Algeria is finally adopting a realistic oil price of $50/B in its 2017 draft budget, instead of the $37/B “reference fiscal price” which was assumed in all previous budgets since 2009. This bore no resemblance to actual market prices, especially at times when the price of Algeria’s Saharan Blend crude was well over $100/B.
Not only has Algeria shifted to a market-related oil price, but it is also abandoning its awkward practice of understating oil revenue and exaggerating the deficit. This was done by accumulating any surplus oil revenue derived from the difference between realized market prices and the lower reference price of $37/B into a reserve fund, the Fond de Regulation des Recettes (FRR), from which off-budget allocations were made at the end of each year to finance the deficit. As of 2017 this accounting practice will be discontinued and all hydrocarbons revenue will accrue to the budget. (CONTINUED - 808 WORDS)
