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International Monetary Fund. Middle East and Central Asia Dept.

The oil price shock has hit Algeria's economy hard and exposed the longstanding vulnerabilities of a growth model dependent on hydrocarbon and public spending. The fiscal position-already weakened by a ramp-up in spending in the wake of the Arab Spring-has deteriorated further as oil revenues plummeted. Once-substantial fiscal savings have been nearly depleted to finance large budget deficits. Following several years of comfortable surpluses, the current account balance has swung sharply into deficit and official reserves, while still large, are diminishing. The banking system as a whole appears healthy, but financial stability risks are increasing. The policy response in 2015 was insufficient, but the 2016 budget calls for a sharp reduction in spending, and the authorities have initiated some reforms, including a much needed reform of the subsidy system.

International Monetary Fund. Middle East and Central Asia Dept.
This 2017 Article IV Consultation highlights Algeria’s continued challenges posed by lower oil prices. Overall economic activity was resilient, but growth in the nonhydrocarbon sector slowed to 2.9 percent in 2016, partly under the effects of spending cuts. Inflation increased from 4.8 percent in 2015 to 6.4 percent in 2016 and stood at 7.7 percent year over year in February 2017. Unemployment was 10.5 percent in September 2016 and remains particularly high among youth (26.7 percent) and women (20.0 percent). Despite fiscal consolidation in 2016, the fiscal and current account deficits remained large, and public debt increased, reflecting in part the assumption of government-guaranteed debt. International reserves, while still ample, have declined rapidly.
International Monetary Fund. Middle East and Central Asia Dept.
This 2018 Article IV Consultation highlights the important challenges Algeria continues to face as a result of the fall in oil prices four years ago. Despite sizable fiscal consolidation in 2017, the fiscal and current account deficits remain large. Real GDP growth slowed sharply, driven mainly by a contraction in hydrocarbon production, although growth in the nonhydrocarbon sector was stable. Unemployment increased to 11.7 percent in September 2017 from 10.5 in September 2016 and remains particularly high among youth and women. Average inflation declined from 6.4 percent in 2016 to 5.6 percent owing to slowing inflation for manufactured goods and services, and stood at 3.4 percent year over year in April 2018.
International Monetary Fund. Middle East and Central Asia Dept.
This 2018 Article IV Consultation highlights that Algeria continues to face important challenges posed by the fall in oil prices four years ago. Despite a sizeable fiscal consolidation in 2017, the fiscal and current account deficits remain large. Real GDP growth slowed sharply, mainly driven by a contraction in hydrocarbon production, although growth in the nonhydrocarbon sector was stable. Unemployment increased to 11.7 percent in September 2017 from 10.5 in September 2016 and remains particularly high among the youth and women. Average inflation declined from 6.4 percent in 2016 to 5.6 percent owing to slowing inflation for manufactured goods and services, and stood at 3.4 percent year-over-year in April 2018.