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UPDATE 2-Algeria plans to raise government spending 16 pct in 2015 -draft budget
August 26, 2014 / 12:50 PM / 3 years ago

UPDATE 2-Algeria plans to raise government spending 16 pct in 2015 -draft budget

(Adds more details, background, cabinet meeting for draft approval)

By Hamid Ould Ahmed

ALGIERS, Aug 26 (Reuters) - Algeria plans to increase state spending by 16 percent in 2015, pushing up its deficit to 22 percent of gross domestic product, despite declining energy earnings, according to a draft budget obtained by Reuters.

Algeria, a member of OPEC, relies on oil and gas exports to finance government development and social programmes. But that revenue has been declining in recent years.

The draft forecasts 2015 economic growth at 3.42 percent, down from the 4.5 percent projected for this year. Inflation is expected to reach 3 percent, slightly lower than the 3.5 percent forecast for 2014.

Algeria has financed its deficit with cash from oil and gas sales, which account for about 97 percent of total exports.

The draft, based on a world oil price of $100 per barrel, expects the volume of energy exports to increase by 3.86 percent next year. It did not provide figures.

The north African country had projected a 3.5 percent increase in oil and gas exports for this year. However, official figures showed overall energy sales declined by 9 percent in the first quarter.

The draft budget sets 2015 spending at 8,858 billion dinars ($112 billion) Part of that will go to boost growth in sectors including industry, agriculture and energy. Part will be spent on subsidies for cereals, fuel, electricity, gas and housing.

Algeria has accumulated foreign-currency reserves of about $200 billion, and it has been spending heavily on social programmes to avert the kind of uprisings that have hit its neighbours.

The draft is due to be discussed and approved later on Tuesday at a cabinet meeting chaired by President Abdelaziz Bouteflika. It will be submitted next month for final approval by parliament, where parties allied to Bouteflika have an overwhelming majority. ($1= 79 dinars) (Reporting by Hamid Ould Ahmed; Editing by Larry King)

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