Front Matter Page
© 1996 International Monetary Fund
August 1996
IMF Staff Country Report No. 96/71
Algeria—Selected Economic Issues
This report on selected economic issues in Algeria was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with this member country. As such, the views expressed in this document are those of the staff team and do not necessarily reflect the views of the Government of Algeria or the Executive Board of the IMF.
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Washington, D.C.
Front Matter Page
INTERNATIONAL MONETARY FUND
ALGERIA
Selected Economic Issues
Prepared by a staff team consisting of Messrs. K. Nashashibi (Head), K. Enders, A. Féler (all MED) Ms. S. Bazzoni (FAD) and Mr. A. Zanello (PDR)
Approved by the Middle Eastern Department
June 11, 1996
Contents
Basic Data
I. Recent Institutional Reforms: Establishing Market Mechanisms
1. Domestic price system
a. Lifting controls on prices and profit margins
b. Eliminating generalized subsidies
2. Reform of the enterprise sector
a. Restructuring public enterprises
b. Privatization and private sector development
3. Financial sector reform
a. Interest rates deregulation
b. Indirect instruments of monetary management and budget financing
c. Commercial bank restructuring
4. External sector reform
a. Trade and payments liberalization
c. From a fixed exchange rate regime to a managed float
II. Fiscal Policy: Recent Performance and Future Prospects
1. Fiscal Consolidation: 1993-95
a. Revenue developments
(1) Hydrocarbon revenue
(2) Nonhydrocarbon revenue
b. Expenditure developments
2. Future prospects
a. The need for a budget surplus
b. New expenditure pressures
c. Fiscal measures to achieve and maintain a budget surplus
(1) Tax reform
(2) Expenditure savings
III. Housing Reform: Fostering a Market-Driven Supply Response
1. Restructuring the housing construction sector
2. Reforming the rental market for housing
3. Revamping housing finance
IV. Recent Evolution of Employment and Medium-Term Prospects
1. Recent trends in the Algerian labor market
2. The structure of unemployment
a. Rural and urban unemployment
b. Youth unemployment
c. Unemployment and education
d. Unemployment duration
3. Reasons for unemployment
a. Formal and informal labor markets
b. Job protection regulation
c. Trade unions, minimum wages, and wage bargaining
d. The evolution of wages
e. Mismatch
4. Reforming labor markets
5. Labor market prospects
V. The Hydrocarbon Sector and its Implications for Macroeconomic Policies
Text Tables
1. Central Government Revenue, 1990-95
2. Central Government Expenditure, 1990-95
3. Government Tax Revenue: Selected Countries, 1994
4. Data on Public Real Estate Management Agencies (OPGIs)
5. Housing Supply, 1990-95
6. Recent Developments in the Labor Market
7. Employment Prospects (Low Growth Scenario), 1996-2001
8. Employment Prospects (High Growth Scenario), 1996-2001
9. External Accounts Under Different Oil Price Scenarios, 1996-2005
Charts
1. Fiscal Developments, 1990-95
2. Unemployment Rate under High and Low Growth Scenarios, 1995-2010
3. The Link Between Oil Prices and GDP, 1981-95
Appendix
1. Summary of the Tax System, 1995
Statistical Appendix
A1. Supply and Use of Resources at Current Prices, 1990-95
A2. Sectoral Distribution of GDP at Current Prices, 1990-95
A3. Sectoral Distribution of Real GDP Growth, 1990-95
A4. Production, Exports, and Consumption of Petroleum Products, 1990-95
A5. Production, Exports, and Consumption of Gas Products, 1990-95
A6. Domestic Prices of Major Energy Products, 1990-95
A7. Cereal Balance, 1991-95
A8. Land Use Patterns, 1989-94
A9. Crop Yields, 1989-95
A10. Livestock, 1989-94
A11. Index of Industrial Production in Public Enterprises, 1990-95
A12. Production of Minerals, 1990-95
A13. Consumer Price Index, 1990-95
A14. Income of Households, 1990-95
A15. Gross and Net Wages in Public Enterprises, January 1991-January 1996
A16. Labor Force, Employment, and Unemployment, 1991-95
A17. Summary of Central Government Operations, 1991-95
A18. Central Government Revenue, 1992-95
A19. Central Government Expenditure, 1992-95
A20. Compensation Fund Operations, 1991-95
A21. Rehabilitation Fund Operations, 1991-95
A22. Sectoral Allocation of Budgetary Capital Expenditure, 1991-95
A23. Social Security Operations, 1990-95
A24. Monetary Survey, 1990-95
A25. Distribution of Credit to the Economy by Maturity, 1990-95
A26. Balance Sheet of the Bank of Algeria, 1990-95
A27. Structure of Interest Rates, 1989-95
A28. Evolution of the Financial System, 1990-95
A29. Balance of Payments, 1991-95
A30. Volume of Hydrocarbon Exports, 1987-95
A31. Exports of Hydrocarbons, 1987-95
A32. Trade Indices, 1987-95
A33. Medium- and Long-Term External Debt, 1988-94
A34. Medium- and Long-Term External Debt by Creditor Country, as at End-1994
A35. Nominal and Real Effective Exchange Rates, 1989-95
Algeria: Basic Data
Including net lending, special accounts, operations of the Rehabilitation Fund.
For comparison purposes, the data on credit to the nongovernment sector for December 1993 need to be adjusted upward by DA 275.5 billion, representing the conversion into government bonds of public enterprises’ commercial debt. This adjustment would yield an increase of 6.6 percent.
| Area: | 2.4 million square kilometers |
| Population (1995) | 28.6 million |
| Population growth (1995) | 2.1 percent |
| Employment in the nonagricultural sector | 3.4 million |
| GDP per capita (1995) | US$1,448 |
| IMF Position (April 30,1996) | |
| Quota | SDR 914.40 million |
| Fund holdings of Dinars | SDR 2,049.14 million |
| Holdings of SDRs | SDR 27.45 million |
| Exchange rate | US$ 1 = DA 54.11 |
| 1995 | 1991 | 1992 | 1993 | 1994 | 1995 | |||
| In billions of dinars | ||||||||
| at current prices | (Percentage change at constant prices) | |||||||
| Nongovernment consumption | 1097.3 | 3.5 | 3.9 | -2.1 | 0.8 | 2.6 | ||
| Government consumption | 309.7 | 4.5 | 3.1 | 3.0 | 6.5 | 3.5 | ||
| Gross fixed investment | 631.7 | -20.3 | 0.2 | -8.4 | 1.3 | 3.2 | ||
| Total domestic demand | 2038.7 | -4.7 | 2.7 | -3.1 | 1.4 | 2.9 | ||
| Exports of goods and services | 527.3 | -1.5 | 4.0 | -1.9 | -4.0 | 5.4 | ||
| Imports of goods and services | 590.7 | -17.7 | 5.6 | -6.7 | 6.2 | 0.1 | ||
| Gross domestic product | 1975.2 | 0.2 | 23 | -2.2 | 0.9 | 4.3 | ||
| (Annual percentage change) | ||||||||
| Consumer prices, end of period | 25.5 | 28.0 | 16.1 | 38.6 | 21.9 | |||
| GDP deflator | 48.9 | 20.0 | 22.0 | 27.7 | 28.4 | |||
| Broad money | 21.3 | 23.9 | 20.8 | 15.4 | 10.5 | |||
| Bank credit to the nongovernment sector | 31.9 | 42.8 | -52.7 2/ | 38.9 | 85.0 | |||
| (In billions of U.S. dollars) | ||||||||
| Balance of payments | ||||||||
| Merchandise exports | 12.4 | 11.5 | 10.4 | 8.9 | 10.3 | |||
| Merchandise imports | 7.8 | 8.3 | 8.0 | 9.2 | 10.2 | |||
| Services and transfers, net | -1.8 | -2.3 | -1.9 | -1.6 | -2.4 | |||
| Current account balance | 2.4 | 1.3 | 0.8 | -1.8 | -2.3 | |||
| (In percent of GDP) | 6.4 | 2.8 | 1.6 | -4.3 | -5.6 | |||
| Current account balance | 1.6 | 1.5 | 1.5 | 2.6 | 2.1 | |||
| Gross official reserves | 2.0 | 1.8 | 1.8 | 1.9 | 2.1 | |||
| (In months of imports) | ||||||||
| (In percent of GDP) | ||||||||
| Government finances | ||||||||
| Revenue | 34.1 | 30.3 | 27.6 | 29.5 | 30.4 | |||
| Expenditures 1/ | 35.9 | 31.5 | 36.2 | 33.9 | 31.8 | |||
| Balance | 1.8 | -1.2 | -8.6 | -4.4 | -1.4 | |||
Including net lending, special accounts, operations of the Rehabilitation Fund.
For comparison purposes, the data on credit to the nongovernment sector for December 1993 need to be adjusted upward by DA 275.5 billion, representing the conversion into government bonds of public enterprises’ commercial debt. This adjustment would yield an increase of 6.6 percent.
| Area: | 2.4 million square kilometers |
| Population (1995) | 28.6 million |
| Population growth (1995) | 2.1 percent |
| Employment in the nonagricultural sector | 3.4 million |
| GDP per capita (1995) | US$1,448 |
| IMF Position (April 30,1996) | |
| Quota | SDR 914.40 million |
| Fund holdings of Dinars | SDR 2,049.14 million |
| Holdings of SDRs | SDR 27.45 million |
| Exchange rate | US$ 1 = DA 54.11 |
| 1995 | 1991 | 1992 | 1993 | 1994 | 1995 | |||
| In billions of dinars | ||||||||
| at current prices | (Percentage change at constant prices) | |||||||
| Nongovernment consumption | 1097.3 | 3.5 | 3.9 | -2.1 | 0.8 | 2.6 | ||
| Government consumption | 309.7 | 4.5 | 3.1 | 3.0 | 6.5 | 3.5 | ||
| Gross fixed investment | 631.7 | -20.3 | 0.2 | -8.4 | 1.3 | 3.2 | ||
| Total domestic demand | 2038.7 | -4.7 | 2.7 | -3.1 | 1.4 | 2.9 | ||
| Exports of goods and services | 527.3 | -1.5 | 4.0 | -1.9 | -4.0 | 5.4 | ||
| Imports of goods and services | 590.7 | -17.7 | 5.6 | -6.7 | 6.2 | 0.1 | ||
| Gross domestic product | 1975.2 | 0.2 | 23 | -2.2 | 0.9 | 4.3 | ||
| (Annual percentage change) | ||||||||
| Consumer prices, end of period | 25.5 | 28.0 | 16.1 | 38.6 | 21.9 | |||
| GDP deflator | 48.9 | 20.0 | 22.0 | 27.7 | 28.4 | |||
| Broad money | 21.3 | 23.9 | 20.8 | 15.4 | 10.5 | |||
| Bank credit to the nongovernment sector | 31.9 | 42.8 | -52.7 2/ | 38.9 | 85.0 | |||
| (In billions of U.S. dollars) | ||||||||
| Balance of payments | ||||||||
| Merchandise exports | 12.4 | 11.5 | 10.4 | 8.9 | 10.3 | |||
| Merchandise imports | 7.8 | 8.3 | 8.0 | 9.2 | 10.2 | |||
| Services and transfers, net | -1.8 | -2.3 | -1.9 | -1.6 | -2.4 | |||
| Current account balance | 2.4 | 1.3 | 0.8 | -1.8 | -2.3 | |||
| (In percent of GDP) | 6.4 | 2.8 | 1.6 | -4.3 | -5.6 | |||
| Current account balance | 1.6 | 1.5 | 1.5 | 2.6 | 2.1 | |||
| Gross official reserves | 2.0 | 1.8 | 1.8 | 1.9 | 2.1 | |||
| (In months of imports) | ||||||||
| (In percent of GDP) | ||||||||
| Government finances | ||||||||
| Revenue | 34.1 | 30.3 | 27.6 | 29.5 | 30.4 | |||
| Expenditures 1/ | 35.9 | 31.5 | 36.2 | 33.9 | 31.8 | |||
| Balance | 1.8 | -1.2 | -8.6 | -4.4 | -1.4 | |||
Including net lending, special accounts, operations of the Rehabilitation Fund.
For comparison purposes, the data on credit to the nongovernment sector for December 1993 need to be adjusted upward by DA 275.5 billion, representing the conversion into government bonds of public enterprises’ commercial debt. This adjustment would yield an increase of 6.6 percent.