An Arabic version of a statement by a delegation from the International Monetary Fund that held discussions via remote communication with the Algerian authorities between September 13 and October 3 stated that “there is an urgent need to reset economic policies with the aim of correcting macroeconomic imbalances while ensuring protection and support for the most vulnerable groups.”“.
The statement added that “the pandemic and the simultaneous decline in oil production and prices had negative repercussions on the Algerian economy in the last year, which led to a sharp contraction in real GDP by 9.4% in 2020.“.
The Fund added that the pandemic “revealed once again the fragility of the Algerian economy (…) the public finance deficit and the external account deficit widened again in 2020. The foreign exchange reserves fell to 48.2 billion US dollars at the end of 2020.“.
Algeria is the fourth largest economic power in the African continent, but it is vulnerable to fluctuations in energy prices, whose resources represent more than 90% of external revenues..
The IMF delegation indicated that “the economy (is witnessing) a gradual recovery, with economic growth expected to exceed 3% this year.“.
However, he noted at the same time that “the annual average rate of inflation accelerated to 4.1% in June 2021” and that growth “is likely to remain weak due to the expected decline in production capacity in the oil sector in the context of the reduction in investments scheduled in 2020 and the current policies that would Reducing loans to the private sector“.
The International Financial Corporation expected “the persistence of high levels of public finance deficits in the medium term,” which “will deplete the exchange reserves and pose risks to inflation, financial stability and the central bank’s budget.”“.
The delegation recommended that Algeria take a package of measures aimed, in particular, at “the diversification of sources of budget financing, including external borrowing.”“.
Algerian President Abdelmadjid Tebboune had ruled out, in the name of preserving national sovereignty, a request for loans from the International Monetary Fund and international financial institutions..
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