Reforms encourage recovery of Algeria's economy

Under its constitution, which was last amended in 2016, Algeria is a semi-presidential republic, with a president acting as head of state and a prime minister acting as head of government. Elected for a five-year term, the president is empowered to appoint the prime minister and a council of ministers, following consultation with the parliamentary majority. While within this structure executive power lies formally with the government, in practice the most significant power is centred around the head of state, who also sits as commander-in-chief of the armed forces. The current president, Abdelaziz Bouteflika, has served four terms since coming to office in April 1999. The two-term limit was abolished via constitutional amendment in 2008, but reinstituted in 2016 in such a manner as to allow the incumbent to run for a fifth term in the next election, which is scheduled for April 2019.

By late 2018 a consensus was beginning to emerge that President Bouteflika would run for, and likely win, his fifth consecutive term.


Legislative power is shared between the executive and the two chambers of Parliament, namely the National People’s Assembly (Assemblée Populaire Nationale, APN), or lower house, and the national council, or upper house. The 462 members of the APN are directly elected to serve five-year terms under a proportional representation system of multi-seat constituencies, with eight seats reserved for Algerians living abroad. The last assembly election took place in May 2017. The president appoints a third of the members of the national council, with the other two-thirds elected for six-year terms, and half of that number elected for three-year intervals.

At a local level, the country is divided into 48 administrative divisions, known as wilayas, each of which are governed by a regional governor, or wali, appointed by the president. The legal system is a mixture of French civil law and Islamic law, with an Constitutional Council consisting of public officials and Supreme Court judges charged with the judicial review of legislative measures.

The 150-member Supreme Court is the highest judicial body in the country, structured around eight functional chambers. Supreme Court judges are appointed for lifelong terms by the High Council of Magistracy, which is presided over by the president.

Despite the influence of Islamic law on the Algerian legal system, there are no sharia courts currently operating in the country.


Algeria was under Ottoman rule for over three centuries until being colonised by the French in 1830, and did not achieve independence until 1962. This was after a long and bloody war of liberation in which more than 1m Algerians were estimated to have been killed.

Unlike neighbouring Tunisia and Morocco, which were governed as protectorates, the north of Algeria was incorporated into metropolitan France, with representatives in its national assembly. French citizenship, however, was not automatic, and remained difficult to obtain. The country’s interior was completely under French control, although it was not incorporated into the French state itself.

The key player in the independence movement was the National Liberation Front (Front Libération Nationale, FLN), which would go on to constitute the dominant political party in the post-colonial period, first as ruler of a one-party state, and later as the largest in a multi-party democracy. In practice, however, since achieving independence, political power in the country has remained concentrated in the hands of a small community of politicians, military figures and, more recently, businessmen.

Ahmed Ben Bella, one of the FLN leaders during the struggle for liberation, became the first president of newly independent Algeria. He pursued socialist economic policies and an independent foreign policy as part of the Non-Aligned Movement until being deposed in 1965 by Houari Boumediene, chief of staff of the armed forces then-chief of staff of the armed forces who became president in a bloodless coup. In his role as president, Boumediene continued on a socialist economic trajectory, while increasing the role of the state in economic activity and centralising political power for himself, after a series of failed attempted coups that occurred in the early years of his rule.

A new constitution was introduced in 1976, which allowed for a degree of political liberalisation, and Boumediene was subsequently elected with 95% of the vote. The president’s death in 1978 gave rise to political instability amid a power struggle within the FLN, before the moderate former military figure Chadli Bendjedid emerged as a consensus candidate for the presidency. Bendjedid was re-elected in 1984 and 1988, and pursued modest economic liberalisation during the latter part of his tenure.

Social unrest in October 1988 gave rise to a new constitution in the following year. This new framework relaxed restrictions on the media and media coverage, and allowed for the establishment of political parties other than the FLN.


The first multi-party legislative elections under the modern constitution took place in 1991, and led to a resounding and unexpected first-round win for the Islamic Salvation Front (Front Islamique du Salut, FIS). However, the military launched an almost immediate coup, preventing the second round of elections from taking place. President Bendjedid was eventually forced to resign, and tens of thousands of FIS supporters and other Islamists were incarcerated, while a military junta known as the High Council of State (Haut Conseil de l’Etat) took control of the country.

This marked the beginning of a civil war that lasted until 2002 – a period known as the décennie noire, or black decade – as a succession of armed Islamist groups waged a lengthy series of wars against the secular state security apparatus.

Mohamed Boudiaf – who was another prominent FLN leader during the war of liberation – was appointed as the first president by the military junta in January 1992, but was assassinated soon thereafter and succeeded by Ali Kafi, who ruled until 1994. Kafi was then replaced by Liamine Zéroual, a fellow military figure. Zéroual was elected with a popular mandate in 1995 as the junta brought its period of rule to an end and eventually was succeeded in 1999 by the current incumbent.


Abdelaziz Bouteflika was born in 1937 and served as foreign minister from 1963 to 1979. His time included a period acting as president of the UN General Assembly, before coming to power as the country’s fifth president in 1999 after a lengthy absence from politics. His early years in office preceded the end of the civil war in 2002, and were followed by a programme of national reconciliation that included an amnesty for FIS members not guilty of war crimes.

The president has been seen in public only occasionally since suffering a stroke in 2013. Nevertheless, in 2014 President Bouteflika secured his fourth term in office, garnering some 81.5% of the vote, amid turnout of around 49.4%. Although the military retains a central role in Algeria’s power dynamics, President Bouteflika has been widely credited with curbing its overall influence and direct power, notably with the disbandment of the Department of Intelligence and Security in 2016.

Algeria was not immune from the unrest experienced across the region in 2011, during the Arab Spring. More recently, there have been protests related to the deteriorating economic situation and, in early 2018, this extended to public pay for medical professionals. However, these have largely proved to be exceptions to the relative social and political stability experienced during the two decades of President Bouteflika’s tenure.

The next presidential election is scheduled to take place in April 2019, and despite his failing health, President Bouteflika is widely anticipated to be successful in winning a fifth term.

While some opposition is expected throughout the election, it appears likely that the incumbent will secure the majority of votes. Nonetheless, the pressure for reform and desire for eventual political transition is predicted to build during his fifth term, particularly if the economy continues underperforming in the near future.

According to the constitutional reform of February 2016, the president is obliged to appoint a prime minister from the largest party in Parliament. In reality, however, this is rarely enforced. The incumbent prime minister, Ahmed Ouyahia, is the co-founder of the National Rally for Democracy (Rassemblement National pour la Démocratie, RND), which is the second-largest party in Parliament. Prime Minister Ouyahia is a career diplomat who has also served as minister of justice, and it is his fourth term acting as prime minister, having occupied the position on three previous occasions: between 1995 and 1998, 2003 and 2006, and from 2008 to 2012.

Before most recently undertaking the role of prime minister in August 2017, Ouyahia served as chief of staff to President Bouteflika from March 2014. His immediate predecessor, Ali Tebboune, served just three months in office following the May 2017 legislative elections.

Political Parties

Algeria is a multi-party democracy with more than 40 parties in operation. Although the constitution expressly forbids the establishment of political parties founded on a religious, linguistic, racial, sex, corporatist or regional basis, there is a degree of latitude in the interpretation of this clause. A number of Islamist parties are currently represented in Parliament, for example. All parties require the assent of the minister of the interior in order to register.

Considering the increasing diversity of political representation, coalition politics are becoming increasingly popular. Prime Minister Ouyahia governs a coalition headed by the FLN party, which gained 164 seats in the lower house in the May 2017 election, compared to 97 gained by the RND.

Since 2005 these two parties have governed as part of the Presidential Alliance, having previously been joined in coalition by the Social Movement for Peace. This is a moderate Islamist party which has 33 members in the APN, but which ultimately withdrew from the alliance in 2012.

An additional two Islamist movements – the Algerian Rally for Hope and the three-party Nadha-Adala-Bina coalition – currently hold 19 and 15 seats in the lower house, respectively.

Policy & Reform Agenda

The government announced in late 2017 that it was changing its economic strategy, deciding to postpone focusing on the budget deficit until at least 2019 and permitting the central bank to finance the budget deficit for a period of five years. This was expected to be accompanied by a wide range of structural reforms which were aimed at further diversifying the economy, stimulating domestic production and reducing the current account deficit.

The IMF warns that the continuation of monetary financing beyond the short term will likely have the effect of significant medium-term economic risks, and the country’s international reserves have already begun a precipitous decline.

Beginning in early January 2018 some 850 products became subject to import restrictions, with tariffs and excise duties also increasing on a range of other, mostly luxury, consumer goods.

Once the April 2019 election has concluded, it is expected that the country will return to a more orthodox macroeconomic policy stance. However, the budget deficit reduction that this will entail is expected to weigh heavily on economic growth and standard of living in the next several years.

This impeding of economic growth may make efforts to introduce the needed structural reforms more difficult than previously anticipated.

In an indication that the authorities are aware of the importance of these reforms, the president made a rare address to the nation in October 2018, which took place on the 64th anniversary of the beginning of Algeria’s independence revolution. He stated that the country must “meet the challenge of accelerating economic reforms and the diversification of national production to free ourselves from dependence on hydrocarbons and the fluctuation of their prices on international markets”.

The timely implementation of this agenda will likely become one of the overriding priorities of the new administration when it comes to power.

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Cover of The Report: Algeria 2018

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