Journal Issue


International Monetary Fund
Published Date:
February 2011
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I. Background: Favorable Developments But Key Challenges Remain

1. After the political and socio-economic crisis of the 1990s, Algeria has enjoyed more than 10 years of economic development but remains as dependent on hydrocarbons and public spending.

Prudent fiscal and monetary policies contributed to maintaining inflation low, and, combined with a period of increasing oil prices, allowed Algeria to build a solid financial position, with large external reserves, sizable budgetary savings in an oil stabilization fund, and low public and external debts. Despite efforts to diversify the economy, hydrocarbon revenues still represent 98 percent of exports and two-thirds of budgetary revenues. The nonhydrocarbon sector is inward-oriented and largely sustained by public spending. On the back of solid nonhydrocarbon growth (about 6 percent over the past decade), unemployment has fallen continuously, reaching 10.2 percent at end-2009, but remains high among the youth.

Unemployment rates, 2001–09

(In percent)

Source Algerian authorities; and IMF staff estimates.

2. Algeria weathered the international crisis relatively well.

The very strong growth in nonhydrocarbon GDP was partially offset by the decline in hydrocarbon production. NHGDP growth reached 9.3 percent in 2009, driven by an excellent cereal harvest and good performance in the Public Investment Program (PIP)-led service and construction sectors. However, the substantial drop in hydrocarbon output (-6.0 percent) lowered overall growth to about 2½ percent, a little lower than in 2008. The stabilization of the hydrocarbon sector and the dynamic performance of the PIP-related sectors should lead to overall growth of 3–3½ percent in 2010.

Real GDP Growth,2005–10

(In percent)

Source Algerian authorities; and IMF staff estimates

Sector Contribution to Real GDP Growth, 2003–10

(In percent)

Source Algerian authorities; and IMF staff estimates.

After rising in 2009, inflation has declined. Average total inflation rose to 5.7 percent in 2009, the highest level of the past decade, due to substantial fresh food price inflation. Nonfresh food inflation remained low in 2009 at 2.3 percent on average. In 2010, the increase in fresh food prices slowed down considerably but the rate of nonfresh food inflation is trending upward. Overall, inflation is projected at just over 4 percent in 2010 on average.

Inflation in CPI Components Jan.2007–Sep. 2010

(Annual Average and y-o-y Growth Rates) (In percent)

Source Algerian authorities.

Growth in deposits and credit to the economy has remained strong. Algerian banks do not rely on external financing and continue to benefit from a healthy growth in deposits, although it slowed down a little since end-2009 (8.3 percent y-o-y in August 2010). The Bank of Algeria (BA) has continued its policy of absorbing excess liquidity generated by the PIP expenditure and the hydrocarbon sector. Overall, credit to the economy has increased by 12.5 percent (August 2010, y-o-y). The growth in credit to the public sector has remained at a high level (excluding debt repurchase by the Treasury) while growth in credit to the private sector (enterprises and households) slowed slightly as a result of a reduction in credit to households following the ban on consumer lending since August 2009.

Money Aggregates and Credit, Jan 2008–July 2010

(y-o-y growth, 3 month MA)

Source: Algerian authorities.

Liquidity Absorption by the Central Bank and Interbank Market, in Billion DA

(3 month moving average)

Source: Algerian authorities.

3. Algeria has continued to maintain its expansionary fiscal stance, supporting the NH sector.

The budget will remain in deficit despite the rise in hydrocarbon revenues. Algeria is expected to post in 2010 its second consecutive budget deficit of the decade, which could reach 4 percent of GDP following a deficit of about 7 percent in 2009. The increase in hydrocarbon revenues will be more than offset by a 17 percent increase in total expenditures. Reflecting the substantial increase in expenditures in recent years, the breakeven oil price that would correspond to a balanced budget increased from US$34/bbl in 2005 to US$88/bbl in 2010. A reform of civil service wages and salaries, to rationalize their structure, has led to a 34 percent rise in the wage bill with effect from 2008. As a result, current expenditure is projected to grow by 31 percent (including salary back payments for 2008–09 in the education sector). Capital expenditure is expected to stabilize at its 2008–09 level with the continued implementation of the 2005–09 PIP. Nonhydrocarbon revenue will record a further 19 percent increase but yet will cover only half of current expenditure. In total, the primary nonhydrocarbon deficit in 2010 would remain broadly unchanged from last year at about 45 percent of NHGDP, indicating a continued support of fiscal policy to NH growth which has decelerated from 2009. The overall deficit should be fully covered by nonbank financing, while the level of resources in the FRR could grow by about US$1½ billion and be equivalent to 38 percent of GDP.

Overall and Nonhydrocarbon Fiscal Balances, 2005–10

Source Algerian authorities; and IMF staff estimates.

Capital, Current and Salary Expenditure,1 2005–10

1Salary expences includes hospitals and autonomous administrative agencies.

Source Algerian authorities; and IMF staff estimates.

4. Nominal and real effective exchanges rates have been rising in 2010.

The real effective exchange rate rose by 6.5 percent in the first seven months of 2010, after declining by 7 percent in 2009. This reflects the increase in the nominal effective exchange rate over the course of 2010 of around 6 percent. The real effective exchange rate remains close to its equilibrium level, reflecting the development of underlying factors, in particular rising oil prices and public expenditures.

5. The current account surplus is improving significantly in 2010 due to higher hydrocarbon exports.

The external balance was negatively affected during 2009 by the fall in the price of hydrocarbons, with the current account surplus falling to 0.3 percent of GDP from 20 percent in 2008. Nevertheless, official reserves increased by US$4 billion to US$149 billion at end-2009 (almost 3 years of imports of goods and services). During the first nine months of 2010, hydrocarbon export revenues increased by about 32 percent, due to the steady rise in the oil prices, while export volumes (in particular of gas) fell by 1.4 percent. Imports decreased slightly from last year, contributing also to the improvement in the current account balance. Accordingly, official reserves rose by about US$8 billion since end-2009 to US$157 billion by end-September 2010.

Exchanges Rates, Jan. 2005–Sep. 2010

Source Algerian authorities; and IMF staff estimates.

Current Account and International Reserves,2005–10

Source Algerian authorities; and IMF staff estimates.

Past Consultations

In recent consultations, the authorities and the staff agreed on the broad macroeconomic policies stance, which have contributed to maintain a very comfortable financial position, but structural reforms have not been as ambitious as suggested by staff. The authorities continued the implementation of a large PIP to improve infrastructure and enhance growth potential. However, the recent substantial increase in civil service wages will push back the fiscal consolidation needed in the medium term to protect Algeria’s capacity to weather negative oil price shocks. Control over the quality of large PIP projects has improved, and modernization of budget systems is advancing slowly. The BA continued to effectively absorb the abundant liquidity of banks to contain inflationary pressures, while maintaining interest rates at their reduced levels since early 2009. The authorities continued to state their objective of economic diversification, but progress in structural reforms, including in the financial sector, remains slow. The new regulations for FDI adopted in 2009 may further deteriorate the unfavorable perception of business climate.

II. Short-Term Outlook and Policies: Supporting Growth while Fending off Inflationary Pressures

6. The global recovery will support the Algerian hydrocarbon sector while public expenditure will continue to boost the nonhydrocarbon sector.

The global recovery has gone hand in hand with a rise in the demand and price of hydrocarbons. As a result, following several years of declining production, the hydrocarbon sector in Algeria should stabilize, but would make only a small contribution to overall growth. Nonhydrocarbon growth is likely to remain strong with the continuation of PIP spending and the ongoing hydrocarbon sector investment program. Accordingly, NHGDP could grow by about 5.3 percent in 2010–11, and contribute to an overall growth of 3.7 percent in 2011. The rises in civil service and public enterprises’ wages could put upward pressure on inflation, which could reach about 5 percent in 2011.

7. Higher oil prices should improve the external and the fiscal balances significantly.

The rise in oil prices projected by the WEO would contribute to an improvement in the current account surplus to 8–9 percent of GDP in 2010–11. The budget balance is expected to remain in negative territory in 2011 at 3.3 percent of GDP, due to continuously large current expenditure.

8. Against the need to further reduce unemployment and uncertainties in Algeria’s main hydrocarbon export markets, policies should aim at continuing to support growth while initiating actions to ensure fiscal sustainability.

The support to economic growth, which helped to weather the impact of the global crisis in 2009, should not be withdrawn too quickly. The prudent macroeconomic management of the past decade has given Algeria an important margin to face external shocks and absorb sharp falls in hydrocarbon prices. However, the global crisis also showed Algeria’s financial vulnerability to prolonged periods of low oil prices. At the same time, the authorities should remain vigilant about risks of potential inflationary pressures.

Fiscal policy

9. The fiscal policy priorities in 2011 should be to break the rising trend of expenditure, while improving its efficiency and targeting.

With public spending playing a dominant role for growth, key policy goals include the continuation of the PIP and complementing and supporting private investment. Thanks to large available fiscal savings, the authorities could maintain the relatively high levels of budget expenditures in the short term. However, as the sharp increase in current expenditures in the past few years could have had detrimental effects via exacerbating “Dutch disease”-type real appreciation of the exchange rate which would undermine NH sector competitiveness, it will be important to stop and reverse this rising trend, develop policies for better targeting of current expenditure (current transfers, in particular), and continue strengthening the efficiency of control over capital expenditure. Moreover, to minimize its impact on aggregate demand, implementation of the reform of public wages and salaries, including back payments, should be spread as much as possible over time.

Hydrocarbon Revenues and NH Fiscal Balances,2005–10

(In percent of NHGDP)

Source Algerian authorities;and IMF staff estimates.

Tax Revenue and Nonhydrocarbon revenue,12005–10

(In percent of NHGDP)

1 Tax revenues in 2010 are adjusted to exclude taxation on back salary payments to the education sector

Source Algerian authorities;and IMF staff estimates.

10. The fiscal balance should improve but will remain in deficit in 2011.

The fiscal position will remain in deficit in 2011. The preliminary 2011 Budget Law provides for the continued implementation of pay scale reforms for the civil service and the increase in recurring charges of new public infrastructures. Current expenditures (on a cash basis) would thus increase by 13 percent to close to 41 percent of NHGDP. However, when excluding salary back payments, the ratio of current expenditures would decline from 37 percent of NHGDP in 2010 to 35 percent in 2011, which should mark the start of a reversal in their trend following the peak reached this year. Capital expenditures are expected to remain stable in real terms. Total revenues will continue to rise thanks to the increase in hydrocarbon prices and greater efficiency of tax administration in the collection of direct taxes.

Authorities’ views

11. Fiscal prudence remains a priority for the authorities. The authorities agreed that the recent substantial growth of expenditure needs to be halted—especially for current expenditure. The salary increase to civil servants in the context of the pay scale reform was a necessary step, nevertheless, to compensate for the loss of purchasing power of public employees due to the absence of adjustments in the last few years. Moreover, the authorities consider that the increase will bring public salaries closer to average salaries in the region. To minimize the potential negative effect on inflation and the external current account, back salary payments will be spread over 2010–12. At the same time, a review of current transfers, in particular of food subsidies, is being launched with World Bank assistance to improve its targeting.

12. The authorities see the continued implementation of large public investments as key to enhance nonhydrocarbon growth potential. Therefore, overall capital expenditure will be kept at their 2009–10 levels in real terms in order to complete the execution of the 2005–09 PIP and start executing the new 2010–14 PIP. Nevertheless, should a deterioration of the international environment occur and hydrocarbon fiscal revenue fall, the authorities stand ready to adjust investment spending according to the availability of resources.

Monetary and exchange rate policies

13. The prevailing orientation of monetary policy for 2010 and 2011 should be to continue to absorb excess liquidity and fend off inflationary pressures.

The BA continues to absorb effectively excess banking liquidity arising from hydrocarbon sector resources and public expenditures, thereby limiting the impact of abundant liquidity on inflation. The authorities should maintain a watchful stance given the current context of rising hydrocarbon revenues fueling the economy with liquidity, the sharp increase in remuneration of civil servants and other employees, as well as the uncertainties relating to the direction of fresh food prices. If inflationary pressures become apparent, the BA should promptly increase interest rates, preferably including the refinancing rate, in order to give a more definite signal for the cost of credit in the economy than the more indirect indication given by liquidity absorption rates. The BA should also maintain effective information exchange with the Ministry of Finance on future spending, and continue to enhance its analytical capacity to better inform monetary policy decisions.

14. Exchange rate policy continues to aim at stabilizing the real effective exchange rate of the dinar close to its equilibrium rate.

The BA continues to conduct an active exchange rate policy of managed float, aimed at maintaining the real effective exchange rate close to its equilibrium level and minimizing the risks of misalignment stemming from volatility in oil prices and of the Euro/US$ exchange rate (Appendix 1). The equilibrium real exchange rate has appreciated in the last few years, essentially reflecting the increase in government spending, entailing the risks of “Dutch disease” welfare-reducing effects.

Authorities’ views

15. The authorities consider that the liquidity absorption has been effective in containing inflation and remain vigilant about any new build up of inflationary pressures. The authorities are mindful of the continuous need to fend off inflationary pressures following the peak of inflation in 2009. They noted, however, that the substantial increase in fresh food prices in 2008–09 was mainly due to market imperfections. These prices have stabilized since early 2010, but the rising inflation in nonfood products is a source of concern. The authorities are monitoring developments closely and stand ready to act to contain any surge in inflation pressures. They face difficulties created by the abundant liquidity to achieve effective monetary transmission but consider that current monetary intervention mechanisms are working well in this context.

16. The authorities remain committed to maintaining the real effective exchange rate close to its equilibrium level and consistent with external stability. During 2010, the exchange rate policy allowed for an appreciation of the real effective exchange rate in line with the recovery of hydrocarbon prices and larger public expenditure. The authorities will pursue their efforts to enhance their exchange rate analysis capacity.

III. Medium-Term Challenges and Reforms: Need to Promote Economic Diversification

Medium-term outlook

17. The medium-term growth outlook remains stable, with risks of a slowdown in some sectors.

Over the medium term, the hydrocarbon sector may be affected by a drop in gas exports—stemming from the possible development of alternative gas production in Algeria’s export markets—which could weigh on growth and total hydrocarbon revenues (see selected issues paper on oil and gas prices). The growth of NHGDP of approximately 5 percent would be supported by the new PIP and the continuation of the hydrocarbon sector investment program. The growth potential of the private sector will critically depend on a forceful structural reform program, in particular in the financial sector and for improving the business climate. A more ambitious program of structural reforms is needed to avoid a slowdown in medium-term NHGDP growth, given that PIP expenditure would remain stable in real terms and should give way to other private sector-led sources of growth.

18. The medium-term financial outlook is positive, given the projected steady increase in hydrocarbon prices.

The medium-term financial outlook is positive overall, thanks to the gradual increase expected in hydrocarbon prices, but it remains dependent on fluctuations in these prices. If public expenditures are contained in the medium term, FRR resources could increase further, albeit at a lower rate of growth than nominal GDP, thus reaching 32 percent of GDP in 2015. With current account surpluses remaining at about 9 percent of GDP over the period, reserves would increase to the equivalent of over four years of imports of goods and services in 2015. In an alternative scenario, with a drop of 30 percent in the price of natural gas, due to the development of unconventional gas production in Algeria’s export markets, the resources in the FRR would fall substantially, by about 10 percentage points of GDP by 2015.

Medium-Term Baseline Scenario, 2009–15
Base scenario2009201020112012201320142015
International oil price (US$/bbl)61.876.278.882.384.886.087.5
International gas price (US$/BTU)
Overal budget balance (percent of GDP)-6.8-3.9-3.3-
FRR (percent of GDP)42.637.932.128.928.930.131.8
Reserves (US$ billion)148.9161.0171.4188.3206.9226.4247.4
Primary budget deficit (percent of NHGDP)-44.9-45.3-45.8-41.6-36.1-33.1-30.8
Current account balance (percent of GDP)
Government net assets (percent of GDP)(*)32.227.620.817.918.119.521.4

FRR minus government debt

FRR minus government debt

Authorities’ views

19. The authorities realize the challenges lying ahead and continue to aim at reducing the reliance of the Algerian economy on the hydrocarbon sector. Their key objective remains to promote a more diversified and private investment-led growing economy in order to reduce unemployment further and improve the living standards of the population. This will continue to guide their policies and structural reforms. The authorities agreed that new developments in international gas markets, with the potential rise of alternative gas production, could affect Algerian gas exports over the medium term.

Medium-term fiscal consolidation and fiscal reforms

20. Nonhydrocarbon budget revenues should be further enhanced, but the tax burden on businesses should decline.

Good progress was achieved in the last few years—with IMF technical assistance—in increasing nonhydrocarbon revenues, including through combating tax fraud, coordinating efforts among the various collecting organizations, and efforts to widen the tax base by creating tax centers. However, in 2010 hydrocarbon revenues still represent about two-third of total revenues. Although the authorities successfully set up the FRR to reduce the budget vulnerability to hydrocarbon revenues, this is not necessarily sufficient in the medium to long term to face oil price volatility. The authorities could aim at covering all current expenditure with nonhydrocarbon revenues in the longer term. At the same time, comparisons with other emerging market economies show that the tax burden on businesses is very high in Algeria. Reducing this burden would ease doing business and support the fight against the informal sector.

Total Tax Burden on Enterprises, 2010

(In percent of profits

Sources: Doing business database, World Bank.

1/ Egypt, Jordan, Lebanon, Morocco, Syria, and Tunisia

2/ Botswana, Brazil, Chile, China, India, Malaysia, Mexico, South Africa, Thailand, and Turkey

3/ Bahrain, Iran, Oman, Quatar, and Saudi Arabia

4/ Angola, Nigeria, and Venezuela

21. Adopting a medium-term budget framework, based on the principle of permanent income, would provide a useful benchmark to ensure fiscal sustainability in the medium term.

This analysis is based on the principle of nonrenewable hydrocarbon resources and the establishment of policies to ensure the availability of hydrocarbon resources in the long term. Accordingly, the government would set itself the goal of spending only part of the hydrocarbon income in order to maintain constant overall wealth—or wealth per capita—over the long term. Applying this framework to Algeria indicates that fiscal consolidation will be necessary to bring the fiscal position back to a sustainable level in the medium term.

Sustainable Nonhydrocarbon (NH) Primary Deficits and Actual/Projections

(In percent of NHGDP)

Source: IMF staff estimates.

22. Following several years of substantial expenditure increase, control and prioritization of expenditure should improve to protect Algeria’s capacity to weather a prolonged fall in oil prices.

Current expenditure has increased on average by 20 percent per year over the past five years. This rise is mainly due to the increase in the wage bill from 11.6 percent of NHGDP in 2006 to 15.6 percent in 2010 (excluding back payments). Wage back payments and rising recurring costs of new infrastructures will put upward pressures on expenditure. Moreover, potential fiscal risks, such as capital project cost overruns, or the need to restructure and further support public enterprises, could add to those pressures. Against this backdrop, containing expenditure more strictly will be necessary to ensure long-term fiscal sustainability. It could be achieved through limiting annual wage increases below inflation, improving the targeting of transfers and subsidies, and prioritizing and adjusting investment projects within available resources. Furthermore, establishing mechanisms to make partial and more regular adjustments to civil service wages would help to avoid destabilizing effects of the very sharp periodic increases as seen in recent past.

23. Close attention should be given to the quality and effectiveness of expenditures.

The creation of the national commission (Caisse Nationale d’Equipements et de Développement, CNED) to monitor the implementation of PIP projects has been a positive development, and it should play an increasingly important role in prioritizing the PIP. That said, for the PIP to have the hoped for positive effect on potential growth, it should also be accompanied by forceful structural reforms aimed at facilitating private economic activity. Modernization of the budget systems is continuing, but requires further significant efforts in some areas. Target-based budget management with performance assessment of the various programs will, over time, bring about improved control and greater efficiency of public expenditure. The preparation for the first time in many years of the 2008 Budget Review Law is a step toward improved transparency.

Authorities’ views

24. The authorities are committed to ensure medium-term fiscal sustainability. They aim at reducing the dependence on hydrocarbon revenues in the medium term and protect the fiscal savings under normal circumstances. Continued modernization of tax administration and strengthened tax collection procedures will help further increasing nonhydrocarbon revenues. The authorities are also exploring measures to curb current expenditure growth over the medium term, including devising a system of targeted income support to replace general subsidies, and establishing market-based pricing mechanisms for some energy product and services.

25. The continuation of fiscal reforms is a key component of the authorities’ growth strategy. They attach great importance to the quality and efficiency of public spending. The role of the CNED will increase with the new 2010–14 PIP for which no new large project will be included in the budget without the CNED’s approval based on transparent procedures. The authorities also pursue their efforts to improve medium-term budgeting and forecasting.

Further strengthening the financial system

26. Financial sector indicators continued to improve in 2009.

Banks are well capitalized overall—especially following the quadrupling of minimum capital requirements in 2009—and profitable. The nonperforming loans (NPLs) ratio decreased further in 2009 to 14.5 percent and loans’ provisioning increased, reflecting tighter risk assessment by both regulators and banks. However, the NPLs ratio in public banks remains too high and further actions are needed to improve the resolution of public banks’ NPLs with public enterprises and the private sector.

27. Banking intermediation remains relatively low.

The banking sector is very liquid, but lending remains relatively low mainly because of credit risk. The establishment of a central credit register for risk of individuals planned for 2011 will help enhance risk assessment and promote lending. Other measures aim to develop lending for small and medium-sized enterprises (SMEs), and mortgage loans to individuals. Some banks are also modernizing their operations and means of payment, to reduce the widespread practice of payment in cash. Similarly, further development of bank branch networks remains essential to improve the use of banks by the general public.

28. Some recent measures may hamper the efforts to modernize the financial system.

New rules for FDI (see below) will prevent the entry of new foreign majority-owned banks or the takeover of public banks by foreign banks as part of any privatization. Moreover, the presence of a nonvoting government representative on the boards of private banks has become mandatory. It will be essential that this does not affect the normal operations of these institutions but fosters a better dialog with the public authorities. Furthermore, the ban on consumer lending (except mortgages) in force since 2009 has affected the deepening of banking activity and should be reviewed once the credit registry becomes operational.

Financial Soundness Indicators, 2005–10(In percent)
Capital adequacy ratio12.315.212.916.521.818.4
Public banks 1/11.714.412.
Foreign banks 2/19.021.618.120.235.329.7
Classified loans/total loans35.734.835.525.421.622.1
Public banks38.237.538.728.524.424.9
Off which, to private sector19.022.024.320.016.917.4
Foreign banks5.78.811.
NPLs/total loans 3/19.217.522.115.714.514.9
Public banks20.419.223.817.616.516.8
Off which, to private sector10.111.718.715.913.013.3
Foreign banks3.
Other class./total loans 4/16.517.313.
Public banks17.818.414.910.97.88.1
Off which, to private sector8.910.
Foreign banks2.
Provisions/classified loans49.354.056.157.768.367.8
Public banks49.
Foreign banks62.348.785.268.778.970.0
Return on equity7.818.824.625.225.7
Public banks5.617.423.625.025.5
Foreign banks25.423.428.025.626.3
Source: Algerian authorities.

90 percent of system assets.

Nonpublic banks are all foreign.

Loans in arrears (100 percent provisioning requirement).

Loans performing but at risk (30 percent or 50 percent provisioning).

Source: Algerian authorities.

90 percent of system assets.

Nonpublic banks are all foreign.

Loans in arrears (100 percent provisioning requirement).

Loans performing but at risk (30 percent or 50 percent provisioning).

29. More forceful implementation of the 2007 FSAP update recommendations will support the modernization of the financial system.

These measures include: (a) clarifying the role of the public banks; (b) improving further the operational environment; and (c) developing nonbank financing through the bond market. The control, management, and governance of public banks (90 percent of banking sector assets) should be enhanced, considering all possible ways forward to bring them to the highest international standards, including through partnerships with foreign financial institutions.

30. Efforts to strengthen banking supervision are underway.

The BA will establish a new bank rating system planned for 2011 as part of ongoing actions to improve the assessment, management, and control of credit risk. The authorities are also preparing the first report on financial stability, to help identify potential risks in the financial sector. This work is part of the responsibility explicitly assigned to the central bank by the 2010 amendment of the Law on Money and Credit (LMC) to ensure financial stability.

Authorities’ views

31. Modernizing and strengthening the financial sector is a key pillar of the authorities’ strategy to support private investment. The BA will continue with its efforts to improve supervision and reinforce the strength of financial institutions. Recent measures such as the new banking accounting system based on IAS/IFS principles contribute to better disclosure of financial information. The authorities consider that the relatively high NPLs levels are due to the legacy of old debts, and that accumulation of new NPLs is small. They will continue to explore ways to enhance operations of public banks, including through possible partnerships with foreign financial institutions. They see the presence of government representatives at private banks’ boards as helping the communication with the authorities.

Efforts needed to diversify the economy

32. Some measures of the 2009 Supplementary Budget Law may have contributed to deter FDI and could hamper the diversification of the Algerian economy.

Algeria has traditionally received little FDI outside the hydrocarbon sector, although it was on an upward trend until 2008. The new measures imposing (a) a 49 percent ceiling for foreign participation in any new FDI; (b) a positive foreign currency balance for new FDI projects; or (c) the reaffirmation of the preemptive right of the public authorities over the sale of foreign investments could deter foreign investors. In 2009, FDI (excluding hydrocarbons and the financial sector) fell by about 60 percent and has not recovered in 2010. Algerian authorities should continue to review the impact of these measures and identify any necessary adjustments that would ensure an attractive, but well controlled FDI regime. For example, the foreign participation limit could apply only for strategic sectors, and the mandatory review of FDI project authorizations by the National Investment Council (CNI) be limited to the largest projects.

FDI Inflows by Sector Excluding oil and Gas and Financial Sectors, USD billion, 2003–10

Sources: Algerian authorities.

33. A more assertive structural reform agenda would boost business climate and private investment-led growth.

The private sector remains weak and fragmented, in particular in the industrial sector, and has limited capacity for innovation and improving competitiveness. The support program for SMEs should be accelerated, with efficient targeting and consistent objectives, which should be devised in cooperation with private sector representatives. The public enterprise restructuring programs, recently decentralized to sector ministries, should gain momentum to give greater scope for private initiative and reduce the fiscal burden. More generally, the authorities should explore any other reform to improve business climate.

34. More efforts are needed to foster Algeria’s integration in regional and world trade.

The growth in imports of the past years demonstrates Algeria’s gradual trade openness, but some recent measures—including the ban on consumer lending—aimed at reining in import growth which was perceived as excessive. Moreover, Algeria still has high average tariff rates which should be reduced starting by cutting the highest rates. In 2009, Algeria joined the Arab Free Trade Zone (AFTZ) and imports from regional partners increased significantly—albeit from low levels—prompting the authorities to seek a more gradual implementation of this trade agreement. The authorities have pursued their efforts to join the World Trade Organization, which they hope in the near future. The negotiations on the new phase in the Association agreement with the European Union (EU) are continuing but have been somehow slowed due to Algerian concerns on the nonhydrocarbon exports access to EU markets.

Authorities’ views

35. The authorities are concerned by the relatively unfavorable perception of Algeria’s business climate but consider that the new measures will help to support investments more beneficial for the local economy. They consider that the new infrastructure will boost Algeria’s competitiveness. Moreover, they believe that the measures taken in 2009 and 2010 to promote greater participation of Algerian private investment and the public sector will help to create better investment opportunities.

36. The authorities consider that certain trade agreements did not meet Algeria’s expectations. In their view, the AFTZ and the Association Agreement with the EU led to excessive import growth with no sufficient benefits for Algerian exports. The authorities are negotiating the restoration of certain duty rights with the AFTZ and the EU in order to smooth the integration process for certain sectors.

IV. Staff Appraisal

37. Algeria has recorded favorable macroeconomic developments but continues to face important challenges.

Algeria has enjoyed a decade of solid nonhydrocarbon growth and low inflation after the political and socio-economic crisis of the 1990s. Prudent fiscal and monetary policies, combined with a period of high oil prices, contributed to build a comfortable financial position, with large external reserves, substantial savings in an oil stabilization fund, and very low public and external debt. However, despite repeated efforts to diversify the economy and strengthen the private sector, Algeria is still as dependent on hydrocarbons and public spending, with productivity and business climate lagging behind trading partners. While having fallen, youth unemployment remains high, highlighting the pressing need to accelerate structural reforms to diversify the economy and promote new sources of sustainable growth.

38. The very expansionary fiscal stance of the last few years will need to be contained over the medium term to protect Algeria’s capacity to withstand negative and prolonged hydrocarbon revenue shocks.

Given the dominant role of public spending for growth, continued implementation of the infrastructure component of the PIP and support to SMEs is desirable in the short term and the large fiscal savings could be used to that end if needed. While upward pressures on expenditure will likely continue, strict containment of spending will be necessary to ensure long-term fiscal sustainability. Wage increases should be limited below inflation, and targeting of transfers and subsidies should improve in order to make room for increased recurring costs of new infrastructures. Investments projects will also need to be prioritized and adjusted within available resources. Similarly, ongoing advances in tax administration should continue to boost nonhydrocarbon revenues. The need for these policies will become more pressing if risks on gas revenue related to the development of nonconventional gas in Algeria’s export markets materialize.

39. Ensuring the quality and efficiency of public expenditure and pursuing budgetary reform are essential to strengthen growth potential.

Ongoing efforts to modernize budget systems should continue, in particular to achieve a medium-term budget programming system, develop tools to evaluate programs performance, and enhance budget control. The role of the commission in charge of monitoring the implementation of large PIP projects has been positive and should become even more important for prioritizing PIP expenditure in the near future.

40. The central bank has been able to contain inflationary pressures, but should stand ready to tighten monetary policy promptly if these pressures were to increase.

The BA has successfully absorbed the abundant liquidity from high oil revenues and large public spending. To avoid that the significant increase in public wages would push inflation up, the BA should reverse the rate cuts of 2009 and consider increasing the refinancing rate if a stronger signal is needed. Ongoing efforts to refine the instruments for monitoring, assessing and absorbing the abundant liquidity should continue.

41. The central bank should continue to pursue an exchange rate policy consistent with external stability.

The BA should closely monitor developments to minimize the risks of misalignment of the real effective exchange rate, which has remained close to its equilibrium level. The containment of government spending would contribute to reduce pressures for a real appreciation and potential “Dutch disease” effects.

42. Structural reforms, including in the financial sector, should be implemented more forcefully to improve the business climate.

The commendable efforts to enhance infrastructures are not sufficient to improve investment climate. New rules for FDI adopted in 2009 and some bureaucratic burden seem to discourage foreign direct investors, which deprives Algeria of needed transfer of technology and know-how. These measures could be reviewed to ensure a well regulated but yet attractive investment framework. Public banks need to improve their governance and further modernize their operational framework to enhance financial intermediation. All possible ways should be explored to bring them to the highest international standards, including through partnerships with foreign institutions and opening up of their capital to the private sector. Recommendations of the 2007 FSAP Update of the financial sector should be implemented forcefully, and ongoing efforts to reduce NPLs should continue to bring their level closer to comparable countries. Moreover, the authorities should continue to seek a better integration of Algeria in the regional and global economy.

43. The authorities should expedite Algeria’s participation as a creditor in the Enhanced HIPC Initiative.

44. It is proposed that the next Article IV consultation be held on the standard 12-month cycle.

Panel 1. Algeria: Selected Economic Indicators

Table 1.Algeria: Selected Economic and Financial Indicators, 2007–15
(Annual percentage change; unless otherwise indicated)
Oil and gas sector
Liquid petroleum exports (in millions of barrels/day)
Natural gas exports (in billions of m3)59.459.553.753.853.853.853.853.853.9
Crude oil export unit value (US$/bbl)74.799.061.876.278.882.384.886.087.5
Share of hydrocarbons in total exports (in percent)98.498.298.398.
National income and prices
GDP at constant prices3.
Hydrocarbon sector-0.9-2.3-6.0-
Other sectors6.
Consumer price index (period average)
External sector 1/
Exports, f.o.b.10.729.7-42.527.
Imports, f.o.b.27.444.2-
Current account balance (in percent of GDP)22.820.
Money and credit
Net foreign assets34.538.25.010.5
Domestic credit 2/-19.7-
Credit to the government (net) 2/3/-26.5-25.20.2-4.7
Credit to the economy 3/17.220.418.512.5
Money and quasi-money24.
Velocity of broad money (GDP/M2)
Idem, in percent of nonhydrocarbon GDP0.
Liquidity ratio (M2/GDP)64.463.370.869.8
(In percent of GDP)
Saving-investment balance22.820.
National savings57.258.650.353.053.754.053.753.553.2
Of which: Nongovernment37.332.938.140.341.
Of which: Nongovernment18.920.431.028.028.428.229.029.729.6
Central government finance
Overall budget balance (deficit-)4.47.7-6.8-3.9-3.3-
Total revenue39.647.236.338.438.437.837.537.136.6
Total expenditure35.239.543.142.241.838.935.834.433.4
(In percent of nonhydrocarbon GDP)
Central government finance
Total revenue70.786.653.859.660.659.558.457.055.7
Total expenditure62.872.563.965.665.861.255.853.050.8
Current expenditure32.037.033.739.940.635.932.431.330.2
Capital expenditure30.735.530.325.725.225.323.421.720.6
Nonhydrocarbon primary balance-44.1-53.1-44.9-45.3-45.8-41.6-36.1-33.1-30.8
Nonhydrocarbon balance-45.7-54.1-45.4-45.8-46.3-42.2-36.7-33.6-31.3
Memorandum items:
GDP (in billions of dinars at current prices)9,30610,99410,13611,73313,20514,41415,61416,74717,953
NHGDP (in billions of dinars at current prices)5,2175,9946,8317,5548,3769,17210,01610,88511,809
GDP (in billions of US$ current prices)134.3170.2139.8158.6168.8178.4187.6196.2205.2
Per capita GDP (in US$)3,9044,9403,9264,3894,6034,7934,9665,1155,270
Crude oil exports (in millions of barrels/day)
Nonhydrocarbon exports (percent of total exports)
Gross official reserves (in billions of US$, end of period)110.2143.1148.9161.0171.4188.3206.9226.4247.4
In months of next year’s imports of goods and services26.935.435.636.737.940.142.745.949.9
Gross government debt (in percent of GDP)
External debt (in percent of GDP)
Sources: Algerian authorities; and Fund staff estimates and projections.

In U.S. dollars terms.

In percent of beginning money stock.

Including the impact of the financial restructuring in 2006 involving the swap of government bonds for bank claims on public enterprises.

Sources: Algerian authorities; and Fund staff estimates and projections.

In U.S. dollars terms.

In percent of beginning money stock.

Including the impact of the financial restructuring in 2006 involving the swap of government bonds for bank claims on public enterprises.

Table 2.Algeria: Balance of Payments, 2007–15
(In billions of U.S. dollars; unless otherwise indicated)
Current account30.634.50.413.415.717.
Trade balance34.240.67.819.722.824.424.924.624.9
Exports, f.o.b.60.678.645.257.662.565.467.468.569.8
Volume change (in percent)-1.6-3.4-10.2-
Price change (in percent)12.934.2-
Imports, f.o.b.-26.4-38.0-37.4-37.9-39.7-41.0-42.5-43.9-44.8
Volume change (in percent)14.834.612.6-
Price change (in percent)11.07.1-
Services and income (net)-5.9-8.9-10.0-8.8-9.6-9.8-9.2-7.9-6.8
Services (net)-4.0-7.6-8.7-8.4-8.8-9.2-9.7-10.1-10.2
Income (net)-1.8-1.3-1.3-0.4-0.8-
Interest payments-0.2-0.2-0.2-0.1-0.1-0.1-0.1-0.1-0.1
Other, including profit repatriation-5.4-6.3-5.9-4.2-4.6-4.7-5.0-5.1-5.4
Transfers (net)
Capital account-
Medium- and long-term capital0.
Direct investment (net)
Loans (net)-0.8-
Short-term capital and errors and omissions-1.7-0.7-0.4-1.4-1.4-1.4-1.4-1.4-1.4
Overall balance29.635.73.914.616.017.318.920.021.4
Official reserves (increases -)-29.6-35.7-3.9-14.6-16.0-17.3-18.9-20.0-21.4
Memorandum items:
Current account balance (in percent of GDP)22.820.
Algerian crude oil price (US$/barrel) 1/74.799.261.876.278.882.384.886.087.5
Gross official reserves (in billions of US$)110.2143.1148.9161.0171.4188.3206.9226.4247.4
Idem, in months of next year’s imports26.935.035.636.737.940.142.745.949.9
Gross external debt (in billions of US$)
Of which: Short term0.
External debt/exports (in percent)8.97.310.
External debt/GDP (in percent)
Sources: Algerian authorities; and Fund staff estimates and projections.

Weighted average of quarterly data.

Including SDR allocation ($1.7 billion).

Sources: Algerian authorities; and Fund staff estimates and projections.

Weighted average of quarterly data.

Including SDR allocation ($1.7 billion).

Table 3.Algeria: Summary of Central Government Operations, 2007–15 1/
(In billions of Algerian dinars)
Budget revenue and grants3,6885,1913,6754,5035,0755,4555,8526,2066,578
Hydrocarbon revenue 2/2,7974,0892,4133,0063,4403,7093,9354,0984,278
Nonhydrocarbon revenue8911,1021,2621,4971,6351,7451,9172,1082,301
Tax revenue7679651,1461,3311,4511,5491,7051,8882,074
Taxes on income and profits2583324626257057838719601,055
Taxes on goods and services347435478489532562623706791
Customs duties133165170176170155157164164
Registration and stamps283436404549545863
Nontax revenues124137116166184196212219227
Total expenditure3,1144,1914,2254,9565,5145,6125,5895,7666,001
Current expenditure1,6722,2182,2993,0133,4033,2903,2483,4053,571
Personnel expenditure6298278801,3301,5021,3681,3031,3721,447
Mudjahidins’ pensions102103131147147147147147147
Material and supplies94112113159168177186197210
Current transfers7631,1151,1381,3391,5441,5501,5611,6361,711
Interest payments856137384248515457
Capital expenditure1,4421,9731,9261,9432,1112,3222,3412,3602,430
Budget balance574999-550-453-439-157264440578
Special accounts-19-31-7000000
Net lending by the treasury141124135000000
Nonhydrocarbon primary balance-2,298-3,183-3,067-3,421-3,837-3,818-3,621-3,604-3,642
Primary balance498906-654-414-397-109314494636
Nonhydrocarbon balance-2,383-3,244-3,104-3,459-3,879-3,866-3,672-3,658-3,699
Overall balance413844-692-453-439-157264440579
(In percent of GDP)
Total revenue39.647.236.338.438.437.837.537.136.6
Of which: Tax revenue8.28.811.311.311.010.710.911.311.6
Total expenditure35.239.543.142.241.838.935.834.433.4
Current expenditure18.020.222.725.725.822.820.820.319.9
Wages and salaries6.87.58.711.311.
Goods and other services2.
Current transfers8.
Debt service0.
Capital expenditure15.517.919.016.616.
Overall balance4.47.7-6.8-3.9-3.3-
(In percent of nonhydrocarbon GDP)
Total revenue70.786.653.859.660.659.558.457.055.7
Hydrocarbon revenue53.668.235.339.841.140.439.337.636.2
Nonhydrocarbon revenue17.118.418.519.819.519.019.119.419.5
Of which: Tax revenue14.716.116.817.617.316.917.017.317.6
Total expenditure62.872.563.965.665.861.255.853.050.8
Current expenditure32.037.033.739.940.635.932.431.330.2
Of which: Personnel expenditure12.113.812.917.617.914.913.012.612.2
Capital expenditure27.632.928.225.725.225.323.421.720.6
Nonhydrocarbon primary balance-44.1-53.1-44.9-45.3-45.8-41.6-36.1-33.1-30.8
Nonhydrocarbon overall balance-45.7-54.1-45.4-45.8-46.3-42.2-36.7-33.6-31.3
Oil stabilization fund (in billions of Algerian dinars)3215.54280.04316.54448.94243.94170.34517.55040.95703.2
(in percent of GDP)34.638.942.637.932.128.928.930.131.8
Sources: Algerian authorities; and Fund staff estimates and projections.

On cash basis.

Including dividends of Sonatrach.

Sources: Algerian authorities; and Fund staff estimates and projections.

On cash basis.

Including dividends of Sonatrach.

Table 4.Algeria: Monetary Survey, 2007–11
(In billions of Algerian dinars; at end of period)
Net foreign assets7,41610,24710,75811,89013,385
Of which: Bank of Algeria (BA)7,39910,23010,74611,87813,372
Net domestic assets-1,424-3,291-3,585-3,702-4,004
Domestic credit-350-1,402-892-831-416
Credit to government (net) 1/-2,583-4,092-4,079-4,416-4,432
Credit to the economy2,2332,6893,1873,5854,016
Of which: Private sector1,2091,4131,6211,8242,052
Other items net-1,075-1,888-2,693-2,871-3,588
Money and quasi-money (M2)5,9916,9567,1738,1889,381
Excluding Sonatrach deposits4,7165,6546,3997,1887,981
(Percent change over 12-month period)
Money and quasi-money (M2)
Excluding Sonatrach deposits12.119.913.212.311.0
Of which: Money33.117.4-0.416.811.0
Credit to the economy17.220.418.512.512.0
Of which: Private sector14.416.914.712.512.5
Memorandum items:
Liquidity ratio (e.o.p. M2/GDP)64.463.370.869.871.0
Liquidity ratio (e.o.p. M2/NHGDP)114.8116.1105.0108.4112.0
Idem, excluding deposits of Sonatrach90.494.393.795.295.3
Sonatrach deposits1,2751,3027741,0001,400
M2 velocity1.
Credit to the economy/GDP24.024.531.430.630.4
Credit to the economy/NHGDP42.844.946.747.547.9
Credit to private sector/NHGDP23.223.623.724.124.5
Sources: Bank of Algeria; and Fund staff estimates and projections.

Net credit to government excludes Treasury postal accounts ("dépôts CCP") deposited at the BA.

Sources: Bank of Algeria; and Fund staff estimates and projections.

Net credit to government excludes Treasury postal accounts ("dépôts CCP") deposited at the BA.

Appendix 1: Exchange Rate Assessment

An analysis using the CGER methodology suggests that the current level of the real effective exchange rate (REER) is broadly in line with fundamentals. Using estimated coefficients for an oil producer like Algeria, the REER misalignment was calculated under the Equilibrium Real Exchange Rate (ERER) and the Macroeconomic Balance (MB) approaches.

The MB approach implies a current account (CA) norm lower than the projected CA balance in 2010, implying an undervaluation of about 23 percent. The gap between the current account and its norm is expected to decrease by about half over the period until 2015.

Results of CGER-type Analysis(In percent of GDP)
Projected CACA norm

A country-specific long-run cointegration relationship was also estimated for the reduced form Equilibrium Real Effective Exchange Rate (EREER). Under this specification, the EREER is determined by Algeria’s terms of trade (ToT), the differential of output per worker in Algeria vis-a-vis trade partners (prod), and government spending as a percentage of GDP (G) (t-stats between parentheses):

Calculating the EREER using the WEO projections for the explanatory variables implies an undervaluation of 14.5 percent in 2010. The EREER has appreciated in the last few years mainly under the effect of increasing government spending. This development entails the risks of a “Dutch disease” phenomenon. The projection of the EREER over the medium term points to a gradual depreciation reflecting the projected lower public spending in percentage of GDP and increased productivity gap vis-a-vis the trading partners which more than balance the impact of higher oil prices. The effective real exchange rate has slightly appreciated since end-2009.

REER and Equilbrium (1970-2015(p))

Annex I. Relations with the Fund

(As of November 30, 2010)

A. Financial Relations

Membership Status Joined 9/26/63; Article VIII

General Resources Account

SDR MillionPercent of Quota
Fund holdings of currency1,198.1893.22
Reserve position in Fund85.086.78

SDR Department

SDR MillionPercent of

Net cumulative allocation1,198.18100.00

Outstanding Purchases and Loans: None.

Financial Arrangements





(SDR Million)


(SDR Million)

Projected Obligations to Fund

(SDR million; based on existing use of resources and present holdings of SDRs)


Implementation of HIPC Initiative: Not Applicable.

B. Nonfinancial Relations

Exchange Rate Arrangement

45. From January 21, 1974 to October 1, 1994, the exchange rate of the dinar was determined on the basis of a fixed relationship with a basket of currencies, adjusted from time to time. On October 1, 1994, the Bank of Algeria introduced a managed float for the dinar through daily fixing sessions that included six commercial banks. This system has been replaced by an interbank foreign exchange market as of January 2, 1996. On December 15, 2010, the average of the buying and selling rates for the U.S. dollar was $1 = DA 74.6, equivalent to SDR 1 = DA 114.9. No margin limits are imposed on the buying and selling exchange rates in the interbank foreign exchange market, except for a margin of DA 0.017 between the buying and selling rates of the Bank of Algeria for the dinar against the U.S. dollar.

46. The exchange regime is classified as other managed arrangement with no preannounced path for the exchange rate. Full surrender requirements are in effect on hydrocarbon export proceeds. Limits on the making of payments for invisible transactions and current transfers, which have remained since Algeria accepted the obligations of Article VIII, sections 2(a), 3, and 4, in 1997, are indicative according to the authorities. Inward direct investment is generally free of restrictions; controls are maintained on other capital account payments and transfers.

Latest Article IV Consultation

47. The discussions for the 2009 Article IV consultation with Algeria were held in Algiers during October21–November 3, 2009. The staff report (IMF Country Report No. 10/57) was considered by the Executive Board on January 5, 2010 on a lapse of time basis and published on March 02, 2010.

Technical Assistance

  • An MFD/LEG mission visited Algiers in July 2005 to advise on the exchange regime and the development of the foreign exchange market.
  • An MFD expert visited Algiers in October 2005 to advise on foreign exchange reserve management.
  • An MFD mission visited Algiers in September 2005, December 2005, and in May 2006 to advise on bank restructuring.
  • An MFD expert visited Algiers several times from February through September 2006 to assist the Bank of Algeria to develop its bank supervision and regulation capability.
  • An MFD expert visited Algiers in January-February 2006 to advise on monetary and foreign exchange operations.
  • An MFD expert visited Algiers in February and May 2006 to advise on foreign exchange reserve management.
  • A STA mission visited Algiers in May 2006 to advise on monetary and financial statistics.
  • An MFD expert visited Algiers in May 2006 to advise on payment systems.
  • A STA mission visited Algiers in May 2006 to advise on consumer price statistics.
  • MFDs expert visited Algiers several times from February through October 2007 to assist the Bank of Algeria in banking supervision.
  • Two FAD missions visited Algiers in February 2007 to review tax policy and advise on customs administration.
  • A multisector STA mission visited Algiers in February 2007 to prepare Algeria’s participation in the GDDS.
  • An FAD mission visited Algiers in April 2007 to continue the program of assistance in tax administration.
  • An FAD mission visited Algiers in May 2008 to continue the program of assistance in tax administration.
  • An MCM mission visited Algiers in May 2009 to advise on strengthening banking supervision and regulation.
  • An MCM mission visited Algiers in June 2009 to prepare the program for harmonizing financial sector infrastructure in the Maghreb.
  • An MCM expert is planned to start a long-term banking supervision TA in December 2010.

Financial Sector Assessment Program

48. Algeria participated in the FSAP in 2003. The Executive Board discussed the Financial System Stability Assessment on January 14, 2004, (see IMF Country Report No. 04/138). The FSAP was updated in 2007.

Resident Representative/Advisor


Annex II. Algeria: Relations with the World Bank Group

JMAP Implementation, FY11

As of December 10th, 2010


timing of



A. Mutual Information on Relevant Work Programs
Bank work

program in

next 12 months
a. Country Partnership Strategy FY11-

FY14 for delivery in FY11, including

Analytical and Technical Assistance

activities on a reimbursable basis, no

lending in line with government’s policy.
Ongoing activities

with multiple

missions throughout

the year

b. Sector workon:
  • State-owned Banks for Ministry of Finance
  • Subsidy targeting
  • Reviewing Social Protection Programs
  • Energy Demand
  • Environment and Tourism
  • Climate change
c. Technical assistance on
  • Credit Registry with Central Bank
  • Financial Crisis simulation (FIRST)
  • RAMP
  • Social Programs Evaluation
  • Support to analysis and evaluation of the Household Survey
  • Agricultural Program
  • Competitiveness Poles
  • Agricultural Statistical Capacity
IMF work

program in

next 12 months
2010 Article IV ConsultationOctober 20-

November 2 2010
January 2011
Preparing analytical work on new FDI

regulation and the structural links between

gas and oil prices in Algeria
OngoingJanuary 2011
Staff visitApril 2011
2011 Article IV consultationOctober 2011January 2012
Technical assistance missions on:

MCM: banking supervision on-site expert


STA: GDP quarterly statisticsNovember 2011
B. Requests for Work Program Inputs
Fund request

to Bank
Developments on the subsidy reformAs needed
Sectoral analysisAs needed
Bank request

to Fund
Assessment of macroeconomic stance and

Semiannual (and on

ad hoc basis if


Article IV and

staff visits
At least 1 operation

Data sharingOngoing
C. Agreement on Joint Products and Missions
Joint products

in next 12

Continuous close coordination on the

reform agenda

Algeria—Statistical Issues Appendix

I. Assessment of Data Adequacy for Surveillance
General: Data provision has some shortcomings, but is broadly adequate for surveillance. Government finance statistics, national accounts, and prices have several shortcomings that hamper analysis.
National Accounts: Key shortcomings in national accounts include an outdated base year for constant price GDP estimates, long lags for publication of data, and incomplete application of the 1993 System of National Accounts. STA has recommended giving priority to compiling GDP at constant prices (including quarterly accounts) and to rebasing the GDP series.
Price Statistics: Data are published with a delay of about 3 months.
Government finance statistics: Key shortcomings include insufficient institutional coverage (coverage is limited to Budgetary Central Government, albeit in a wide sense, including the general budget, the annexed budget, and the special treasury accounts), classification problems, long lags for production of statistics, and lack of reconciliation of financing with the monetary accounts. Key factors behind these weaknesses include the lack of financial resources allocated to the compilation of statistics, insufficient interagency coordination, as well as concerns about accuracy that give rise to reluctance to publish provisional data.
Monetary statistics: The authorities need to ensure the data consistency with the methodology in the Monetary and Financial Statistics Manuel, 2000. Timely reporting of balance sheet data by some state-owned commercial banks remains problematic, and most commercial banks do not report all data needed to compile the monetary survey. Prudential data reported by state-owned banks are unreliable and not timely.
Balance of payments: Although balance of payments statistics are generally of good quality, they could benefit from a survey for direct investment data.
II. Data Standards and Quality
Algeria began participation in the General

Data Dissemination System (GDDS) on

April 21, 2009.
No data ROSC is available.
Algeria: Table of Common Indicators Required for Surveillance

As of December 7, 2009
Date of latest observationDate receivedFrequency of Data7Frequency of Reporting7Frequency of publication7
Exchange Rates10/0911/02/10DMW
International Reserve Assets and Reserve Liabilities of the Monetary Authorities109/0911/02/10DMM
Reserve/Base Money09/1011/30/10MMM
Broad Money09/1011/02/10MMM
Central Bank Balance Sheet09/1011/02/10MMA
Consolidated Balance Sheet of the Banking System09/1011/02/10MMA
Interest Rates 209/1011/02/10MMM
Consumer Price Index09/1011/20/09MMM
Revenue, Expenditure, Balance and Composition of Financing3 – General Government4NANANA
Revenue, Expenditure, Balance and Composition of Financing3 – Central Government03/1011/02/10QIA
Stocks of Central Government and Central Government-Guaranteed Debt503/1011/02/10QIA
External Current Account Balance06/1010/20/10QQA
Exports and Imports of Goods and Services09/1010/20/10QQA
Gross External Debt09/1011/02/10AAA
International Investment Position6PAPAPA

Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents. Data are partial, because of shortcomings in the compilation of FDI.

Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents. Data are partial, because of shortcomings in the compilation of FDI.

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