises and did not make it possible to stem the increase in imports, which have doubled since 2009, as planned, while reinforcing import monopolist tendencies. Sixthly, many Algerians and foreigners use the parallel market, for the transfer of currencies, using their Algerian employees to increase the amount, certainly witnessing, due to mistrust, a significant flight of capital from those who have big fortunes. Seventhly, to protect itself against inflation, and therefore the deterioration of the Algerian dinar, Algeria does not only place its assets in land, real estate or gold, but part of the savings is placed in currencies. Indeed, many households put themselves in the perspective of a drop in oil revenues, and given the erratic fluctuations in gold prices, buy currencies on the informal market. 3.- Three strategic parameters determine the future of the Algerian economy:
The price of oil, the evolution of foreign exchange reserves and demographic pressure (more than 50 million inhabitants in 2030. We will have to create at least 300,000/400,000 new jobs per year requiring an annual growth rate over several years of 8/9% in real terms and to be realistic where in July 2020, it is Sonatrach obtaining directly and indirectly with derivatives 98% of foreign exchange earnings. This situation influences the level of foreign exchange reserves 2020/2021 According to the IMF, Algeria needs a barrel of more than 135 dollars in 2021 and according to the specialized site, Oil Price, 157.2 dollars to balance its budget. of 30 dollars, tax price and 35 dollars market price, the PLF 2021 40 dollars, is only an accounting artifice According to IMF forecasts for previous years, the equilibrium price of a barrel for Algeria was estimated from 104.6 dollars in 2019, to 101.4 dollars in 2018 and to 91.4 in 2017. This resulted in a drastic drop in foreign exchange reserves, which evolved as follows: 2013: 194.0 billion dollars, – 2018: 79.88 billion dollars – end of 2019: 62 billion dollars, – end of 2020, forecasts of the Supplementary Finance Act being 44.2 billion dollars against 51.6 billion provided for in the initial law. The IMF forecasts 33.8 billion dollars at the end of 2020, the French Treasury 36 billion and at the end of 2021, beginning of 2022, between 12/15 billion dollars. In the event of a drastic drop in foreign exchange reserves to 12/15 billion dollars, which hold the quotation of the Algerian dinar at more than 70%, the Bank of Algeria will be forced to devalue the official dinar to around 200/220 dinars one euro with a surge in the price on the parallel market which fluctuates according to the rate of inflation.

Bureaucratic authoritarian measures produce the opposite effect and when a government acts administratively and far from transparent mechanisms and social consultation, society gives birth to its own rules to operate, which have legal value since they are based on a contract between citizens, thus moving away from the rules that the power wants to impose. The use of money printing after the depletion of the Petroleum Stabilization Fund (FRR) to finance the budget deficit, the Central Bank having resorted to this mechanism from mid-November 2017 to April 2019, having mobilized 55 billion dollars, equivalent to 32% of 2018 GDP, will eventually have a negative impact. This financing, in addition to the inflationary effect, as in Venezuela, favors, contrary to certain speeches, the fall in foreign exchange reserves since by making dinars available to certain companies (70% of the raw materials and equipment of public companies and private being imported, the rate of integration not exceeding 15/20%) the latter will import foreign currencies in goods and services. Algeria cannot continue to operate between the equipment and operating budget, according to the IMF, at a price above 100 dollars a barrel. In summary, the Alrean economy in this month of December 2020 is still based on the income from hydrocarbons where, according to international reports, the price of oil if there is a timid recovery in growth in 2021, (a real recovery not before 2022 according to the Secretary General of the OECD and the IMF) will fluctuate between 45/50 dollars per barrel but never forgetting that for Algeria that 33% of Sonatrach's revenue comes from gas, providing 33% of revenue, the price of which has fallen by more than 70% between 2008/2019. Also, beware of the monetary illusion, the currency being only the effect of social relations, the slippage of the dinar without deep structural reforms to energize the productive apparatus which can lead to an inflationary spiral having repercussions on the deterioration of the purchasing power in particular of fixed and political incomes with strong social tensions. The Algerian economy has potential but needs consistency in its socio-economic policy.

Algeria being faced with significant challenges, posed by the fall in oil prices, future challenges, to project itself into the future, far from any devastating populism, imposes a new governance, a language of truth and the morality of rulers. Algeria will have to adapt to the new world, restore confidence to secure its future, move away from the vagaries of the rentier mentality, rehabilitate work and intelligence, bring together all its children and all the political, economic and social forces , avoiding division on secondary subjects. It is national security.