Abstract
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.
Relations with the Fund
(As of March 31, 2016)
Membership Status: Joined: September 26, 1963; Article VIII.
General Resources Account
| SDR Million | Percent Quota | |
|---|---|---|
| Quota | 1,959.90 | 100.00 |
| IMF’s holding of currency (holdings rate) | 1,771.82 | 90.40 |
| Reserve tranche position | 188.08 | 9.60 |
| SDR Million | Percent Quota | |
|---|---|---|
| Quota | 1,959.90 | 100.00 |
| IMF’s holding of currency (holdings rate) | 1,771.82 | 90.40 |
| Reserve tranche position | 188.08 | 9.60 |
SDR Department
| SDR Million | Percent Allocation | |
|---|---|---|
| Net cumulative allocation | 1,198.18 | 100.00 |
| Holdings | 898.59 | 75.00 |
| SDR Million | Percent Allocation | |
|---|---|---|
| Net cumulative allocation | 1,198.18 | 100.00 |
| Holdings | 898.59 | 75.00 |
Outstanding Purchases and Loans
None
Financial Arrangements (In millions of SDR)
| Approval | Expiration | Amount Approved | Amount Drawn | |
|---|---|---|---|---|
| Type | Date | Date | (SDR Million) | (SDR Million) |
| EFF | 5/22/1995 | 5/21/1998 | 1,169.28 | 1,169.28 |
| Stand-by | 5/27/1994 | 5/22/1995 | 457.20 | 385.20 |
| Stand-By | 6/03/1991 | 3/31/1992 | 300.00 | 225.00 |
| Approval | Expiration | Amount Approved | Amount Drawn | |
|---|---|---|---|---|
| Type | Date | Date | (SDR Million) | (SDR Million) |
| EFF | 5/22/1995 | 5/21/1998 | 1,169.28 | 1,169.28 |
| Stand-by | 5/27/1994 | 5/22/1995 | 457.20 | 385.20 |
| Stand-By | 6/03/1991 | 3/31/1992 | 300.00 | 225.00 |
Projected Obligations to Fund
(SDR million; based on existing use of resources and present holdings of SDRs):
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2016 | 2017 | 2018 | 2019 | 2020 | |
| Principal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Charges/interest | 0.13 | 0.17 | 0.17 | 0.17 | 0.17 |
| Total | 0.13 | 0.17 | 0.17 | 0.17 | 0.17 |
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2016 | 2017 | 2018 | 2019 | 2020 | |
| Principal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Charges/interest | 0.13 | 0.17 | 0.17 | 0.17 | 0.17 |
| Total | 0.13 | 0.17 | 0.17 | 0.17 | 0.17 |
Implementation of HIPC Initiative: Not Applicable.
Exchange Rate Arrangement
1. 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 April 15, 2016, the average of the buying and selling rates for the U.S. dollar was US$ 1 = DZD 108.96, equivalent to SDR 1 = DZD 153.15. No margin limits are imposed on the buying and selling exchange rates in the interbank foreign exchange market, except for a margin of DA 0.015 between the buying and selling rates of the Bank of Algeria for the dinar against the U.S. dollar.
2. The de jure exchange rate arrangement is managed floating and the de facto exchange regime is classified as other managed arrangement with no preannounced path for the exchange rate. Algeria maintains an exchange system free from restrictions on the making of payments and transfers for current international transactions.
Article IV Consultation
The last Article IV consultation was concluded by the Executive Board on December 1, 2014 (IMF Country Report 14/341). The discussions for the 2016 Article IV consultation were held in Algiers from March 1 to March 14, 2016.
Technical Assistance
| STA | Monetary and financial statistics and financial stability indicators | April 2012 |
| MCM | Banking supervision, macro-prudential policy and monetary policy | September 2012 |
| FAD | Public financial management | September 2012 |
| FAD | Subsidy reform | March 2013 |
| FAD | Tax policy | November 2013 |
| MCM | Bank supervision | December 2013 |
| FAD | Tax administration | April 2014 |
| STA | International investment position statistics | September 2014 |
| MCM | Foreign exchange market development | September 2014 |
| FAD | Multiyear budgeting | September 2014 |
| FAD | Tax policy | January 2015 |
| MCM | Interbank financial market development | February 2015 |
| FAD | Organic budget law | April 2015 |
| FAD | Tax administration | April 2015 |
| MCM | Management of foreign exchange reserves | April 2015 |
| RES | Macro-modeling | May 2015 |
| MCM | Macroprudential policies and financial stability | July 2015 |
| MCM | Liquidity management, monetary operations, and interbank market developments | September 2015 |
| MCM | Enhancing bank regulation and supervision | November 2015 |
| FAD | Tax and customs administration | November 2015 |
| MCM | Setting up a liquidity committee | December 2015 |
| MCD | Stress testing banks | December 2015 |
| FAD | Tax administration | February 2016 |
| MCM | Financial stability and macroprudential policy framework | April 2016 |
| STA | Monetary and financial statistics and financial stability indicators | April 2012 |
| MCM | Banking supervision, macro-prudential policy and monetary policy | September 2012 |
| FAD | Public financial management | September 2012 |
| FAD | Subsidy reform | March 2013 |
| FAD | Tax policy | November 2013 |
| MCM | Bank supervision | December 2013 |
| FAD | Tax administration | April 2014 |
| STA | International investment position statistics | September 2014 |
| MCM | Foreign exchange market development | September 2014 |
| FAD | Multiyear budgeting | September 2014 |
| FAD | Tax policy | January 2015 |
| MCM | Interbank financial market development | February 2015 |
| FAD | Organic budget law | April 2015 |
| FAD | Tax administration | April 2015 |
| MCM | Management of foreign exchange reserves | April 2015 |
| RES | Macro-modeling | May 2015 |
| MCM | Macroprudential policies and financial stability | July 2015 |
| MCM | Liquidity management, monetary operations, and interbank market developments | September 2015 |
| MCM | Enhancing bank regulation and supervision | November 2015 |
| FAD | Tax and customs administration | November 2015 |
| MCM | Setting up a liquidity committee | December 2015 |
| MCD | Stress testing banks | December 2015 |
| FAD | Tax administration | February 2016 |
| MCM | Financial stability and macroprudential policy framework | April 2016 |
Financial Sector Assessment Program
Algeria first participated in the FSAP in 2003. The FSAP was updated in 2007 and in 2013. The Executive Board discussed the Financial System Stability Assessment on January 24, 2014 (IMF Country Report No. 14/161).
Resident Representative/Advisor
None.
Relations with the World Bank Group
JMAP Implementation, FY16
(As of April 20, 2016)
| Title | Products | Provisional timing of missions | Expected delivery date |
|---|---|---|---|
| A. Mutual Information on Relevant Work Programs | |||
| Bank work program in next 12 months | a. Sector work
|
June 2016 June 2016 |
March 2017 March 2017 |
b. Technical assistance
|
October 2017 June 2017 June 2016 March 2017 March 2017 August 2016 December 2016 June 2016 September 2016 December 2017 |
||
| IMF work program in next 12 months | Staff visit Staff visit 2017 Article IV consultation Continued technical assistance expected in the following areas:
|
July 2016 October 2016 March 2017 |
May 2017 |
| B. Requests for Work Program Inputs | |||
| Fund request to Bank | Analysis related to subsidy reform Sectoral analysis |
As needed As needed |
|
| Bank request to Fund | Assessment of macroeconomic stance and prospects Data sharing |
Semiannual (and on ad hoc basis if requested) Ongoing |
Following Article IV and staff visits |
| C. Agreement on Joint Products and Missions | |||
| Joint products in next 12 months | Continuous close coordination on the reform agenda | Ongoing | |
| Title | Products | Provisional timing of missions | Expected delivery date |
|---|---|---|---|
| A. Mutual Information on Relevant Work Programs | |||
| Bank work program in next 12 months | a. Sector work
|
June 2016 June 2016 |
March 2017 March 2017 |
b. Technical assistance
|
October 2017 June 2017 June 2016 March 2017 March 2017 August 2016 December 2016 June 2016 September 2016 December 2017 |
||
| IMF work program in next 12 months | Staff visit Staff visit 2017 Article IV consultation Continued technical assistance expected in the following areas:
|
July 2016 October 2016 March 2017 |
May 2017 |
| B. Requests for Work Program Inputs | |||
| Fund request to Bank | Analysis related to subsidy reform Sectoral analysis |
As needed As needed |
|
| Bank request to Fund | Assessment of macroeconomic stance and prospects Data sharing |
Semiannual (and on ad hoc basis if requested) Ongoing |
Following Article IV and staff visits |
| C. Agreement on Joint Products and Missions | |||
| Joint products in next 12 months | Continuous close coordination on the reform agenda | Ongoing | |
Statistical Issues
| I. Assessment of Data Adequacy for Surveillance | |
| General: Data provision has some shortcomings, but is broadly adequate for surveillance. | |
| National Accounts: Following STA recommendations, the NSO compiles annual national accounts (ANA) at prior year prices. The ANA broadly follow the 1993 SNA recommendations, but nonprofit institutions serving households are not taken into account. The NSO started publishing quarterly national accounts in 2015. Price Statistics: Data are published with a delay of less than one month. |
|
| 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, and concern about accuracy that give rise to reluctance to publish provisional data. | |
| Monetary statistics: Monetary statistics compiled by the authorities are largely in line with the methodology in the Monetary and Financial Statistics Manual, 2000 and its companion Compilation Guide, 2008. Timeliness of reporting by state-owned commercial banks has significantly improved; consequently, data on depository corporations—as well as finance companies—are usually available within a period of two to three months. Reporting formats (balance sheet and appendices) applied to commercial banks and finance companies were updated in 2009 and the updated version was enforced in 2010. All respondents now provide all requested data. Data on insurance corporations are not yet collected, but the Banque d’Algérie, with the continuing support of the IMF Statistics Department, launched a project to this end in 2009. | |
| Balance of payments: Balance of payments statistics are generally of good quality. Estimates of international investment position data are now available for 2011-2013 but have not yet been compiled for more recent years. | |
| II. Data Standards and Quality | |
| Algeria began participation in the General Data Dissemination System (GDDS) on April 21, 2009. | No data ROSC is available. |
| I. Assessment of Data Adequacy for Surveillance | |
| General: Data provision has some shortcomings, but is broadly adequate for surveillance. | |
| National Accounts: Following STA recommendations, the NSO compiles annual national accounts (ANA) at prior year prices. The ANA broadly follow the 1993 SNA recommendations, but nonprofit institutions serving households are not taken into account. The NSO started publishing quarterly national accounts in 2015. Price Statistics: Data are published with a delay of less than one month. |
|
| 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, and concern about accuracy that give rise to reluctance to publish provisional data. | |
| Monetary statistics: Monetary statistics compiled by the authorities are largely in line with the methodology in the Monetary and Financial Statistics Manual, 2000 and its companion Compilation Guide, 2008. Timeliness of reporting by state-owned commercial banks has significantly improved; consequently, data on depository corporations—as well as finance companies—are usually available within a period of two to three months. Reporting formats (balance sheet and appendices) applied to commercial banks and finance companies were updated in 2009 and the updated version was enforced in 2010. All respondents now provide all requested data. Data on insurance corporations are not yet collected, but the Banque d’Algérie, with the continuing support of the IMF Statistics Department, launched a project to this end in 2009. | |
| Balance of payments: Balance of payments statistics are generally of good quality. Estimates of international investment position data are now available for 2011-2013 but have not yet been compiled for more recent years. | |
| 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 March 31, 2016
Any reserve assets that are pledged or 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.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); and Not Available (NA), Partially available (PA)
Algeria: Table of Common Indicators Required for Surveillance As of March 31, 2016
| Date of latest observation | Date received | Frequency of Data7 | Frequency of Reporting7 | Frequency of publication7 | |
|---|---|---|---|---|---|
| Exchange Rates | 03/31/16 | 03/31/16 | D | D | D |
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | 12/15 | 03/03/16 | D | M | Q |
| Reserve/Base Money | 12/15 | 03/03/16 | D | M | Q |
| Broad Money | 12/15 | 03/03/16 | D | M | Q |
| Central Bank Balance Sheet | 12/15 | 03/03/16 | D | M | Q |
| Consolidated Balance Sheet of the Banking System | 12/15 | 03/03/16 | M | M | Q |
| Interest Rates2 | 12/15 | 03/03/16 | M | M | Q |
| Consumer Price Index | 03/16 | 04/19/16 | M | M | M |
| Revenue, Expenditure, Balance and Composition of Financing3—Central Government4 | 11/15 | 02/18/16 | M | I | A |
| Stocks of Central Government and Central Government-Guaranteed Debt5 | 12/15 | 02/18/16 | I | I | A |
| External Current Account Balance | Q4, 2015 | 02/18/16 | Q | I | Q |
| Exports and Imports of Goods and Services | Q4, 2015 | 02/18/16 | Q | I | Q |
| GDP/GNP | Q4, 2015 | 04/25/16 | Q | Q | Q |
| Gross External Debt | Q4, 2015 | 02/18/16 | Q | I | Q |
| International Investment Position6 | 2013 | 03/03/16 | I | I | NA |
Any reserve assets that are pledged or 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.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); and Not Available (NA), Partially available (PA)
Algeria: Table of Common Indicators Required for Surveillance As of March 31, 2016
| Date of latest observation | Date received | Frequency of Data7 | Frequency of Reporting7 | Frequency of publication7 | |
|---|---|---|---|---|---|
| Exchange Rates | 03/31/16 | 03/31/16 | D | D | D |
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | 12/15 | 03/03/16 | D | M | Q |
| Reserve/Base Money | 12/15 | 03/03/16 | D | M | Q |
| Broad Money | 12/15 | 03/03/16 | D | M | Q |
| Central Bank Balance Sheet | 12/15 | 03/03/16 | D | M | Q |
| Consolidated Balance Sheet of the Banking System | 12/15 | 03/03/16 | M | M | Q |
| Interest Rates2 | 12/15 | 03/03/16 | M | M | Q |
| Consumer Price Index | 03/16 | 04/19/16 | M | M | M |
| Revenue, Expenditure, Balance and Composition of Financing3—Central Government4 | 11/15 | 02/18/16 | M | I | A |
| Stocks of Central Government and Central Government-Guaranteed Debt5 | 12/15 | 02/18/16 | I | I | A |
| External Current Account Balance | Q4, 2015 | 02/18/16 | Q | I | Q |
| Exports and Imports of Goods and Services | Q4, 2015 | 02/18/16 | Q | I | Q |
| GDP/GNP | Q4, 2015 | 04/25/16 | Q | Q | Q |
| Gross External Debt | Q4, 2015 | 02/18/16 | Q | I | Q |
| International Investment Position6 | 2013 | 03/03/16 | I | I | NA |
Any reserve assets that are pledged or 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.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); and Not Available (NA), Partially available (PA)