{
  "title": "IMF Executive Board Concludes 2021 Article IV Consultation with Algeria",
  "publication": "IMF News, November 22, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/11/19/pr21341-algeria-imf-executive-board-concludes-2021-article-iv-consultation-with-algeria",
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  "summary": "1/ In months of next year's imports of goods and services.",
  "publishDate": "2021-11-22",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Date of Executive Board conclusion: November 19, 2021.\n- Context: Algeria recovering from the concomitant Covid-19 pandemic and oil shocks in 2020.\n- Authorities’ response: Swift measures mitigated health and social impact; stepped-up vaccination and targeted containment measures helped slow down a third wave of infection."
    },
    {
      "heading": "Recent economic developments",
      "content": "- 2020 real GDP contraction: 4.9 percent.\n- 2021Q1 real GDP growth (year-on-year): 2.3 percent.\n- Drivers of 2021Q1 growth: Rebound in hydrocarbon prices and production; relaxation of containment measures.\n- External current account balance: Improved significantly in the first six months of 2021 after a marked deterioration in 2020.\n- Inflation drivers: Higher international food prices and an episode of drought in Algeria adversely affecting households’ purchasing power."
    },
    {
      "heading": "Ongoing vulnerabilities and risks",
      "content": "- Accumulated shocks since 2014 have increased vulnerabilities.\n- Fiscal and external current account deficits: Continued large deficits in recent years reduced policy space.\n- Public debt and reserves: Public debt increased significantly and international reserves declined.\n- Outlook risks: Main risks are evolution of oil prices, the pandemic, and the social and geopolitical environment; risks are tilted to the downside."
    },
    {
      "heading": "Executive Board Assessment and guidance",
      "content": "- Directors’ overall view: Agreed with the thrust of the staff appraisal; commended authorities’ timely and comprehensive efforts to contain human and economic costs.\n- Need for policy mix: Called for a well-calibrated policy mix to support macroeconomic stability and promote sustainable, resilient and inclusive growth.\n- Fiscal policy:\n  - Agreed need for gradual and sustained fiscal consolidation underpinned by both revenue-enhancing and spending measures.\n  - Recommended adapting pace and composition of adjustment to the evolution of the pandemic and domestic conditions to protect the most vulnerable.\n  - Commended efforts to modernize budget management and improve public sector efficiency.\n  - Encouraged diversifying budget financing sources and avoiding central bank financing.\n- Monetary and financial sector policy:\n  - Underscored that a well-calibrated monetary policy combined with greater exchange rate flexibility could support stabilization efforts.\n  - Encouraged reinforcement of bank supervision, implementation of a crisis management framework, and strengthening governance at state-owned banks.\n  - Welcomed forthcoming reforms to strengthen central bank independence.\n- Structural and governance reforms:\n  - Commended strategy to revive growth and reduce dependence on hydrocarbons.\n  - Welcomed focus of the new Government Action Plan and agreed with identified reform priorities for a transition to more inclusive and sustainable growth.\n  - Noted recent announcements on strengthening transparency and the anti-corruption institutional framework, enhancing climate resilience, encouraging digitalization, foreign direct investment, and competition to foster private sector investment and job creation.\n  - Emphasized that strengthening the AML/CFT framework remains a priority."
    },
    {
      "heading": "Projections and key statistics (2019–22)",
      "content": "- Demographics and context:\n  - Population: 43.4 million; 2019\n  - Per capita GDP: US$ 3,940 (2019)\n  - Quota: SDR 1,959.9 million\n  - Gini coefficient: 0.28 (2015)\n  - Key export markets: EU\n  - Main exports: oil and gas\n- Output:\n  - Real GDP growth (percent): 2019: 0.8; 2020: -4.9; 2021 Est.: 3.2; 2022 Proj.: 2.4\n  - Nonhydrocarbon GDP growth (percent): 2019: 2.0; 2020: -3.9\n- Employment:\n  - Unemployment (percent, end of period): 2019: 11.4; 2020: …\n- Prices:\n  - Inflation (percent, average): 2019: 6.5; 2020: 7.7\n- Central government finances (percent of GDP):\n  - Total revenue: 2019: 32.3; 2020: 30.1; 2021 Est.: 28.0; 2022 Proj.: 27.6\n  - Of which, hydrocarbon: 2019: 13.1; 2020: 10.3; 2021 Est.: 11.1; 2022 Proj.: 12.4\n  - Total expenditure: 2019: 41.9; 2020: 39.8; 2021 Est.: 39.4\n  - Overall budget balance (deficit-): 2019: -9.6; 2020: -11.7; 2021 Est.: -11.8\n  - Gross government debt: 2019: 45.8; 2020: 50.7; 2021 Est.: 59.2; 2022 Proj.: 65.4\n- Money and credit:\n  - Broad money (percent change): 2019: -0.8; 2020: 7.4; 2021 Est.: 17.0; 2022 Proj.: 13.3\n  - Credit to the economy (percent change): 2019: 9.0; 2020: 3.0; 2021 Est.: 1.8; 2022 Proj.: 5.6\n- Balance of payments:\n  - Current account balance (percent of GDP): 2019: -9.9; 2020: -12.7; 2021 Est.: -3.6\n  - FDI (percent of GDP): 2019: 0.7\n  - Gross reserves (months of imports) 1/: 2019: 17.6; 2020: 12.5; 2021 Est.: 9.9\n  - External debt (percent GDP): 2019: 2.2; 2020: 1.9\n- Exchange rate:\n  - REER average (percent change): 2019: 2.3; 2020: -4.6\n\n1/ In months of next year's imports of goods and services."
    },
    {
      "heading": "Administrative note",
      "content": "- It is expected that the next Article IV consultation with Algeria will be held on the standard 12-month cycle.\n\nIMF Communications Department — Press Release No. 21/341 (November 22, 2021).\n\n---\n\n\n References\n\n- Algeria and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/11/19/pr21341-algeria-imf-executive-board-concludes-2021-article-iv-consultation-with-algeria"
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    "Published: November 22, 2021",
    "Date of Executive Board conclusion: November 19, 2021.",
    "Context: Algeria recovering from the concomitant Covid-19 pandemic and oil shocks in 2020.",
    "Authorities’ response: Swift measures mitigated health and social impact; stepped-up vaccination and targeted containment measures helped slow down a third wave of infection.",
    "2020 real GDP contraction: 4.9 percent.",
    "2021Q1 real GDP growth (year-on-year): 2.3 percent.",
    "Drivers of 2021Q1 growth: Rebound in hydrocarbon prices and production; relaxation of containment measures.",
    "External current account balance: Improved significantly in the first six months of 2021 after a marked deterioration in 2020.",
    "Inflation drivers: Higher international food prices and an episode of drought in Algeria adversely affecting households’ purchasing power.",
    "Accumulated shocks since 2014 have increased vulnerabilities.",
    "Fiscal and external current account deficits: Continued large deficits in recent years reduced policy space.",
    "Public debt and reserves: Public debt increased significantly and international reserves declined.",
    "Outlook risks: Main risks are evolution of oil prices, the pandemic, and the social and geopolitical environment; risks are tilted to the downside.",
    "Directors’ overall view: Agreed with the thrust of the staff appraisal; commended authorities’ timely and comprehensive efforts to contain human and economic costs.",
    "Need for policy mix: Called for a well-calibrated policy mix to support macroeconomic stability and promote sustainable, resilient and inclusive growth.",
    "Fiscal policy:",
    "Monetary and financial sector policy:",
    "Structural and governance reforms:",
    "Demographics and context:",
    "Output:",
    "Employment:",
    "Prices:",
    "Central government finances (percent of GDP):",
    "Money and credit:",
    "Balance of payments:",
    "Exchange rate:",
    "It is expected that the next Article IV consultation with Algeria will be held on the standard 12-month cycle.",
    "[Algeria and the IMF](http://www.imf.org/external/country/DZA/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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