Development Policy

The overall fiscal balance for the first quarter of 2008 continued to show a surplus of approximately DZD 448 billion, equivalent to US$ 6.9 billion from hydrocarbon exports. Earning from hydrocarbons  were estimated at US$ 41.71 billion in the first half of 2008 compared to US$26.94 billion over the same period in 2007 and US$ 59.61 billion for all of 2007. For the first half of 2008, and compared to the same period in the previous year, the increase in imports was significant both for food products (64.41 %) as well as for industrial and agricultural capital goods (53.38 %) and semi-processed goods (19.57 %). The significant increase in food product imports is largely due to the surge in the prices of these products on the international market.

The balance of payments surplus for the first half of 2008 remained at around US$ 20 million compared to only US$ 12.57 billion for the same period in 2007. Official foreign exchange reserves totalled US$133 billion, that is the equivalent of about 4 years of imports, as at end June 2008. This situation has allowed Algeria to considerably improve the sustainability of its external debt over the past few years. The external debt-to-GDP-ratio declined to 3.6% by end June 2008, following an early repayment (starting in 2005) of debt contracted with multilateral institutions and bilateral creditors.

With the entry into force, in 2005, of the Association Agreement with the European Union establishing a free trade zone between the two parties, the integration of Algeria into global trades has increased greatly: non-hydrocarbon exports from Algeria to EU countries represented almost 68.1% of total non-hydrocarbon exports for the first eight months of 2008 compared to 40.8% for the same period in 2007.2 This improvement in integration at the global level is also seen in trade with Asian countries which rose by 36.12% between the first halves of 2007 and 2008 to US$ 4.91 billion. Algeria is also a  a member of the Arab Maghreb Union and is signatory to a Trade and Investment Framework Agreement with the USA and has participated in the negotiations on  the establishment of  a Euro-Mediterranean Free-Trade Area.

Bank Group Strategy

The most recent Bank Strategy for Algeria covered the 2000-2002 period. Currently, the AfDB has no Country Strategy Paper for Algeria. However,  dialogue is ongoing with Algerian authorities with a view to strengthening cooperation with the country. This cooperation will essentially take the form of technical assistance and advice, capacity building, and knowledge generation and dissemination through economic and sector work.

In 41 years of cooperation, the Bank has financed 36 operations in favour of Algeria, comprising twenty–three (23) projects, one (1) study, four (4) lines of credit, one (1) institutional support project, three (3) reform programs, two (2) emergency assistance operations, and two (2) technical assistance operations. In accordance with the country strategy and the economic development program established by Algerian authorities, the Bank’s operations have mainly concerned infrastructure (49%), agriculture (21%), industry and the financial sector (12%), and support for reform programs (9%).

In 2006, the Bank’s total commitments in Algeria are estimated at over UA 1.312 billion, the year in which Algeria informed the Bank of its desire to cancel all the uncomitted balances on loans which did not have a 100% disbursement rate.  Following the cancellations and early repayment of loans contracted with the Bank, the Bank’s portfolio in Algeria has no ongoing investment projects

Ongoing activities primarily concern technical assistance and capacity building operations.