{
  "title": "An Open and Diverse Economy To Benefit All Algerians",
  "publication": "IMF Blog, March 18, 2013",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2013/03/18/an-open-and-diverse-economy-to-benefit-all-algerians",
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  "summary": "The IMF and Algeria reaffirmed a \"special partnership\" during the Managing Director's visit.",
  "sections": [
    {
      "heading": "Fiscal stabilization and partnership",
      "content": "- The IMF and Algeria reaffirmed a \"special partnership\" during the Managing Director's visit.\n- Algeria pledged US $5 billion to the IMF's global firewall.\n- Algeria’s capable management of its oil and gas windfall has resulted in high foreign exchange reserves and economic stability.\n- Recent policy steps noted:\n  - This year’s budget \"keeps the rise of current spending and public wages in check.\"\n  - Last year’s decision \"to raise the required reserves rate as well as the liquidity absorption\" will help contain demand pressures on prices.\n  - \"Still, further monetary tightening may be necessary.\""
    },
    {
      "heading": "Ensuring economic stability — findings and risks",
      "content": "- Key macro outcomes over the past decade: \"Steady growth, and low fiscal and external deficits and debt levels.\"\n- Inflation:\n  - \"Inflation has been on the rise, reaching nearly 9 percent last year—a 15‑year high.\"\n  - Causes identified: \"wage hikes that exceeded productivity increases, and relatively accommodative monetary policies.\"\n  - Risk highlighted: \"Such pressures risk undermining growth and hurting the most vulnerable.\"\n- Policy implication: Containing demand and monetary tightening are important to protect growth and vulnerable populations."
    },
    {
      "heading": "Building a vibrant private sector — constraints and opportunities",
      "content": "- Hydrocarbon dependence:\n  - \"Accounts for around 40 percent of total GDP, 98 percent of exports, and two-thirds of budget revenues.\"\n  - Employment in the sector: \"only about 2 percent of the workforce is directly employed by the sector.\"\n- Implication: Hydrocarbons alone \"cannot provide a lasting basis for jobs or rising living standards for the wider population.\"\n- Identified opportunity sectors: \"agribusiness, industry and services such as tourism and trade.\"\n- Policy recommendations to foster private sector-led growth:\n  - \"Open up to reach out to global markets and to also let some of the world in—for investment, trade, and expertise.\"\n  - Improve the business environment by \"reducing red tape\" and \"changing the rules for foreign ownership.\"\n  - Acknowledge that \"It will take time to fundamentally change the business climate, but a start can be made now.\""
    },
    {
      "heading": "Reforming the labor market — priorities and measures",
      "content": "- Youth unemployment progress:\n  - \"A decade ago youth unemployment stood at more than 50 percent, it has since dropped to 20 percent.\"\n  - Assessment: \"still unacceptably high, with many more young adults soon to be looking for work.\"\n- Core challenge: \"too many people rely on the government as the employer of choice\" and \"Mindsets need to change.\"\n- Suggested reforms and policies:\n  - Change \"laws and regulations that make it hard for private businesses to employ people.\"\n  - Implement \"more active labor market policies—such as jobs-based training for young graduates or job placement programs.\"\n  - Focus on \"better matching worker skills to the needs of the labor market.\"\n- Clarification on IMF stance: Labor market reform is not equivalent to automatic pay cuts; the IMF's view \"has changed.\""
    },
    {
      "heading": "Protecting the most vulnerable — subsidy reform",
      "content": "- Current subsidy problem:\n  - \"Prices for certain goods and services in Algeria are subsidized by the government.\"\n  - For gasoline and gas alone, \"implicit subsidies provided by the government may be as much as 12 percent of GDP.\"\n  - Distributional issue: \"The main beneficiaries are the well-to-do who consume energy more heavily.\"\n  - Budgetary trade-off: Subsidies \"steal precious resources away from other government spending priorities, including on health, education, and infrastructure.\"\n- Policy path recommended:\n  - \"Subsidies should be made explicit and better targeted to the people who really need them.\"\n  - Acknowledge that \"This problem cannot of course be tackled over night.\""
    },
    {
      "heading": "Working together — implementation and outlook",
      "content": "- Transition to a more prosperous and inclusive Algeria \"will take time\" and \"at times, the way forward may not be easy.\"\n- Several priorities are emphasized as common across the region: \"inclusion, jobs, a more flourishing private sector, subsidy reform to better help the truly needy.\"\n- The existing constructive dialogue between the IMF and Algeria is presented as a foundation for addressing these challenges jointly.\n\nSource: Christine Lagarde, \"An Open and Diverse Economy To Benefit All Algerians\", March 18, 2013.\n\n---\n\n\n References\n\n- عربي\n\nSource: https://www.imf.org/en/blogs/articles/2013/03/18/an-open-and-diverse-economy-to-benefit-all-algerians"
    }
  ],
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    "Authors: Christine Lagarde",
    "Published: March 18, 2013",
    "The IMF and Algeria reaffirmed a \"special partnership\" during the Managing Director's visit.",
    "Algeria pledged US $5 billion to the IMF's global firewall.",
    "Algeria’s capable management of its oil and gas windfall has resulted in high foreign exchange reserves and economic stability.",
    "Recent policy steps noted:",
    "Key macro outcomes over the past decade: \"Steady growth, and low fiscal and external deficits and debt levels.\"",
    "Inflation:",
    "Policy implication: Containing demand and monetary tightening are important to protect growth and vulnerable populations.",
    "Hydrocarbon dependence:",
    "Implication: Hydrocarbons alone \"cannot provide a lasting basis for jobs or rising living standards for the wider population.\"",
    "Identified opportunity sectors: \"agribusiness, industry and services such as tourism and trade.\"",
    "Policy recommendations to foster private sector-led growth:",
    "Youth unemployment progress:",
    "Core challenge: \"too many people rely on the government as the employer of choice\" and \"Mindsets need to change.\"",
    "Suggested reforms and policies:",
    "Clarification on IMF stance: Labor market reform is not equivalent to automatic pay cuts; the IMF's view \"has changed.\"",
    "Current subsidy problem:",
    "Policy path recommended:",
    "Transition to a more prosperous and inclusive Algeria \"will take time\" and \"at times, the way forward may not be easy.\"",
    "Several priorities are emphasized as common across the region: \"inclusion, jobs, a more flourishing private sector, subsidy reform to better help the truly needy.\"",
    "The existing constructive dialogue between the IMF and Algeria is presented as a foundation for addressing these challenges jointly.",
    "[عربي](http://blog-montada.imf.org/?p=2134)"
  ],
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