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The Board of Directors of the African Development Bank (AfDB) on Wednesday, November 2, 2016, approved a €900-million loan to Algeria to finance the country’s Industrial and Energy Competitiveness Support Programme (PACIE).
PACIE aims to help create conditions conducive to inclusive growth in Algeria through implementation of economic reforms to (i) ensure fiscal consolidation through improved domestic revenue mobilization and rationalization of budgetary expenditure; (ii) improve the investment climate, opening up the economy to improving framework for private economic initiative and activities, foreign as well as local; and (iii) improving efficiency of the energy sector and promoting renewable energy.
With declining oil revenues, Algeria’s overriding economic challenges call for a vigorous policy response built on fiscal consolidation through broadening and strengthening the revenue side, rationalizing and reducing expenditures, enhancing the efficiency of capital expenditure to ensure long-term budget sustainability; as well as structural transformation centered on diversification, away from hydrocarbon, and strengthened competitiveness and job creation.
PACIE is in line with the New Economic Growth Model (NMCE) 2016-2030 adopted on July 26, 2016, and addresses Algeria’s need to enhance the resilience and competitiveness of its economy and, hence, lay a solid foundation for sustainable growth that creates jobs and wealth. The PACIE is the first lending operation of the new strategic framework highlighting the cooperation between the Bank and Algeria for the period of 2016-2018.
The Program is aligned with two of the Bank’s top five institutional priorities (High 5s), namely “Industrialize Africa” and “Light up and power Africa”. It will also have significant ripple effects on the “Feed Africa” top priority by supporting the development of value chains in the country’s regions since agriculture is a strategic sector, as well as on the “Improve the quality of life for the people of Africa” priority.
PACIE will benefit the entire Algerian population through enhanced competitiveness, which will boost growth and job creation. In particular, it will benefit: (i) Algerian SMEs; (ii) investors; (iii) economic stakeholders mostly youth and women to take advantage of opportunities through self-employed status.
The Board also approved an Interim Country Strategy Paper which provides an operational framework for the Bank’s re-engagement to support the achievement of the objectives of the Government’s 2016-2018 “New Economic Growth Model,” built on two pillars – (i) industrialization, competitiveness and development of value chains; and (ii) support for transformation of the energy sector.