Economy
From The Report: Algeria 2016
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The largest economy in the Maghreb, Algeria is also the region’s wealthiest country in terms of purchasing power parity-adjusted per capita. Hydrocarbons are the mainstay of economic activity; however, amid slowing production and exports, as well as the sharp drop in oil prices since mid-2014, the government is taking a range of measures to develop other sectors, with a particular focus on industry, agriculture and tourism. These should bolster diversification efforts that will have long-term benefits, in particular given anticipated falls in oil and gas production over the coming decades, and the long-term prospects are positive. This chapter contains interviews with Ali Haddad, President, Forum des Chefs d’Entreprise; Zied Ladhari, Tunisian Minister of Industry; and Jaime García-Legaz, Former Secretary of State for Trade.

Articles from this Chapter

Overview

Going strong: The economy is on stable footing and offers great potential
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The largest economy in the Maghreb, Algeria is also the region’s wealthiest country in terms of purchasing power parity-adjusted per capita. Hydrocarbons are the mainstay of economic activity; however, amid slowing production and exports, as well as the sharp drop in oil prices since mid-2014, the government is taking a range of measures to develop other sectors, with a particular focus on industry, agriculture and tourism. The drop in oil prices, as well as rises in government spending in recent…

Analysis

In the balance: Deficits are becoming a more common occurrence
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Up to and including 2013, Algeria had registered a positive current account balance every year since 1999, including very large surpluses in some years. The indicator peaked at a figure of 24.7% of GDP in 2006, according to IMF figures. However, the balance was transformed into a deficit of AD1.38trn (€11.4bn), or 4.4% of GDP, in 2014, helped by a decline in international oil prices in the second half of that year. As the oil price fall gathered pace, the deficit widened to a figure of $27.5bn…

Analysis

Pulling in capital: A new investment framework should attract more investors to a greater variety of sectors
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As part of steps to reduce the country’s economic reliance on oil and gas production, Algeria’s parliament in mid-July 2016 passed a law aimed at attracting new private sector investment by modifying the national investment promotion framework, which dates from 2001. The law is due to be implemented by the end of 2016. In keeping with this timetable, the Ministry of Industry and Mines in November 2016 indicated that applicatory decrees for the legislation had been completed and submitted to the…

Interview

Let’s get digital: Mouatassem Boudiaf, Deputy Minister for Digital Economy and Financial System Modernisation, on driving digitalisation
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Interview:Mouatassem Boudiaf Why did the government see the need to create a digital economy department? MOUATASSEM BOUDIAF: The digital economy department has been created partially to tackle the much-needed modernisation of Algeria’s financial system. The creation of the digital economy department shows the government’s commitment to this sector, which will play a clear role in diversifying Algeria’s economy. A big part of the drive from this department will centre on information…

Interview

Implementing new initiatives: Ali Haddad, President, Forum des Chefs d’Entreprise (FCE), on exports and foreign direct investment
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Interview: AliHaddad What reforms do you think are needed to improve the organisation of export activity? ALI HADDAD: A number of measures that fall within the purview of the state – relating to procedures and regulations; aid and subsidies; infrastructure and logistics; and banking and tax practices – must be taken to trigger a genuine export dynamic. In order to approach the matter strategically, we propose the creation of a steering committee under the authority of the prime minister…

Analysis

Work in progress: Algeria looks to boost capital markets liquidity
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With traditional lending constrained by lower hydrocarbons receipts, public authorities are redoubling their efforts to develop Algeria’s capital markets. By encouraging listings on the country’s equity and debt markets, officials are looking to relieve pressure on the national Treasury and create new investment opportunities for financial institutions. “The Treasury and the state no longer possess the budgetary means to finance development projects at the same level as in recent years, which…

Interview

Ties that bind: Zied Ladhari, Tunisian Minister of Industry, on building upon older relationships and developing new ones
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Interview:Zied Ladhari What is the relationship between Tunisia and Algeria, specifically with respect to industry? ZIED LADHARI: Tunisians attach a lot of importance to the relationship with Algeria. Our histories since independence share many aspects. With respect to the economic aspect today, we hope to transform our historic and cultural ties into increasingly dynamic relations with Algeria and to use them to create real strategic partnerships. Currently, we observe that our economic…

Analysis

New priorities: Economic diversification and lower oil prices are leading to a redirection of fiscal policy
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High international oil prices in the mid-2000s saw Algeria record large fiscal surpluses, peaking at 13.8% of GDP in 2006, according to IMF figures. This allowed the authorities to pay down the country’s debt and indeed to begin accumulating large fiscal savings in the years that followed, stored mainly in the oil savings fund, which is known as the Revenue Regulation Fund (Fonds de Régulation de Recettes, FRR). However, government expenditure also rose in the late 2000s and early 2010s, in particular…

Interview

Fruitful relationship: Jaime García-Legaz, Former Secretary of State for Trade, on working towards closer collaboration
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Interview:Jaime García-Legaz What factors have driven the increased activity of Spanish companies in Algeria? JAIME GARCÍA-LEGAZ: Spanish companies have been present in Algeria for many decades. Some, like Dragados, continued working and executing projects in Algeria even in the 1990s. Since the beginning of the 21st century, when Algeria embarked upon the normalisation of economic life and the reconstruction and expansion of its infrastructure, Spanish companies have played a significant…