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Algeria
| Beyond oil score(out of 100 points) |
39.0 |
| Index ranking(out of 26 countries ranked) |
17 |
| Overall status* |
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| General Economic Framework |
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| Political Framework |
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| Society and Future Skills |
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| (Beyond) oil related factors |
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According to the US Department of energy, Algeria contains an estimated 11.8 billion barrels of proven oil reserves. Algeria is the world's second largest exporter of natural gas and has the world's fifth largest natural gas reserve and 14th largest oil reserve. The hydrocarbons sector is the backbone of the economy, accounting for roughly 60% of budget revenues, 30% of GDP, and over 95% of export earnings.
Beyond-oil investments to drive future growth
Thanks to high oil prices, the Algerian economy over the last number of years has been experiencing a surge in its income. Algeria's economy has grown at about 4% annually since 1999. According to the IMF, Algeria’s real GDP grew by an impressive 4.8% 2005. This figure is expected to increase to 5.3% for the year 2006. The high price of oil is supplemented by increased gas exports from Algeria to Europe have meant that Algeria’s foreign exchange reserves have also been increasing. The recent gas crisis between Russia and Ukraine, have increased the attractiveness of Algeria as an alternative gas supplier to Europe. Meanwhile the Algerian government has embarked on a reform program for its economy, aided by the technical guidance of the IMF. Reform of the economy was needed for a number of reasons. Algeria has been saddled with high debts since 1994. As a condition for further loans, the IMF asked for the reform of the Algerian economy. Since then, thanks to a debt rescheduling program, higher fiscal discipline and high income from oil, Algeria’s foreign debt has fallen from a high of $28 billion in 1999 to its current level of $24 billion. Another $4 billion worth of Russian debt was cancelled in April 2006, in return for the purchase of $7 billion worth of Russian military hardware. Reform of the Algerian economy was also needed as a tool to create jobs. Algeria has been suffering from high unemployment. This problem was adding to the social instability in Algeria, something which the government wants to reduce, as Algeria has been involve in a bloody civil war since 1992, after elections were cancelled. The civil war has cost many lives, and has caused massive economic damage, such as reduction in the number of tourists, and investment in Algeria, especially in the non oil sector.
Beyond Oil Summary
Algeria’s economy, despite its recent growth, is still not ready for the Beyond Oil age. This is due to a number of factors. One of them is lack of investment in the non oil sector. Although recently there have been signs of growth in the banking and telecommunication sector, thanks to private investment, nevertheless such steps are still considered as very small. Market reform, more business friendly investment laws and return of peace to Algeria would go a long way in ensuring that Algerians will have a secure Beyond Oil future. The obstacles which are stopping that are corruption, a centralised economy, too much power held by the military elite, and the extra ordinary power of unions.
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Indicates high preparedness
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Indicates deficits but potential for development
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Indicates unfavourable preconditions.
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