Press Release: IMF Managing Director Rodrigo de Rato's Statement at the Conclusion of his Visit to Algeria
March 2, 2005
Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund (IMF), made the following statement on March 2, 2005 in Algiers, at the conclusion of his visit to Algeria:
"I have had the privilege during my visit to Algeria to meet President Abdelaziz Bouteflika. I also met Prime Minister Ahmed Ouyahia, Minister of Finance Abdellatif Benachenhou, Central Bank Governor Mohammed Laksaci, members of Parliament, and representatives of civil society. I would like to thank the Algerian authorities for their warm welcome.
"Our discussions have revealed a common understanding of Algeria's accomplishments and the challenges that lie ahead. Algeria has made progress over the past decade in moving from a state-controlled to an open, market-based economy. Remarkable success has been achieved in restoring macroeconomic stability, and progress has been made in liberalizing foreign trade, and increasing economic growth. We, at the IMF, have supported you in these efforts and I congratulate you on your achievements.
"However, major challenges remain, in particular to quicken the pace of sustainable growth and to reduce the high level of unemployment. The increased political stability and Algeria's strong financial position create an ideal window of opportunity to tackle these challenges.
"We share with the Algerian authorities the view that macroeconomic stability is a prerequisite for growth, foreign investment, and expanding trade. In this respect, sound management of the hydrocarbon wealth that takes into account infrastructure and social spending needs, together with the importance of maintaining macroeconomic stability, is key. The 2005 government budget is an important step in this direction. In this regard, it is not only the level of the fiscal balance that matters, but also the efficiency and transparency of the budget process. I also welcome the authorities' intention to continue the prudent monetary policy that has kept inflation under control.
"In our discussions today, we also agreed that macroeconomic policies alone are not enough. Higher growth rates that generate employment, reduce poverty, and increase general standards of living, also require deep structural and institutional reforms.
"At the core of these reforms lie the establishment of a sound banking system and the further integration of Algeria in the world economy:
"The recent decision to replace bank loans to loss-making public enterprises by explicit budget subsidies is a step toward these goals. At the same time, it is crucial to strengthen banking supervision and privatize several public banks, in order to speed up the transfer of modern know-how and banking practices to the sector.
"Following the signing of an Association Agreement with the European Union in 2002, it is now important to proceed with its ratification and implementation. Equally, we look forward to seeing Algeria conclude negotiations towards World Trade Organization accession. Increasing regional cooperation among the Maghreb countries would also buttress the benefits from multilateral trade liberalization. In this regard, I have proposed to the authorities organizing a regional seminar on trade facilitation in the countries of the Maghreb.
"In addition, restructuring and privatizing the viable public enterprises will enable them to grow again. These reforms, which should be accompanied by an appropriate social safety net, would increase the efficiency of the Algerian economy, boost growth and exports, and create productive jobs.
"The IMF stands ready to assist Algeria in completing its reform agenda. We encourage the authorities to meet these important future challenges and we wish you every success."