## _cr08103

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---

### Executive Summary — Key issues and policy priorities
- Market-oriented reforms have produced higher growth, low inflation, and strong fiscal and external positions.
- Policy priorities:
  - Sustain favorable performance to lessen dependence on hydrocarbon production.
  - Further lower unemployment, especially among the youth.
- Macroeconomic tensions and policy levers:
  - Expansionary fiscal stance has boosted banking system liquidity; central bank has mopped up excess liquidity and is considering an increase in reserve requirements on commercial bank deposits.
  - Bank of Algeria stands ready to raise policy rates if inflationary pressures intensify.
  - If inflationary pressures persist, fiscal policy should support monetary policy by slowing the pace of the public investment program (PIP).
  - The PIP’s large size and limited absorption capacity call for intensified scrutiny over expenditure quality and efficiency.
- Exchange rate and external stability:
  - Staff estimates are consistent with the central bank’s analysis that the real exchange rate of the dinar is close to its equilibrium level.
- Structural reforms:
  - Progress in tax policy and administration reform; authorities considering further simplification and rationalization in line with FAD recommendations.
  - Financial sector reform is key to intermediation of large savings and to strengthen monetary policy transmission; authorities intend to implement recommendations of the 2007 FSAP update and improve bank governance and credit risk management.
  - Algeria is close to securing WTO accession; authorities plan to implement action plans adopted by Maghreb economic integration conferences organized with Fund staff.

### I. Introduction — Summary findings and challenges
- Recent outcomes:
  - Average annual GDP growth reached about 5 percent over the past five years.
  - Inflation remained under 4 percent over the past five years.
  - Unemployment has declined steadily but remains high, particularly among youth.
- Hydrocarbon sector role:
  - Hydrocarbon sector represents almost half of GDP, nearly all exports of goods, and 3/4 of fiscal revenues, but only 2 percent of employment.
  - Total factor productivity growth has turned slightly positive after an extended period of negative growth.
- Policy challenge:
  - Ensure long-term high and sustained nonhydrocarbon growth to: (a) reduce reliance on hydrocarbon production; (b) further lower unemployment; and (c) transform the country into a dynamic emerging economy.

### II. Economic and financial backdrop — Short-term outlook and medium-term projections
- Short-term and 2008 projections:
  - Overall GDP growth likely to reach 5 percent in 2008 (from 4½ percent in 2007).
  - External current account likely to be close to 25 percent of GDP in 2008 (23½ percent of GDP in 2007).
  - International reserves have passed the $100 billion mark.
  - Bank of Algeria raised policy interest rates in June 2007 by 50 basis points to 2.5 percent.
  - Year-on-year inflation declined from 5.5 percent in July to 4 percent in October; average consumer price inflation likely to remain below 4 percent in 2007.
  - Fiscal stance: projected nonhydrocarbon deficit about 40 percent of nonhydrocarbon GDP (NHGDP) in 2008, up from 37.5 percent in 2007; overall surplus projected at 14 percent of GDP in 2008 from 12 percent in 2007.
- Medium-term outlook (based on WEO oil price projections):
  - Real GDP projected to grow close to 5 percent annually on average over the next five years.
  - External position likely to remain strong; imports would increase significantly driven by the PIP and hydrocarbon investments.
  - Gross external reserves projected to reach about four years of import coverage by 2012 under the scenario.
- Risks to outlook:
  - Acceleration of inflation.
  - Limited absorption capacity affecting quality of public spending.
  - Sharp decline in oil prices.
  - Heightened terrorism activities.
- Upside potential:
  - Accelerated structural reforms could spur private investment and medium-term nonhydrocarbon growth.

### III. Monetary and exchange rate policy — Staff analysis and authorities’ views
- Liquidity and monetary policy:
  - Expansionary fiscal stance boosted liquidity; until mid-2006 surplus reflected mainly Sonatrach deposits in Banque Extérieure d’Algérie (BEA).
  - Since mid-2006 fiscal injections affected all banks evenly, potentially contributing to inflationary pressures and hampering financial market development and monetary transmission.
  - Interbank market and secondary market for government securities activity has become subdued; need to absorb larger liquidity surpluses may lead to undue volatility in policy interest rates and a need for more permanent absorption.
- Exchange rate assessment:
  - Staff estimates and BA analysis: REER of the dinar is close to equilibrium.
  - Three approaches used: Equilibrium Real Exchange Rate, Macroeconomic Balance (MB), and Permanent Income Framework (PIF); all three show REER broadly in line with equilibrium.
- Selected quantitative points (verbatim formulas and table excerpts reproduced in source):
  - Equilibrium REER regression: GprodoilREER44.053.125.01.3+++=
  - MB pooled results: yOilBNFAPopFBCA1.02.002.03.08.0−+++= ; fixed effects results: yOilBPopFBCA02.03.001.07.0−+−=
  - MB estimated current account norm: 10.6 percent of GDP vs. underlying current account balance 10.4 percent of GDP (under current policies).
  - PIF results: estimated current account norm 10.3 percent of GDP (rule 1); under rule 2 projected current account 10.4 percent of GDP vs. current account norm 15.3 percent of GDP.
  - Table of projected results (MB / PIF / Actual / Rule 1):
    - 2008: MB 18.9 / PIF 21.0 / Actual 29.0 / Rule 1 24.8
    - 2009: MB 19.8 / PIF 15.0 / Actual 23.0 / Rule 1 17.9
    - 2010: MB 13.2 / PIF 13.0 / Actual 19.0 / Rule 1 14.6
    - 2011: MB 11.9 / PIF 11.3 / Actual 17.0 / Rule 1 12.0
    - 2012: MB 10.6 / PIF 10.3 / Actual 15.3 / Rule 1 10.4
- Authorities’ positions:
  - BA ready to further increase policy interest rates and keep them positive in real terms.
  - Authorities have started to refrain from depreciating the nominal rate to fully offset inflation differential with partner countries.
  - BA considering increasing required reserves; expect mitigating liquidity drains in 2008 due to substantial Sonatrach investment outlays (high import content).

### IV. Fiscal policy — Stance, projections, and expenditure quality
- Authorities intend to maintain an expansionary fiscal policy stance in support of nonhydrocarbon growth.
- Projected path and sustainability:
  - Nonhydrocarbon primary deficit would peak in 2009, and thereafter decline to about 35 percent of nonhydrocarbon GDP by 2012.
  - High hydrocarbon revenue would keep overall budget surplus above 5 percent of GDP through 2012.
  - Staff estimates: current fiscal stance sustainable and consistent with objective to keep hydrocarbon-related per capita wealth constant over time.
  - If inflationary pressures intensify, fiscal policy should withdraw some fiscal stimulus by slowing PIP pace.
- Key projected indicators (2008–2012):
  - Sustainable primary deficit: -42.3, -40.3, -38.5, -36.8, -35.2
  - Staff projections for actual primary deficit: -39.0, -39.6, -36.9, -35.4, -34.4
  - Crude oil export unit value (US$/bbl): 90.5, 83.8, 81.0, 80.5, 80.3
- PIP scale and quality concerns:
  - PIP launched at $50 billion for 2005–09, later increased to $155 billion, 120 percent of 2007 GDP.
  - Limited absorption capacity necessitates intensified scrutiny over expenditure quality and efficiency.
- Authorities’ fiscal management measures:
  - Implementing recommendations of the 2004 fiscal ROSC and public expenditure review (2005–06).
  - National Investment Fund for Development (Caisse Nationale d’Equipement pour le Développement) prepared a guidebook for selecting major investment projects; expected to improve project implementation, monitoring, and evaluation by 2008.
  - Draft organic law on public finances to be submitted to parliament in coming months.
  - Envisaged wage bill increase in 2008 by 20 percent as part of civil service reform; authorities link future public-sector real wage increases to productivity and nonhydrocarbon performance.

### V. Financial sector, capital markets, and intermediation
- Objectives of reform:
  - Deepen financial intermediation to channel large savings toward investment needs and support private sector activity.
- FSAP update findings and recommendations:
  - Banking system does not pose threat to macro stability given government financial wherewithal and past NPL buybacks.
  - Progress in banking supervision, operational environment, and public banks’ governance.
  - Main recommendations: clarify role of public banks (including planned privatization), enhance operational environment, develop nonbank financing, continue effective liquidity management.
- Nonperforming loans and credit risk:
  - Risk management remains an issue; surge in credit to private sector has raised NPLs.
  - At end-2006 total NPLs stood at 34 percent; NPLs on loans to the private sector by public banks: 45 percent.
- Capital markets and nonbank financing:
  - Domestic corporate bond market sizeable; maturities extend to 11 years.
  - Public enterprises’ investments could increase bond issuance via sociétés publiques de projet.
  - Proposals to launch fixed-income mutual funds and a commercial paper market.
  - Treasury decided to stabilize stock of auctioned government debt by rolling over maturing securities.
  - Abundant liquidity pushed yields on government securities up to two years below the interest rate on three-month BA deposit auctions, interfering with monetary policy transmission.
  - Authorities plan to list large corporate and government bonds on the Algiers Bourse; regulatory framework for commercial paper nearly finalized.
- Policy guidance:
  - Improve governance and performance of public banks, proceed with privatizations, ensure guarantee schemes for SME credit do not distract from credit risk assessment, and revamp credit registry to reduce credit risk.

### VI. Tax reform, business environment, and trade liberalization
- Tax reform proposals (in line with FAD TA):
  - Eliminate special tax regimes.
  - Further simplify the corporate tax.
  - Increase the personal income tax threshold, with fewer brackets and lower rates.
  - Eliminate VAT exemptions and speed up refunds.
  - Replace the turnover tax with direct budgetary transfers to local governments.
- Fiscal cost:
  - FAD estimated short-term budgetary cost of tax reform on the order of 1½ percent of GDP.
- Implementation status:
  - Draft 2008 budget law includes reform of the personal income tax.
  - Eliminating the turnover tax requires addressing sustainability of local finances.
  - Nonhydrocarbon tax revenues have performed well following tax administration reforms with Fund technical assistance.
- Trade and integration:
  - Comprehensive tariff reform in 2001; Association Agreement with the EU effective in 2005; progress toward WTO accession.
  - Authorities intend to continue liberalizing external trade and finalize WTO accession soon; new accession offer to be discussed in January 2008.
  - Second phase of the AAEU initiated in September 2007 with elimination of tariffs on imports of agricultural and industrial products.
  - Authorities to implement action plans from Maghreb integration conferences.

### VII. Statistics, technical assistance, and capacity building
- Data adequacy:
  - Data broadly adequate for surveillance but serious weaknesses exist, particularly in government finance statistics.
  - Key causes: limited financial resources for compilation, insufficient interagency coordination, reluctance to publish provisional data.
- GDDS participation and statistical missions:
  - Algeria decided to participate in the GDDS in February 2006; national coordinator nominated; GDDS metadata production in process.
  - STA missions advised on national accounts, monetary and financial statistics, consumer price statistics, and GDDS participation.
  - February 2007 multisector mission found significant progress on monetary and financial statistics; SRFs published in IFS Supplement starting June 2007 issue.
  - November 2007: authorities published first issue of the Quarterly Statistical Bulletin including balance of payments data.
- GFS and monetary statistics recommendations:
  - Improve human and financial resources, automate bridge between Treasury ledger and GFS table (SROT), present FRR proceeds as revenue, compile more detailed breakdowns, and extend institutional coverage.
  - Enforce reporting obligations of banks; extend monetary statistics coverage to finance companies; align chart of accounts with MFSM.
- Technical assistance timeline (selected missions):
  - MFD, STA, FAD missions across 2005–2007 on bank inspection, liquidity management, reserve management, bank restructuring, national accounts, monetary statistics, consumer price statistics, and tax policy.

### VIII. Selected economic indicators and key statistics (historical series and snapshots)
- Real GDP: 6.9 (2003), 5.2 (2004), 5.1 (2005), 2.0 (2006), 4.6 (2007).
- Hydrocarbon sector growth: 8.8 (2003), 3.3 (2004), 5.8 (2005), -2.5 (2006), -1.0 (2007).
- Other sectors growth: 5.9 (2003), 6.2 (2004), 4.7 (2005), 5.6 (2006), 6.0 (2007).
- Consumer price index (average): 2.6 (2003), 3.6 (2004), 1.6 (2005), 2.5 (2006), 3.7 (2007).
- Gross national savings (percent of GDP): 43.3 (2003), 46.2 (2004), 51.8 (2005), 54.4 (2006), 54.5 (2007).
- Gross national investment (percent of GDP): 30.3 (2003), 33.2 (2004), 31.2 (2005), 29.2 (2006), 31.0 (2007).
- Exports, f.o.b (billions of U.S. dollars): 24.5 (2003), 32.2 (2004), 46.3 (2005), 54.7 (2006), 59.9 (2007).
- Imports, f.o.b (billions of U.S. dollars): 13.4 (2003), 18.0 (2004), 19.9 (2005), 20.7 (2006), 25.2 (2007).
- Current account (percent of GDP): 13.0 (2003), 13.1 (2004), 20.6 (2005), 25.2 (2006), 23.6 (2007).
- Gross official reserves (billions of U.S. dollars): 32.9 (2003), 43.1 (2004), 56.2 (2005), 77.8 (2006), 108.5 (2007).
- Reserves, in months of next year's imports: 18.1 (2003), 21.0 (2004), 26.5 (2005), 29.1 (2006), 32.2 (2007).
- External debt (percent of GDP): 34.4 (2003), 25.6 (2004), 16.7 (2005), 4.9 (2006), 3.5 (2007).
- Interest rate (central bank rediscount rate, percent): 4.5 (2003), 4.0 (2004), 4.0 (2005), 4.0 (2006), 4.0 (2007).
- Exchange rates (December 5, 2007): $1 = DA 67.8; SDR 1 = DA 107.1; BA margin: DA 0.017 between buying and selling rates for the dinar against the U.S. dollar.

### Policy recommendations and priorities highlighted by staff and Directors
- Maintain macroeconomic stability while deepening market-oriented reforms.
- Tighten monetary vigilance as fiscal stimulus may boost liquidity and domestic demand; BA to stand ready to raise policy rates and increase reserve requirements.
- If inflationary pressures persist, withdraw some fiscal stimulus by slowing the PIP and identifying savings in current spending.
- Intensify scrutiny of PIP project selection, implementation, and monitoring to improve absorption and spending quality.
- Press ahead with tax reform: reduce exemptions, tackle VAT design, eliminate the turnover tax, and modernize tax administration.
- Implement FSAP recommendations: improve bank governance, risk management, and proceed with planned bank privatizations.
- Develop domestic capital markets (corporate bonds, commercial paper) and list bonds on Algiers Bourse to deepen nonbank financing.
- Continue trade liberalization, finalize WTO accession, and pursue Maghreb regional integration action plans.
- Advance AML/CFT regulatory framework and expedite Algeria’s participation as a creditor in the Enhanced HIPC Initiative.
- Next Article IV consultation proposed on the standard 12-month cycle.

*Source: IMF staff report excerpt contained in the provided document.*

### Executive Summary ......................................................................................................

### Executive Summary

### Key Issues and Policy Discussions
- Algeria’s market-oriented economic reforms have produced: higher growth, low inflation, and strong fiscal and external positions.
- Policy priorities:
  - Sustain favorable performance to lessen dependence on hydrocarbon production.
  - Further lower unemployment, especially among the youth.
- Macroeconomic tensions and policy levers:
  - The expansionary fiscal stance has boosted liquidity in the banking system, calling for vigilance in monetary policy.
  - The central bank has mopped up excess liquidity and is considering an increase in reserve requirements on commercial bank deposits; it stands ready to raise policy rates if inflationary pressures intensify.
  - If inflationary pressures persist, fiscal policy will need to support monetary policy by slowing the pace of the public investment program (PIP).
  - The PIP’s large size and limited absorption capacity call for intensified scrutiny over expenditure quality and efficiency.
- Exchange rate and external stability:
  - Staff estimates are consistent with the central bank’s analysis that the real exchange rate of the dinar is close to its equilibrium level.
- Structural reforms:
  - Progress in tax policy and administration reform is starting to yield results; authorities are considering further simplification and rationalization in line with FAD recommendations.
  - Financial sector reform is key to effective intermediation of large savings and to strengthen monetary policy transmission; authorities intend to implement recommendations of the 2007 FSAP update and improve bank governance and credit risk management.
  - Algeria is close to securing WTO accession; authorities plan to implement action plans adopted by the Maghreb economic integration conferences organized with Fund staff.

*Executive Summary (pages 3–4 of the source document).*

### I. Introduction — Summary Findings
- Recent outcomes:
  - Average annual GDP growth reached about 5 percent over the past five years.
  - Inflation remained under 4 percent over the past five years.
  - Unemployment has declined steadily but remains high, particularly among youth.
- Hydrocarbon sector role:
  - Hydrocarbon sector represents almost half of GDP, nearly all exports of goods, and 3/4 of fiscal revenues, but only 2 percent of employment.
  - Total factor productivity growth has turned slightly positive after an extended period of negative growth.
- Policy challenge:
  - Ensure long-term high and sustained nonhydrocarbon growth to: (a) reduce reliance on hydrocarbon production; (b) further lower unemployment; and (c) transform the country into a dynamic emerging economy.
- 2007 consultation focus:
  - Macroeconomic policy mix to sustain nonhydrocarbon growth amid large hydrocarbon receipts, ensuring expansionary fiscal stance does not threaten macroeconomic stability or spending quality.
  - Promoting a dynamic private sector via financial sector reform (2003 FSAP update), tax reform, and further regional and global integration.

### II. Economic and Financial Backdrop — Key Indicators and Projections
- Short-term outlook and 2008 projections:
  - Overall GDP growth likely to reach 5 percent in 2008 (from 4½ percent in 2007).
  - External current account likely to be close to 25 percent of GDP in 2008 (23½ percent of GDP in 2007).
  - International reserves have passed the $100 billion mark.
  - The Bank of Algeria raised policy interest rates in June 2007 by 50 basis points to 2.5 percent.
  - Year-on-year inflation declined from 5.5 percent in July to 4 percent in October; average consumer price inflation likely to remain below 4 percent in 2007.
  - Fiscal stance: projected nonhydrocarbon deficit about 40 percent of nonhydrocarbon GDP (NHGDP) in 2008, up from 37.5 percent in 2007; overall surplus projected at 14 percent of GDP in 2008 from 12 percent in 2007.
- Medium-term outlook (based on WEO oil price projections):
  - Real GDP projected to grow close to 5 percent annually on average over the next five years, supported by continued strong nonhydrocarbon activity and steady implementation of the PIP and structural reforms.
  - External position likely to remain strong; imports would increase significantly driven by the PIP and hydrocarbon investments.
  - Gross external reserves projected to reach about four years of import coverage by 2012 under the scenario.
- Risks to outlook:
  - Acceleration of inflation.
  - Limited absorption capacity affecting quality of public spending.
  - Sharp decline in oil prices.
  - Heightened terrorism activities.
- Upside potential:
  - Accelerated structural reforms to improve the business environment could spur private investment and medium-term nonhydrocarbon growth.

### III. Report on Discussions — Monetary and Exchange Rate Policy (Background, Staff Analysis, Authorities’ Views)
- Liquidity and monetary policy:
  - Expansionary fiscal stance has boosted liquidity; until mid-2006 liquidity surplus reflected mainly Sonatrach deposits in Banque Extérieure d’Algérie (BEA).
  - Since mid-2006, fiscal injections have changed liquidity to affect all banks evenly, potentially contributing to inflationary pressures and hampering financial market development and monetary transmission.
  - Activity in the interbank market and secondary market for government securities has become subdued; need to absorb larger liquidity surpluses may lead to undue volatility in policy interest rates and a need for more permanent absorption.
- Exchange rate assessment:
  - Staff estimates are consistent with BA analysis that the REER of the dinar is close to its equilibrium level.
  - Three approaches used: Equilibrium Real Exchange Rate, Macroeconomic Balance (MB), and Permanent Income Framework (PIF); all three show the REER broadly in line with equilibrium (Box 1).
- Selected quantitative points from Box 1:
  - Equilibrium REER regression: GprodoilREER44.053.125.01.3+++= (as presented in the source).
  - MB approach pooled results: yOilBNFAPopFBCA1.02.002.03.08.0−+++= ; fixed effects results: yOilBPopFBCA02.03.001.07.0−+−= (formulas reproduced verbatim).
  - Estimated current account norm (MB): 10.6 percent of GDP vs. underlying current account balance 10.4 percent of GDP (under current policies).
  - PIF results: estimated current account norm 10.3 percent of GDP (rule 1); under rule 2 projected current account 10.4 percent of GDP vs. current account norm 15.3 percent of GDP.
  - Table of projected results (MB, PIF, Actual) for selected years reproduced in source: 
    - 2008: MB 18.9 / PIF 21.0 / Actual 29.0 / Rule 1 24.8
    - 2009: MB 19.8 / PIF 15.0 / Actual 23.0 / Rule 1 17.9
    - 2010: MB 13.2 / PIF 13.0 / Actual 19.0 / Rule 1 14.6
    - 2011: MB 11.9 / PIF 11.3 / Actual 17.0 / Rule 1 12.0
    - 2012: MB 10.6 / PIF 10.3 / Actual 15.3 / Rule 1 10.4
- Authorities’ positions:
  - BA ready to further increase policy interest rates and keep them positive in real terms.
  - Authorities have started to refrain from depreciating the nominal rate to fully offset inflation differential with partner countries.
  - They view policies as consistent with external stability and emphasize difficulty in estimating equilibrium REER given volatile oil prices.
  - Authorities noted mitigating liquidity drains in 2008 due to substantial Sonatrach investment outlays (high import content) and expected increased credit demand from public enterprises for infrastructure, with limited impact on domestic demand because of high import content.
  - BA is considering increasing required reserves.

### IV. Fiscal Policy — Background and Staff Analysis (Summary)
- Fiscal stance:
  - Expansionary, driven by accelerated PIP implementation and increased wage bill.
  - Projected nonhydrocarbon deficit about 40 percent of NHGDP in 2008 (up from 37.5 percent in 2007).
  - Higher hydrocarbon revenues projected to raise the overall fiscal surplus to 14 percent of GDP in 2008 (from 12 percent in 2007), increasing FRR resources.
- Policy implications:
  - If inflationary pressures persist, fiscal policy should slow the pace of the PIP to support monetary policy.
  - The PIP’s large scale ($50 billion launched in 2004 for 2005–09, later increased to $155 billion, 120 percent of 2007 GDP) and limited absorption capacity necessitate intensified scrutiny over expenditure quality and efficiency.

*Executive Summary (pages 3–17 of the source document).*

### 13.      The authorities intend to maintain their expansionary fiscal policy stance in

### _cr08103 - 13.      The authorities intend to maintain their expansionary fiscal policy stance in

### Fiscal stance, projections, and macro implications
- The authorities intend to maintain an expansionary fiscal policy stance in support of nonhydrocarbon growth.
- Driven mainly by the PIP, the nonhydrocarbon primary deficit would peak in 2009, and thereafter decline to about 35 percent of nonhydrocarbon GDP by 2012.
- High hydrocarbon revenue would keep the overall budget surplus above 5 percent of GDP through 2012.
- Staff estimates show that the current fiscal stance is sustainable and consistent with the objective to keep hydrocarbon-related per capita wealth constant over time, based on prudent macroeconomic assumptions.
- Despite the strong fiscal position, fiscal policy will need to support monetary policy if inflationary pressures intensify, by withdrawing some fiscal stimulus.

Key projected indicators (2008–2012)
- Sustainable primary deficit: -42.3, -40.3, -38.5, -36.8, -35.2
- Staff projections for actual primary deficit: -39.0, -39.6, -36.9, -35.4, -34.4
- Crude oil export unit value (US$/bbl): 90.5, 83.8, 81.0, 80.5, 80.3

### Authorities’ views and policy intentions on expenditure quality and fiscal management
- The authorities are aware of the need to intensify scrutiny over expenditure quality and efficiency.
- They have started implementing recommendations of the public expenditure review conducted with the World Bank in 2005–06. The National Investment Fund for Development (Caisse Nationale d’Equipement pour le Développement) has prepared a guidebook for selecting major investment projects in line with sectoral priorities and ensuring minimum standards. The authorities expect this to improve project implementation, monitoring, and evaluation by 2008.
- Substantial progress has been made to modernize budget management and strengthen fiscal governance. The authorities indicated that they are implementing the recommendations of the 2004 fiscal ROSC, including the completion of sectoral medium-term expenditure frameworks for several ministries. They also intend to submit the draft organic law on public finances to parliament in the coming months.
- The authorities reaffirmed their commitment to long-term fiscal sustainability, including linking increases in real wages to productivity and economic performance in the nonhydrocarbon sector.
- The envisaged increase in the wage bill in 2008 (by 20 percent) is described as part of a broad-based civil service reform to improve efficiency and retain skilled staff; it also reflects higher employment in security services.
- The authorities pointed out that the high import content of the PIP will likely limit its impact on inflation.

### Reforms to deepen financial intermediation and boost private sector activity
- Financial system reform is intended to channel Algeria’s large savings more effectively toward investment needs.
- An FSAP update with an IMF/World Bank team found the banking system does not pose a threat to macroeconomic stability, given the financial wherewithal of the predominant owner of banks—the government—which has repeatedly bought back from public banks NPLs to public enterprises.
- Progress noted in: (a) banking supervision; (b) operational environment for financial intermediation; and (c) public banks’ governance framework.
- Main recommendations: (a) clarifying the role of public banks, including proceeding with planned bank privatization; (b) enhancing the operational environment of the financial sector; (c) developing nonbank financing; and (d) continuing to ensure effective liquidity management.
- Risk management remains an issue, now also for loans to private entities; the recent surge in credit to the private sector has given rise to higher NPLs.
- At end-2006, total NPLs stood at 34 percent (NPLs on loans to the private sector by public banks: 45 percent).

### Capital markets, public debt, and nonbank financing
- Algeria’s domestic corporate bond market is sizeable relative to comparators; maturities extend to 11 years.
- Public enterprises have launched significant investments in energy, water, and transportation systems; new entities (sociétés publiques de projet) are being established for specific projects, potentially increasing bond issuance.
- Financing new infrastructure could partially flow through public offerings of corporate bonds instead of credit from public banks, freeing lending capacity for SMEs.
- Proposals to launch fixed-income mutual funds and a commercial paper market would deepen nonbank financing channels.
- Public debt issuance policy: the treasury decided to stabilize the stock of auctioned government debt by rolling over maturing securities. Abundant liquidity and lack of financing requirement have pushed yields on government securities up to two years below the interest rate on three-month BA deposit auctions, interfering with monetary policy transmission.
- Authorities emphasized improving governance and performance of public banks, including through privatization. They argued for government guarantee schemes to support credit to SMEs while large credits flow to public enterprises for infrastructure. A planned revamping of a credit registry should reduce credit risk to the private sector.
- The authorities view a sustained market for corporate debt securities as strengthening financial intermediation and providing competitive pressure on public banks. The regulatory framework for the commercial paper market is nearly finalized. Plans include listing large corporate and government bonds on the Algiers Bourse to boost price transparency.
- Authorities noted that yields on treasury securities reflected current market conditions and that expected tightening of liquidity via Sonatrach’s investments and BA’s absorption operations will gradually close the interest rate gap with BA instruments.

### Tax reform and business environment
- Algeria’s strong fiscal position provides an opportunity to overhaul the tax system to strengthen the business environment without much concern for budgetary impact.
- FAD estimated a short-term budgetary cost of tax reform on the order of 1½ percent of GDP.
- The tax administration submitted proposals in line with FAD TA on tax policy, including: (a) eliminating special tax regimes; (b) further simplifying the corporate tax; (c) increasing the personal income tax threshold, with fewer brackets and lower rates; (d) eliminating VAT exemptions and speeding up refunds; and (e) replacing the turnover tax with direct budgetary transfers to local governments.
- The draft 2008 budget law already includes the reform of the personal income tax. Eliminating the turnover tax requires addressing broader issues on sustainability of local finances.
- Nonhydrocarbon tax revenues have performed well as a result of reforms in tax administration with Fund technical assistance.

### Trade liberalization, regional integration, and competitiveness
- Algeria has progressed on global and regional integration: comprehensive tariff reform in 2001; the Association Agreement with the European Union (AAEU) became effective in 2005; progress toward WTO accession.
- Enhancing cooperation to establish a large regional market is expected to help harness trade liberalization benefits. Algeria participated in a high-level conference on the role of the private sector in economic development and regional integration in the Maghreb in Tunis in November 2007.
- The authorities intend to continue liberalizing external trade, remain engaged in regional integration, and expect to finalize WTO accession soon. A new accession offer was to be discussed in January 2008. The second phase of the AAEU was initiated in September 2007 with elimination of tariffs on imports of agricultural and industrial products.
- The authorities intend to press ahead with reforms to maximize benefits of existing free trade agreements and to upgrade domestic industry to improve competitiveness in international markets.

*Source: Algerian authorities; and Fund staff estimates and projections.*

### 27.      Achievements: Algeria’s market-oriented economic reforms are starting to bear fruits.

### 27.      Achievements: Algeria’s market-oriented economic reforms are starting to bear fruits.

### Major achievements
- Nonhydrocarbon growth is accelerating.
- Employment is on the rise.
- Inflationary pressures have been kept in check.
- The authorities’ massive investment program has started to improve infrastructures and living conditions.

### Challenges
- Sustain recent favorable economic performance over the medium term to lessen the economy’s dependence on hydrocarbon production.
- Further lower unemployment that remains too high, particularly among the youth.
- Transform Algeria into a dynamic emerging market economy.

### Risks
- Short term: The ongoing fiscal stimulus could generate inflationary pressures that could derail the recovery in private sector activity.
- Medium term: The acceleration in nonhydrocarbon growth could prove short lived if the public investment program does not generate a lasting domestic supply response by improving productivity.

### Monetary policy
- Monetary policy to date has contained inflationary pressures by absorbing the banking system’s structural liquidity surplus.
- Looking ahead, monetary policy may bear a heavier burden because the continuing fiscal stimulus is bound to further boost liquidity and domestic demand.
- The current monetary stance remains appropriate, but the central bank should stand ready to further raise interest rates if inflationary pressures intensify.
- The growing liquidity in the banking system:
  - heightens inflationary risks;
  - interferes with the monetary policy transmission mechanism; and
  - hampers the development of financial intermediation.
- Absorbing this liquidity permanently would require a combination of:
  - raising the reserve requirement on bank deposits, with adequate remuneration;
  - providing the central bank with government securities to conduct open market operations; and
  - gradually easing controls over capital outflows.

### Exchange rate policy
- Policies have been consistent with external stability; the real effective exchange rate of the dinar has so far remained close to its equilibrium level.
- Authorities should continue to monitor developments closely to minimize the risk of misalignment.
- If Algeria’s inflation rises above that of its trade partners, the central bank should not respond with an offsetting nominal depreciation that could fuel inflationary pressures.

### Fiscal policy
- Algeria’s fiscal position continues to strengthen despite substantial public investment efforts that have widened the nonhydrocarbon deficit.
- If inflationary pressures persist, fiscal policy will need to support monetary policy by slowing the pace of the public investment program and identifying possible savings in current spending.
- The 2008 budget envisages a sizeable increase in the wage bill that reflects a broad reform of the remuneration system for the civil service; this reform should improve efficiency in the public administration.
- Authorities should continue to keep public-sector real wage increases in line with productivity gains in the nonhydrocarbon sector to preserve competitiveness and long-term fiscal sustainability.

### Quality of public investment
- The economic and social impact of the public investment program (PIP) depends crucially on the quality of spending.
- The PIP’s large size and limited absorption capacity call for intensified scrutiny over expenditure quality and efficiency.
- Staff welcomes that the National Fund for Investment and Development has started to operate.

### Tax reform
- Progress toward strengthening tax administration and simplifying the tax system has been encouraging.
- Strong performance of nonhydrocarbon revenues despite lower income tax rates and external tariffs augurs well.
- To produce noticeable effects on the business climate, the tax-reform policy agenda needs to move forward to:
  - gradually reduce exemptions;
  - tackle VAT design; and
  - eliminate the turnover tax.
- Staff supports the reform proposals that the tax administration has put forward, following technical assistance from the Fund.

### Financial sector reform
- Expanding nonhydrocarbon activity requires effective financial intermediation.
- The financial sector has strengthened, but further progress is pressing.
- Staff encourages implementation of the recommendations of the 2007 FSAP update.
- Priorities include improving bank governance and risk management, given strong growth in private sector credit that should not translate into higher nonperforming loans.
- Ensure guarantee schemes on credit to small and medium enterprises do not distract banks from assessing credit risk.
- Staff encourages the authorities to press ahead with planned bank privatizations.

### Corporate bond market
- Further developing Algeria’s sizeable corporate bond market would heighten competition in the financial sector and lower bank exposures to public enterprises.
- Staff welcomes the decision to list large corporate and government bonds on the Algiers’ Bourse and encourages finalizing the regulatory framework for the commercial paper market.
- Continued public debt issuance is essential for market development because capital markets need a reliable yield curve.

### Regional and global integration
- To maximize benefits from the Association Agreement with the EU, Algeria needs to push forward with both global and Maghreb integration.
- Authorities should soon secure WTO accession to ensure access to international markets.
- Staff encourages implementation of the action plans adopted by the conferences on Maghreb economic integration organized with Fund staff.

### AML/CFT and HIPC
- Staff welcomes the ongoing implementation of the AML/CFT framework and encourages enactment of regulations on the size of cash transactions.
- Staff encourages the authorities to expedite Algeria’s participation as a creditor in the Enhanced HIPC Initiative.

### Consultation cycle
- It is proposed that the next Article IV consultation with Algeria take place on the standard 12-month cycle.

*Source: IMF staff report excerpt (section 27: Achievements) contained in the provided document.*

### 41.      From January 21, 1974 to October 1, 1994, the exchange rate of the dinar was

### _cr08103 - 41.      From January 21, 1974 to October 1, 1994, the exchange rate of the dinar was

### Exchange rate regime and foreign exchange market
- From January 21, 1974 to October 1, 1994, 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.
- The daily fixing system was replaced by an interbank foreign exchange market as of January 2, 1996.
- On December 5, 2007:
  - The average of the buying and selling rates for the U.S. dollar was $1 = DA 67.8.
  - SDR 1 = DA 107.1.
- No margin limits are imposed on buying and selling exchange rates in the interbank foreign exchange market, except for a margin of DA 0.017 between the buying and selling rates of the Bank of Algeria for the dinar against the U.S. dollar.

### Exchange regime, external transactions, and capital controls
- The exchange regime is a managed float with no preannounced path for the exchange rate.
- Full surrender requirements are in effect on hydrocarbon export proceeds.
- Limits on payments for invisible transactions and current transfers (in place since Algeria accepted the obligations of Article VIII, sections 2(a), 3, and 4, in 1997) are indicative according to the authorities.
- Inward direct investment is generally free of restrictions; controls are maintained on other capital account payments and transfers.

### Latest Article IV Consultation
- Discussions for the 2006 Article IV consultation with Algeria were held in Algiers during October 4–18, 2006.
- The staff report (IMF Country Report No. 07/72) was discussed by the Executive Board on January 10, 2007 and published on February 22, 2007.
- IMF Executive Board concluded the 2007 Article IV consultation with Algeria on February 11, 2008.
- Key macro outcomes highlighted in the PIN (February 19, 2008):
  - Real GDP growth: 4.6 percent in 2007 from 2 percent in 2006.
  - Nonhydrocarbon sector growth: 6 percent in 2007.
  - Inflation remained low despite rising food prices.
  - Unemployment declined in 2007 but remained high, particularly among youth.
  - International reserves "have now passed the US$100 billion mark."
  - External current account surplus remained above 20 percent of GDP in 2007.
  - Fiscal policy stance remained expansionary; the nonhydrocarbon fiscal deficit reached about (text cuts off).

### Technical assistance (missions and experts)
- MFD expert visits and missions:
  - January–February 2005: advise on bank inspection.
  - July 2005: advise on liquidity management and monetary operations; MFD/LEG mission on exchange regime and development of the foreign exchange market.
  - October 2005: advise on foreign exchange reserve management.
  - September 2005, December 2005, May 2006: advise on bank restructuring.
  - Several visits from February through September 2006: assist Bank of Algeria to develop bank supervision and regulation capability.
  - January–February 2006: advise on monetary and foreign exchange operations.
  - February and May 2006: advise on foreign exchange reserve management.
  - May 2006: advise on payment systems.
  - Several visits February through October 2007: assist Bank of Algeria in banking supervision.
- STA expert visits and missions:
  - June–July 2005: advise on development of quarterly national accounts statistics.
  - May 2006: advise on monetary and financial statistics.
  - May 2006: advise on consumer price statistics.
  - February 2007: multisector STA mission to prepare Algeria’s participation in the GDDS.
- FAD missions:
  - Two FAD missions in February 2007 to review tax policy and advise on customs administration.
  - April 2007: FAD mission to continue assistance in tax administration.
- Other:
  - MFD expert visit in May 2006 to advise on payment systems.
  - STA multisector mission (February 2007) and other technical support continued across areas relevant to statistics and banking supervision.

### Financial Sector Assessment Program (FSAP)
- Algeria participated in the FSAP in 2003.
- The Executive Board discussed the Financial System Stability Assessment on January 14, 2004.
- The FSSA was published on May 17, 2004.
- The 2003 FSAP was updated in 2007. Missions took place in March and June 2007, and conclusions were discussed with the authorities in November 2007.

### Relations with the World Bank (as of November 30, 2007)
- Algeria Country Assistance Strategy for 2004–06 objectives:
  - Strengthen fiscal sustainability and hydrocarbon revenue management.
  - Remove constraints to private sector-led growth (business environment, SMEs, financial sector, infrastructure).
  - Support strategy and implementation for better service delivery (water supply, transport, housing, environmental services, human development).
- World Bank portfolio in Algeria:
  - 2 active operations and 71 closed loans, with cumulative net commitment of $4.3 billion, of which $4.2 billion have been repaid.
  - Net commitments for the 2 current operations amount to $25.3 million, of which $9.5 million have been disbursed.
  - Of the 2 operations, one is closing on December 31, 2007 and the last one in February 2009.
  - No new loans have been approved since FY03.
  - In FY06 the government prepaid $637 million of 22 IBRD loans, and cancelled $176.9 million of loans for active operations.
- Recent analytical work and TA:
  - Update of the FSAP (joint with IMF), Public Expenditure Review (PER) with IMF, Labor Markets and Social Protection policy note, Investment Climate Assessment (second), policy note on Trade in Services.
  - TA supporting social insurance (pensions), macroeconomic modeling to the ministry of finance and the central bank, improvement of doing business indicators, training on poverty/governance/private sector issues, rural development topics, skills development and technical, vocational and educational training.
- Reimbursable Technical Assistance (RTA) beginning 2006:
  - Preparation of management contracts in water supply for three large cities.
  - Capacity building for Caisse Nationale d’Equipement et de Développement (CNED).
  - Assistance to ministry of urban planning and environment (MATE) in solid waste management and rehabilitation of open dumps and clean development mechanism.
  - Advisory services on procurement to SONATRACH.
  - Planned RTA to central bank for creation of a credit bureau and on regulatory framework of credit cooperatives.

### Statistical issues and data adequacy
- Overall: Data provided to the Fund are broadly adequate for effective surveillance, but serious weaknesses exist, particularly in government finance statistics.
- Key causes of statistical weaknesses:
  - Lack of financial resources for compilation of statistics.
  - Insufficient interagency coordination.
  - Concerns about accuracy leading to reluctance to publish provisional data.
- GDDS participation:
  - Algeria decided to participate in the GDDS in February 2006; a national coordinator was nominated and GDDS metadata production was in process.
  - GDDS participation and technical issues were discussed during the STA multisector statistics mission in February 2007.
- Real sector:
  - ONS human, material and financial resources are insufficient, especially for real sector statistics.
  - Mission recommendations: prioritize compilation of GDP at constant prices with a change in base; compile quarterly accounts.
  - SNA 1993 is not fully applied.
  - Recommendation for BA and ministère des finances (MF) to assume some tasks from ONS to reduce workload.
  - Price index is published with delay; new index with base 2001 has not been published yet; weights need revision; new products should be introduced.
  - Real sector data reported to STA irregularly and with substantial lags.
- Government finance statistics (GFS):
  - Improvements require greater human and financial resources, more prominent role for the general directorate of accounting in the ministry of finance, and an automated bridge table between the detailed monthly Treasury ledger (Balance générale) and the GFS table (Situation Résumée des Opérations du Trésor—SROT).
  - Changeover to an enhanced chart of accounts of the Treasury offers an opportunity to revamp GFS compilation.
  - 2006 GDDS mission and 2007 multi-sector mission recommended:
    - Show proceeds of the oil stabilization fund (FRR) as revenue (rather than financing).
    - Compile more detailed breakdowns, particularly for “other transfers.”
    - More appropriate reporting of three large debt assumption operations carried out over the past decade.
    - Further work on financing and reconciliation with monetary statistics.
  - Meeting GDDS and eventually SDDS standards will require substantial extension of coverage (consolidating operations of social security and Wilayate, and subsequently other administrative bodies and municipalities).
  - Algeria reported GFS through the year 2006 for publication in the GFS Yearbook, but institutional coverage is limited to Budgetary Central Government (general budget, annexed budget, special treasury accounts); clarification sought on recording of the latter (net versus gross).
  - No sub-annual data are submitted for IFS publication.
- Monetary statistics:
  - Monetary data broadly adequate for policy formulation and monitoring.
  - Coverage improved with consolidation of CNEP data beginning December 1998 and CNMA-banque operations beginning January 2002.
  - Reporting of balance sheet data by some state-owned commercial banks is very untimely; most commercial banks do not report complete data needed for the monetary survey.
  - Prudential data reported by banks are untimely and unreliable for state-owned banks.
  - May 2006 mission reiterated recommendation to strictly enforce reporting obligations of banks by introducing high penalties.
  - Recommendation to extend coverage to include finance companies and to undertake major revision of outdated chart of accounts and accounting guidelines to align with the Monetary and Financial Statistics Manual (MFSM).
  - February 14–27, 2007 multisector mission found significant progress: documentation of concepts and methodology, revision of reporting forms, completion of development of monetary and financial statistics based on Standardized Report Forms (SRFs); SRFs published in IFS Supplement starting June 2007 issue.
- Balance of payments:
  - February 2007 mission found statistics generally of good quality, supported by completeness of ITRS system under tight foreign exchange regulations.
  - Emphasis on need to implement a survey for direct investment data.
  - November 2007: authorities published the first issue of the Quarterly Statistical Bulletin, which includes balance of payments data.

### Key data and indicators cited
- Exchange rates and related:
  - $1 = DA 67.8 (average of buying and selling rates for the U.S. dollar, December 5, 2007).
  - SDR 1 = DA 107.1 (December 5, 2007).
  - Bank of Algeria margin: DA 0.017 between buying and selling rates for the dinar against the U.S. dollar.
- Macroeconomic and external:
  - Real GDP growth: 4.6 percent in 2007; 2 percent in 2006.
  - Nonhydrocarbon sector growth: 6 percent in 2007.
  - International reserves: "have now passed the US$100 billion mark" (2007).
  - External current account surplus: remained above 20 percent of GDP in 2007.
- World Bank financials (as of November 30, 2007):
  - Cumulative net commitment: $4.3 billion; $4.2 billion repaid.
  - Net commitments for 2 current operations: $25.3 million; undisbursed/balance and disbursed: $9.5 million disbursed.
  - FY06 prepayment: $637 million of 22 IBRD loans.
  - FY06 cancellations: $176.9 million of loans for active operations.

*IMF country report content provided in the supplied PDF excerpt.*

### 37.5 percent of GDP in 2007 from 36 percent in 2006, as a result of the public investment program and

### _cr08103 - 37.5 percent of GDP in 2007 from 36 percent in 2006, as a result of the public investment program and

### Fiscal outcomes and public investment
- Gross national savings increased to 54.4 percent (2006) and 54.5 percent (2007).
- Gross national investment: 29.2 percent (2006) and 31.0 percent (2007).
- Overall fiscal surplus remained at 12 percent in 2007, supported by higher hydrocarbon revenues and increased savings in the hydrocarbon stabilization fund (FRR).
- Central government finance (in percent of GDP):
  - Total revenue: 43.0 (2006) and 42.7 (2007).
  - Total expenditure and net lending: 29.4 (2006) and 30.9 (2007).
  - Overall budget balance (deficit-): 13.6 (2006) and 11.8 (2007).
- In percent of nonhydrocarbon GDP:
  - Total revenue: 79.5 (2006) and 77.5 (2007).
  - Total expenditure and net lending: 54.4 (2006) and 56.0 (2007).
  - Nonhydrocarbon balance: -36.0 (2006) and -37.6 (2007).
- Authorities’ strategy: preserve long-term fiscal sustainability, increase savings in the stabilization fund, continue capital expenditure under the Public Investment Program (PIP), improve quality of spending, and link future real public sector wage increases to productivity and economic performance per the National Economic and Social Pact.

### Executive Board assessment and authorities’ response
- Executive Directors welcomed recent economic performance and market-oriented reforms; noted accelerating nonhydrocarbon growth, rising employment, controlled inflation, strong external and fiscal positions, and infrastructure improvements from the investment program.
- Main challenges highlighted:
  - Ensure sustained high productivity and nonhydrocarbon growth.
  - Further reduce still high unemployment.
  - Improve financial intermediation.
- Policy priorities and recommendations from Directors:
  - Maintain macroeconomic stability and deepen market-oriented reforms.
  - Continue tightening monetary vigilance as fiscal stimulus may boost liquidity and domestic demand.
  - Consider withdrawing some fiscal stimulus in 2008 if inflationary pressures intensify.
  - Prioritize PIP projects in line with absorptive capacity to reduce demand pressures.
  - Strengthen tax administration, reduce exemptions, improve VAT design, and eliminate the turnover tax.
  - Implement Financial Sector Assessment Program recommendations, strengthen bank governance and risk management, and avoid guarantee schemes distracting from credit risk assessment.
  - Finalize regulatory framework for the commercial paper market and develop local corporate debt securities markets.
  - Continue trade liberalization and finalize WTO accession.

### Monetary policy, liquidity, and exchange rate
- Central bank actions and stance:
  - Tightening of monetary policy absorbed excess liquidity and helped keep inflation under control despite rising food prices.
  - Central bank increased reserve requirement rate from 6.5 percent to 8 percent in January 2008.
  - Authorities stand ready to increase BA’s policy interest rates, reserve requirements, and liquidity absorption if needed.
  - Continued sterilization of part of oil-induced inflows via the stabilization fund.
  - Emphasis on enhanced coordination between BA and the Ministry of Finance, especially with envisaged early repayment of domestic public debt.
- Exchange rate policy:
  - Directors considered the exchange rate policy consistent with external stability.
  - Assessment: the real effective exchange rate remains close to its equilibrium level (acknowledging estimation difficulties for oil exporters).
  - Authorities committed to a flexible exchange rate policy and implementing policies to enhance productivity and diversification.

### Financial sector reforms and private sector development
- Progress and priorities:
  - Continued structural reforms to strengthen financial intermediation and the business environment to spur private investment and growth.
  - Eleven foreign banks operational; another major international bank to start soon; further licenses in process.
  - Privatization process initiated for Crédit Populaire d’Algérie (CPA); temporarily suspended due to international financial market turmoil.
  - Ongoing reforms: improve public banks’ governance, modernize accounting and information systems, modernize the payment system, enhance risk management and internal controls, strengthen prudential and supervisory framework and enforcement.
  - Authorities view government repurchase of banks’ nonperforming claims on public enterprises as part of a broader public enterprise reform agenda including privatization, restructuring, and multi-year performance contracts.
  - Emphasis on developing domestic capital markets, including corporate bond listings and commercial paper market regulation, to support PIP financing and financial stability.
- Credit dynamics and risks:
  - Growth in total credit to the economy remained moderate despite excess liquidity.
  - Share of credit to the private sector in total credit increased from 43 percent (2003) to 53 percent (2006).
  - Total credit to public enterprises declined during 2005-06.
  - Authorities committed to monitoring risks of rapid credit growth and concentration.

### Selected economic indicators and key statistics (as presented)
- Real GDP: 6.9 (2003), 5.2 (2004), 5.1 (2005), 2.0 (2006), 4.6 (2007).
- Hydrocarbon sector growth: 8.8 (2003), 3.3 (2004), 5.8 (2005), -2.5 (2006), -1.0 (2007).
- Other sectors growth: 5.9 (2003), 6.2 (2004), 4.7 (2005), 5.6 (2006), 6.0 (2007).
- Consumer price index (average): 2.6 (2003), 3.6 (2004), 1.6 (2005), 2.5 (2006), 3.7 (2007).
- Gross national savings (in percent of GDP): 43.3 (2003), 46.2 (2004), 51.8 (2005), 54.4 (2006), 54.5 (2007).
- Gross national investment (in percent of GDP): 30.3 (2003), 33.2 (2004), 31.2 (2005), 29.2 (2006), 31.0 (2007).
- Exports, f.o.b (in billions of U.S. dollars): 24.5 (2003), 32.2 (2004), 46.3 (2005), 54.7 (2006), 59.9 (2007).
- Imports, f.o.b (in billions of U.S. dollars): 13.4 (2003), 18.0 (2004), 19.9 (2005), 20.7 (2006), 25.2 (2007).
- Current account (in percent of GDP): 13.0 (2003), 13.1 (2004), 20.6 (2005), 25.2 (2006), 23.6 (2007).
- Gross official reserves (in billions of U.S. dollars): 32.9 (2003), 43.1 (2004), 56.2 (2005), 77.8 (2006), 108.5 (2007).
- Reserves, in months of next year's imports: 18.1 (2003), 21.0 (2004), 26.5 (2005), 29.1 (2006), 32.2 (2007).
- External debt (in percent of GDP): 34.4 (2003), 25.6 (2004), 16.7 (2005), 4.9 (2006), 3.5 (2007).
- Debt service ratio (in percent of exports): 17.9 (2003), 17.6 (2004), 12.5 (2005), 23.8 (2006), 3.1 (2007).
- Terms of trade (deterioration -): 9.7 (2003), 13.6 (2004), 30.0 (2005), 9.8 (2006), 3.4 (2007).
- Real effective exchange rate (depreciation -) 1/: -9.5 (2003), 0.6 (2004), -3.9 (2005), -0.3 (2006), -0.5 (2007).
- Money and credit (annual percentage change):
  - Net foreign assets: 33.4 (2003), 33.1 (2004), 34.0 (2005), 31.9 (2006), 33.5 (2007).
  - Domestic credit: -1.4 (2003), -8.6 (2004), -17.8 (2005), -5.9 (2006), -16.0 (2007).
  - Credit to the government (net): -5.3 (2003), -13.2 (2004), -24.4 (2005), -8.9 (2006), -21.4 (2007).
  - Credit to the economy: 8.9 (2003), 11.2 (2004), 15.9 (2005), 7.1 (2006), 13.8 (2007).
  - Broad money: 15.6 (2003), 11.5 (2004), 11.1 (2005), 18.7 (2006), 23.1 (2007).
  - Interest rate (central bank rediscount rate, in percent): 4.5 (2003), 4.0 (2004), 4.0 (2005), 4.0 (2006), 4.0 (2007).
- Central government finance (selected historical series):
  - Total revenue: 37.1 (2003), 36.1 (2004), 40.9 (2005), 43.0 (2006), 42.7 (2007).
  - Total expenditure and net lending: 29.3 (2003), 29.2 (2004), 29.0 (2005), 29.4 (2006), 30.9 (2007).
  - Overall budget balance (deficit-): 7.8 (2003), 6.9 (2004), 11.9 (2005), 13.6 (2006), 11.8 (2007).

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2008/_cr08103.pdf*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2008/_cr08103.pdf_