Algeria: Financial System Stability Assessment

IMF Staff Country Reports, June 10, 2014

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Algeria: Financial System Stability Assessment

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Bibliographic details

• Published: June 10, 2014
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781498328739.002

Overview

• The Financial System Stability Assessment finds Algeria’s financial system "stable overall but thoroughly underdeveloped."
• The global crisis "has had virtually no impact on Algeria’s financial system."
• Financial sector reforms have been delayed by "the emergence of global financial and regional political turmoil."

Key findings

• Protective features shielding the banking sector from external shocks:
  • "Pervasive exchange controls."
  • "Widespread public ownership."
  • "An abundance of domestic funding."
• Structural constraints and policy choices:
  • Privatization of banks has been "halted."
  • Consumer lending has been "suspended."
• Progress on prior recommendations:
  • "The authorities have also made progress in a number of areas implementing the recommendations of the 2007 Financial Sector Assessment Program update."

Financial sector features and vulnerabilities

• Market structure and ownership:
  • Dominance of state-owned banks contributes to limited development of private banking services.
• Market openness and external exposure:
  • Exchange controls and domestic funding reduce exposure to external shocks but constrain integration with international financial markets.
• Lending and credit dynamics:
  • Suspension of consumer lending limits household credit growth and financial deepening.
• Regulatory context:
  • Ongoing implementation of selected 2007 FSAP update recommendations indicates partial regulatory progress amid a cautious reform environment.

Policy implications and recommendations

• Reform sequencing and priorities (inferred from findings presented):
  • Resume and sequence financial sector reforms when global and regional stability allow, with attention to privatization where appropriate.
  • Reassess exchange control regime to balance external shock protection with financial deepening and market integration.
  • Re-evaluate consumer lending suspension to support household access to credit while maintaining financial stability safeguards.
  • Continue implementing outstanding recommendations from the 2007 Financial Sector Assessment Program update to strengthen supervision, resolution frameworks, and market infrastructure.

Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/algeria-financial-system-stability-assessment-41624

Content in this bundle

• Algeria: Financial System Stability Assessment; IMF Country Report No. 14/161, January 9, 2014
  • Algeria: Financial System Stability Assessment; IMF Country Report No. 14/161, January 9, 2014 (Markdown version)
  • Algeria: Financial System Stability Assessment; IMF Country Report No. 14/161, January 9, 2014 (PDF)
• Algérie évaluation de la stabilité du secteur financier; Rapport du FMI No. 14/161; 9 janvier 2014
  • Algérie évaluation de la stabilité du secteur financier; Rapport du FMI No. 14/161; 9 janvier 2014 (Markdown version)
  • Algérie évaluation de la stabilité du secteur financier; Rapport du FMI No. 14/161; 9 janvier 2014 (PDF)