Algeria: Selected Issues

IMF Staff Country Reports, June 13, 2018

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This Selected Issues paper discusses measures needed to improve public spending efficiency to foster more inclusive growth in Algeria.
Fostering more inclusive growth in a sustainable way requires addressing Algeria’s longstanding structural issues that have led to persistently high unemployment, weak private sector job creation, and insufficient quality of public services.
To help reverse this situation, particularly in an environment of dwindling financial resources, Algeria should improve the efficiency of public spending, including through strengthening public wage bill and investment management.
Improving public spending efficiency would enable the country to increase the return on investment in human capital and infrastructure, and improve the quality and reach of public service delivery.
Enhancing spending efficiency would help ensure that the public sector fosters private sector activity rather than competes with it.

Structural challenges documented: persistently high unemployment; weak private sector job creation; insufficient quality of public services.
Fiscal constraint emphasized: “dwindling financial resources” as a context for reforms.
Areas of focus identified: public spending efficiency, public wage bill management, public investment management.
Expected outcomes of reforms: higher return on investment in human capital and infrastructure; improved quality and reach of public service delivery; public sector that supports rather than competes with private sector activity.

Improve the efficiency of public spending.
Strengthen public wage bill management.
Strengthen public investment management.
Prioritize reforms that increase returns on investment in human capital and infrastructure.
Reorient public sector activity to foster private sector development.