Economy
From The Report: Algeria 2013
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Having weathered the global economic crisis relatively easily and avoided most of the political turmoil that affected its neighbours during the Arab Spring, Algeria has continued along a steady path of economic growth and social development. In 2012 the country’s GDP reached AD15.84trn (€145.73bn), a 3.3% increase over the previous year. Algeria’s considerable oil and gas reserves, accounting for more than 60% of government revenues, have provided the authorities with sufficient fiscal flexibility to embark on major spending projects in nearly all sectors and subsidise key products such as fuel and food. Despite the economic growth, the expanding population and rising consumption are driving up unemployment and inflation.

This chapter contains interviews with Karim Djoudi, Minister of Finance; Mustapha Benbada, Minister of Trade; Mohamed Seghir Babes, President, National Economic and Social Council; Réda Hamiani, President, Algerian Business Leaders’ Forum; and a viewpoint with Christine Lagarde, Managing Director, IMF.

Articles from this Chapter

Overview

A key resource: Hydrocarbons production continues to play a crucial role in the economy
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Since the country gained independence more than 50 years ago, Algeria’s economy has evolved significantly, but it has only been in recent years that its heft as an investment destination has tangibly changed, and for the better. Algeria has been following something of a contrary approach to much of the rest of the world over the past few years. Even as the global economy has struggled, Algeria has continued to sail along fairly smoothly. It has not seen the vertiginous growth rates of emerging…

Interview

OBG talks to Karim Djoudi, Minister of Finance
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Intreview:Karim Djoudi What efforts have been made to promote investments in Algeria? KARIM DJOUDI: A wide range of measures are being conducted to promote investment that have impacted several areas, such as the legislative framework, investment activity, land acquisition, development of economic and logistical activity zones, and tax benefits. The decrease of the tax burden represents a new regime of financial and tax benefits. We are also offering fiscal encouragement for new modes of…

Interview

OBG talks to Mustapha Benbada, Minister of Trade
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Interview:Mustapha Benbada What is the current situation regarding accession to the World Trade Organisation (WTO)? MUSTAPHA BENBADA: At the 11th meeting of the Working Party on the Accession of Algeria in April 2013, WTO members reviewed the state of play in bilateral negotiations on goods and services, continued the examination of the Algerian trade regime based on the revised working party report, and examined legislative developments. Members pointed out that substantial work still remained…

Analysis

Gradual liberalisation: Efforts are being made to slowly open the country’s markets
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Algeria’s trade patterns have long been quite stable, with exports relying overwhelmingly (97%) on hydrocarbons and trade with the EU accounting for roughly half of the total. Bolstered by still-high oil prices into the first half of 2013, Algeria maintains beneficial terms of trade that allow it to run a consistent surplus. Although there is limited impetus for a change in trade policy, authorities are forging ahead with plans to gradually liberalise trade both on a bilateral basis, with…

Interview

OBG talks to Mohamed Seghir Babes, President, National Economic and Social Council (CNES)
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Interview:Mohamed Seghir Babes How can a better focus on training reduce activities in the informal sector? MOHAMED SEGHIR BABES: The informal economy occupies a prominent position in various markets, and its impact is widely seen. Far from being constructive, it is leading to the development of illegal, unhealthy and unproductive practices. Training and target-oriented actions will help people previously employed in the informal sector by encouraging them to fit within the official framework.…

Interview

OBG talks to Réda Hamiani, President, Algerian Business Leaders’ Forum
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Interview:Réda Hamiani How has local manufacturing performed in recent years? What factors have affected this? REDA HAMIANI: Unfortunately, Algerian production is under-performing. This situation is the result of a large-scale divestment, caused by significant losses of market shares following the liberalisation of national trade decided by public authorities. Yet it was also due to the fact that risk-taking in the field of investment has been made difficult by a challenging business environment.…

Analysis

Consolidation, not austerity: Prudent measures are being taken to help restrain government spending
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Following three years of rapid fiscal expansion, in 2013 Algeria’s government began attempting to consolidate its budget spending and raise domestic revenue. While the outlook for the non-hydrocarbons segment remains somewhat uncertain, authorities plan to continue limiting government expenditures to help guarantee the country’s fiscal sustainability over the medium term. This presents a challenging position in which the need to meet social demands in the run-up to the 2014 elections must…

Analysis

A helping hand: Many staple products receive either direct or indirect government subsidies
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As they are throughout North Africa – and indeed, much of the emerging world – subsidies remain a major driver of fiscal expansion in Algeria and have become a balancing act between minimising hardship for lower-income groups and avoiding a large rise in fiscal deficits. Algeria is luckier than most countries, with significant hydrocarbons revenues that give it greater flexibility, allowing it to expand coverage even as other countries look to roll back their subsidy programmes. EXPLICIT…

Viewpoint

Growing right: Christine Lagarde, Managing Director, IMF, on ensuring continued stability
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Algeria’s economy has performed well over the past decade, often in the shadow of global uncertainty. Sensible macroeconomic policies, especially in managing oil and gas revenues cautiously, have helped Algeria navigate the global crisis as well as regional disruptions. Yet the goal of continued stability — and certainly the hope for more broadly shared growth — cannot be assumed or taken lightly. Today we see pressures that will test stability. The advanced economies are still struggling…