Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

UPDATE
ALGERIA ECONOMIC

Investing in Data

Growth
for Diversified

Spring 2024
 Algeria Economic
Update
Investing in Data for Diversified Growth

Spring 2024

Middle East and North Africa Region

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TABLE OF CONTENTS
List of Acronyms..................................................................................................... v
Acknowledgments................................................................................................... vii
Executive summary................................................................................................. ix
Résumé analytique................................................................................................. xi
‫ملخص تنفيذي‬......................................................................................................... xiii
Chapter 1: Recent economic developments.................................................................... 1
Growth Outside Extractive Sectors Remained Robust in 2023.............................................................................. 1
Extractive Industries Production Increased in 2023, Despite Lower Oil Production......................................... 2
The Current Account Surplus Shrunk but Reserve Accumulation Continued.................................................... 4
The Fiscal Deficit Has Expanded and Public Debt Increased................................................................................. 6
With Fresh Food Prices Decreasing, Inflation Started to Moderate in Late 2023.............................................. 7

Chapter 2: Outlook and Risks..................................................................................... 9

GDP Growth Would Remain Robust, Despite OPEC Quota Cuts and Subdued Agricultural Production... 9
External and Fiscal Balances Will Again Be Under Pressure.................................................................................. 9
Hydrocarbon Prices Amid Geopolitical Uncertainty Pose Significant Risks....................................................... 11

Annex 1: Recent Special Sections of the Algeria Economic Update......................................... 15

Bibliography......................................................................................................... 19

iii
 List of Figures
Figure 1 Dynamic growth was supported by an acceleration in investment, accompanied
by a surge in imports..................................................................................................................................... 2
Figure 2 ...and stimulated non-extractive industries and services...................................................................... 2
Figure 3 Growth in nighttime lights in 2023............................................................................................................. 3
Figure 4 Satellite nighttime lights suggest a slowdown in nonhydrocarbon activity in Q1-2024..................... 3
Figure 5 Increasing natural gas production and exports offset lower oil production…................................ 4
Figure 6 …but hydrocarbon export prices remained elevated, despite natural gas prices
coming down................................................................................................................................................... 4
Figure 7 The current account narrowed as export prices decreased and imports expanded…................ 5
Figure 8 …even as imports prices eased for most product categories............................................................. 5
Figure 9 Exports volume decreased in H2-2023, but remained above pre-pandemic levels….................. 6
Figure 10 …while imports expanded, notably those of vehicles ................................................................................. 6
Figure 11 Increasing expenditures outpaced revenues, widening the fiscal deficit…..................................... 7
Figure 12 …and the public debt ratio increased as did oil savings...................................................................... 7
Figure 13 Inflation eased, as fresh food prices started to decline in Q2-2023….............................................. 8
Figure 14 …while money supply growth moderated, and private sector credit accelerated......................... 8
Figure 15 During the 2023-24 crop season, rainfall improved in the East but worsened in the West…..... 10
Figure 16 …and crop growth measures tracked changes in rainfall.......................................................................... 10
Figure 17 After a steep increase between 2021 and 2024, the 2024 Budget Law projects
a stabilization in spending ................................................................................................................................. 11
Figure 18 The growth slowdown was driven by investment, notably public investment,
and accompanied by declining productivity .......................................................................................... 12
Figure 19 Public investment is now smaller, and the margin to raise it is limited, raising the importance
of faster private investment ............................................................................................................................. 12

List of Boxes
Box 1 Timely tracking of economic developments in Algeria with alternative data sources................. 3
Box 2 Export and import trends in Q1-2024....................................................................................................... 5
Box 3 Early satellite indicators of agricultural production................................................................................ 10
Box 4 The 2024 Budget Law................................................................................................................................... 11
Box 5 The pandemic accelerated the importance to pivot to a private investment-led
growth model................................................................................................................................................... 12

iv ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH

LIST OF ACRONYMS
BoA Bank of Algeria NEER Nominal effective exchange rate
BTU British thermal unit OAIC Algerian Interprofessional Office of
CPI Consumer Price Index Cereals
DZD Algerian Dinar OECD Organization for Economic Cooperation
EIA Energy Information Agency and Development
EUR Euro ONS National Office of Statistics
EPT Algeria’s administrative regions OPEC Organization of the Petroleum Exporting
FAO Food and Agriculture Organization Countries
IMF International Monetary Fund GDP Gross Domestic Product
FRR Revenue Regulation Fund Pp Percentage points
LNG Liquefied natural gas PSR Special refinancing program
LPG Liquefied petroleum gas REER Real effective exchange rate
FDI Foreign direct investment SMMEEI Steel, metal, mechanical, electrical, and
JODI Joint Organizations Data Initiative electronic industries
Kb/d Thousands of barrels per day SOE State-owned enterprises
MARS Monitoring Agricultural Resources TTF Securities Transfer Facility
Mb/d Millions of barrels per day US$ United States Dollar
MENA Middle East and North Africa WB World Bank

v
ACKNOWLEDGMENTS

T
his Algeria Economic Update reports on the Desponts, Amel Henider, and Daniel Prinz under the
main recent economic developments and supervision of Eric Le Borgne and Abdoulaye Sy. The
policies. It places them in a global and lon- authors would like to thank Jesko Hentschel (Country
ger-term context and assesses the implications of Director for the Maghreb and Malta) and Kamel Braham
these developments and policy changes for Algeria’s (Resident Representative for Algeria) for their valuable
economic prospects. The report is intended for a comments during the review of this report. The World
broad audience, including policymakers, business Bank team is particularly grateful to Algeria’s Ministry
leaders, financial market participants, and the com- of Finance and Ministry of Energy for their comments
munity of analysts and professionals working in/ on the report prior to publication.
on Algeria. The report is divided into two chapters. The findings, interpretations, and conclusions
Chapter 1 presents macroeconomic developments expressed in this report are those of the World Bank
in Algeria over the year 2023 and the first quarter staff and do not necessarily reflect the views of the
of 2024, while Chapter 2 describes the short- and World Bank Board of Executive Directors or the
medium-term outlook for the Algerian economy. The countries it represents. For information about the World
deadline for data entry and forecast preparation Bank and its activities in Algeria, including electronic
was May 10, 2024. copies of this publication, please visit https://www.ba​
The Algeria Economic Update is the work of nquemondiale.org/fr/country/algeria. For questions
the Middle East and North Africa (MENA) section of or comments on the content of this publication, please
the World Bank Group’s Macroeconomics, Trade, and contact Cyril Desponts ([email protected])
Investment (MTI) practice area. It was prepared by Cyril and Eric Le Borgne ([email protected]).

vii
EXECUTIVE SUMMARY

A
lgeria’s growth was robust in 2023, Growth is expected to slow in 2024 amidst
and inflation started to decelerate. GDP subdued oil and agricultural output, before recov-
growth accelerated to 4.1 percent, sup- ering in 2025. In the baseline scenario, oil quota
ported by hydrocarbon sector growth, as natural gas cuts would remain in place, and hydrocarbon GDP
production compensated for successive crude oil would contract slightly in 2024. Non-hydrocarbon
production quota cuts. Non-extractive GDP growth activity would remain dynamic, driven by investment
reached 3.7 percent as investment growth accelerated, and private consumption, supported by a third con-
supported by a marked recovery in public investment, secutive annual wage increase. Based on early
and leading to a surge in imports. Private consump- satellite weather and crop growth data, agricultural
tion remained dynamic, stimulated by growing public production is expected to remain subdued in 2024.
sector wages, and pulling sectors serving households. Overall GDP growth would reach 2.9 percent in 2024
Inflation remained at 9.3 percent over 2023 but mod- and pick up again to 3.7 percent in 2025 as oil pro-
erated to 5.0 percent year-on-year in the first quarter of duction and agricultural output recover.
2024, amidst a sustained decline in fresh food prices, Amidst higher imports and public spend-
a strong dinar, and lower import prices. ing, lower hydrocarbon revenues would put
Falling hydrocarbon prices narrowed the renewed pressure on external and fiscal bal-
current account surplus in 2023, while increas- ances. In the baseline scenario, hydrocarbon exports
ing the fiscal deficit and the public debt-to-GDP decline and imports increase, tracking dynamic
ratio. The fall of hydrocarbon and fertilizer export domestic demand, and causing the current account
prices and large increase in import volumes resulted to turn slightly negative in 2024 before posting larger
in a rapidly narrowing current account surplus, deficits in 2025 and 2026. In the budget, lower hydro-
although reserves continued to increase, to reach carbon revenues and another wave of wage and
16.1 months of imports at end-2023. Hydrocarbon transfer increases would offset robust tax revenues
revenues in the budget have nonetheless remained and consolidation of capital expenditures. The over-
stable but given the sharp increase in the wage bill all budget deficit would increase in 2024 and stabilize
and capital expenditures, the overall budget defi- in the next two years, resulting in growing public debt,
cit widened to 5.2% of GDP. The deficit was mainly which would pass 55 percent of GDP by 2026.
financed outside the banking sector, with bond issu- The variability of hydrocarbon prices
ance declining, oil savings increasing to 8.2% of GDP, remains the main risk to macroeconomic bal-
and public debt as a percentage of GDP increasing ances, with projected financing needs highlighting
slightly to 49.2% of GDP. the importance of a gradual fiscal rebalancing.

ix
 Rising imports and public spending have deepened improvement of the business environment, is even
the non-hydrocarbon current account and budget def- more important now that public investment, previ-
icits, leaving macroeconomic balances more exposed ously the engine of Algeria’s growth, is increasingly
to global oil price dynamics, in an environment of constrained by rigid and rapidly expanding current
heightened geopolitical uncertainty. While foreign expenditures.
exchange reserve remains adequate, projected fis- Continuing to strengthen data systems
cal financing needs call for prudent public spending would support investment and public policymak-
policies and a gradual fiscal rebalancing. Meanwhile, ing. In 2023 and 2024, digitalization efforts accelerated,
subdued rainfall and higher temperatures in recent as did efforts from the Bank of Algeria and ONS to
years, with their effect on agricultural production, infla- strengthen their publications, with notably the first
tion, and imports, underscore the vulnerability of the GDP rebasing. The alternative data sources used in
Algerian economy to climate change. this report, such as satellite data on crop development
Efforts to foster private sector investment or nighttime lights, represent a useful complement
and diversification should be strengthened. The to conventional economic and social statistics. Yet,
risks associated with global hydrocarbon prices point improving the availability, granularity, and timeliness of
to the importance of supporting diversification by official economic data, most notably relating to activity,
accelerating private sector investment in non-hydro- investment, and the labor market, remains of utmost
carbon sectors. The 2022 Investment Law, the 2023 importance. Enhanced data systems would support
Banking and Monetary Law, formal adhesion to the the authorities’ pivot towards performance-based
Africa Continental Free Trade Agreement, the 2023 budgeting and support evidence-based policymak-
Land Law and initiation of state-owned bank reforms ing. They would also provide accurate and exhaustive
are aimed at boosting private investment to foster economic data to researchers and analysts, potential
diversification. Strengthening those efforts, in partic- domestic and international investors, alleviating eco-
ular by ensuring that they contribute effectively to the nomic uncertainty and fostering investment.

x ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH

RÉSUMÉ ANALYTIQUE

L
a croissance de l’Algérie a été robuste en et des dépenses d’investissement, le déficit budgé-
2023, et l’inflation a commencé à décélé- taire global s’est creusé, pour atteindre 5,2% du PIB.
rer. La croissance du PIB s’est accélérée pour Le déficit a été principalement financé hors du sec-
atteindre 4,1%, soutenue par celle du secteur des teur bancaire, les émissions souveraines diminuant,
hydrocarbures, la production de gaz naturel ayant l’épargne pétrolière augmentant à 8,2% du PIB et
compensé les réductions successives des quotas de la dette publique augmentant légèrement, à 49,2%
production de pétrole brut. La croissance du PIB hors du PIB.
industries extractives a atteint 3,7%, la croissance de La croissance devrait ralentir en 2024 dans
l’investissement s’étant accélérée, soutenue par une un contexte de production pétrolière et agricole
reprise marquée de l’investissement public, et entraî- limitée, avant de se redresser en 2025. Dans le
nant une hausse des importations. La consommation scénario de référence, les réductions des quotas
privée est restée dynamique, stimulée par la hausse pétroliers resteraient en place et le PIB des hydrocar-
des salaires dans le secteur public et stimulant les bures se contracterait légèrement en 2024. L’activité
secteurs fournissant les ménages. L’inflation s’est hors hydrocarbures resterait dynamique, tirée par
maintenue à 9,3% en 2023 et a ralenti à 5,0% en glis- l’investissement et la consommation privée, soute-
sement annuel au premier trimestre 2024, dans un nue par une troisième hausse annuelle consécutive
contexte de baisse soutenue des prix des produits ali- des salaires dans l’administration publique. D’après
mentaires frais, de dinar fort et de baisse des prix à les premières données satellitaires sur la météo et le
l’importation. développement des cultures, la production agricole
La chute des prix des hydrocarbures à la devrait rester modérée en 2024. La croissance glo-
fin 2022 a réduit l’excédent du compte courant bale du PIB atteindrait 2,9% en 2024 et repartirait à
en 2023, creusé le déficit budgétaire, et le ratio 3,7% en 2025 à mesure que la production pétrolière
dette publique/PIB a augmenté. La chute des prix et la production agricole se redresseraient.
à l’exportation des hydrocarbures et des engrais et Dans un contexte d’augmentation des
la forte augmentation des volumes d’importation ont importations et des dépenses publiques, la
entraîné une contraction rapide de l’excédent de la baisse des recettes d’hydrocarbures exercerait
balance courante, mais les réserves ont continué une pression accrue sur les équilibres extérieurs
d’augmenter, pour atteindre 16,1 mois d’importations et budgétaires. Dans le scénario de référence, les
à fin 2023. Les recettes des hydrocarbures dans le exportations d’hydrocarbures diminueraient et les
budget se sont néanmoins maintenues mais, compte importations augmenteraient, suivant le dynamisme
tenu de la forte augmentation de la masse salariale de la demande intérieure, et ramenant la balance

xi
 du compte courant sous l’équilibre en 2024 avant tive à l’investissement de 2022, la loi monétaire et
de générer des déficits plus importants en 2025 et bancaire de 2023, l’adhésion formelle à l’Accord de
2026. Dans le budget, la baisse des recettes d’hy- libre-échange continental africain, la loi sur le foncier
drocarbures et une nouvelle vague d’augmentations économique de 2023 et le lancement de réformes des
des salaires et des transferts surcompenseraient le banques publiques visent à stimuler l’investissement
dynamisme des recettes fiscales et la modération des privé pour favoriser la diversification. Le renforcement
dépenses d’investissement. Le déficit budgétaire glo- de ces efforts, notamment en s’assurant que ces
bal augmenterait en 2024 avant de se stabiliser les mesures contribuent effectivement à stimuler l’envi-
deux années suivantes, résultant en une augmenta- ronnement des affaires, est d’autant plus important
tion de la dette publique, qui dépasserait 55% du PIB que l’investissement public, auparavant moteur de
d’ici 2026. la croissance de l’Algérie, est de plus en plus limité
La variabilité des prix des hydrocarbures par des dépenses courantes rigides et en expansion
reste le principal risque pour les équilibres rapide.
macroéconomiques, les besoins de finance- La poursuite de l’amélioration des sys-
ment prévisionnels soulignant l’importance d’un tèmes de données soutiendrait l’investissement
rééquilibrage budgétaire progressif. L’augmenta- et l’élaboration des politiques publiques. En 2023
tion des importations et des dépenses publiques a et 2024, les efforts de numérisation dans l’adminis-
creusé les déficits courants et budgétaires hors hydro- tration algérienne ont été renforcés, tout comme
carbures, laissant les équilibres macroéconomiques certaines publications de la Banque d’Algérie et de
plus exposés à la dynamique des prix mondiaux du l’ONS, avec notamment le premier rebasage du PIB.
pétrole, dans un environnement d’incertitude géo- Les sources alternatives de données utilisées dans
politique accrue. Si les réserves de change restent le présent rapport, telles les données satellites sur le
confortables, les besoins attendus de financement développement des cultures ou l’éclairage nocturne,
budgétaire appellent des politiques de dépenses représentent un complément utile aux statistiques
publiques prudentes et un rééquilibrage budgétaire économiques et sociales usuelles. Néanmoins,
progressif. Dans le même temps, la faiblesse des l’amélioration de la disponibilité, de la granularité et
précipitations et la hausse des températures de ces de l’actualité des données économiques officielles,
dernières années, avec leurs effets sur la production notamment en ce qui concerne l’activité, l’investisse-
agricole, l’inflation et les importations, soulignent la ment et le marché du travail, reste de la plus haute
sensibilité de l’économie algérienne au changement importance. Des systèmes de données améliorés
climatique. soutiendraient le passage vers une budgétisation
Les efforts visant à encourager l’investis- axée sur les résultats et l’élaboration de politiques
sement du secteur privé et la diversification de fondées sur des données probantes. Ils fourniraient
l’économie devront être renforcés. Les risques également des données économiques précises et
associés aux prix mondiaux des hydrocarbures sou- exhaustives aux chercheurs et analystes, aux inves-
lignent l’importance de soutenir la diversification en tisseurs nationaux et internationaux potentiels, ce qui
accélérant les investissements du secteur privé et atténuerait l’incertitude économique et favoriserait
dans les secteurs hors-hydrocarbures. La loi rela- l’investissement.

xii ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH

 ‫ملخص تنفيذي‬
‫الصناعي ــة ع ــن حال ــة الطق ــس و تط ــور املحاصي ــل الزراعي ــة‪ ،‬م ــن‬
‫املتوق ــع أن يك ــون منواإلنت ــاج الزراع ــي مح ــدودا يف ع ــام ‪ .2024‬وم ــن‬
‫املتوق ــع أن يبل ــغ النم ــو االج ــايل للنات ــج املح ــي اإلج ــايل ‪ 2.9٪‬يف‬
‫ققت الجزائر منواً قويً ا يف عام ‪ ،2023‬و بدأ التضخم يف‬
‫التباطؤ‪ .‬ارتفع منو الناتج املحيل اإلجاميل بنسبة ‪ ،4.1٪‬مدعوم اً‬
‫بنمو قطاع املحروقات‪ ،‬حيث عوض إنتاج الغاز الطبيعي‬
‫ح‬
‫ع ــام ‪ ،2024‬و يرتف ــع إىل ‪ 3.7٪‬يف ع ــام ‪ 2025‬م ــع تع ــايف إنت ــاج النف ــط‬ ‫التخفيضات املتكررة يف حصص إنتاج النفط الخام‪ .‬كام بلغ منو الناتج‬
‫و اإلنت ــاج الزراع ــي‪.‬‬ ‫املحيل اإلجاميل خارج قطاع الصناعات االستخ راجية ‪ ،3.7٪‬بسبب‬
‫يف ظ ــل زي ــادة ال ــواردات و النفق ــات العمومي ــة‪ ،‬س ــيؤدي انخف ــاض‬ ‫تسارع منو االستثامر و االنتعاش امللحوظ يف االستثامر العمومي‪،‬‬
‫عائ ــدات املحروق ــات إىل زي ــادة الضغ ــط ع ــى التوازن ــات الخارجي ــة و‬ ‫مام أدى إىل زيادة يف الواردات‪ .‬و ظل االستهالك الخاص ديناميك يً ا‪،‬‬
‫توازن ــات امليزاني ــة العمومي ــة‪ .‬يف الس ــيناريو املرجع ــي‪ ،‬م ــن املتوق ــع‬ ‫مدفو ًع ا بزيادة األجور يف القطاع العمومي‪ ،‬األمر الذي أدى اىل تحفيز‬
‫أن تنخف ــض ص ــادرات املحروق ــات و ترتف ــع ال ــواردات‪ ،‬مب ــا يت ــاىش م ــع‬ ‫القطاعات التي تزود األرس بالسلع و الخدمات‪ .‬من ناحية أخرى‪ ،‬ظل‬
‫ديناميكي ــة الطل ــب املح ــي‪ ،‬م ــا يعي ــد املي ــزان التج ــاري إىل الت ــوازن‬ ‫التضخم عند ‪ 9.3٪‬يف عام ‪ 2023‬و تباطأ إىل ‪ 5.0٪‬سنوي اً يف الربع األول‬
‫يف ع ــام ‪ 2024‬قب ــل أن يول ــد عج ـ ًزا يف امليزاني ــة العمومي ــة يف عام ــي‬ ‫من عام ‪ 2024‬بسبب ت راجع أسعار املنتجات الزراعية الطازجة و قوة‬
‫‪ 2025‬و‪ .2026‬انخف ــاض إي ـرادات املحروق ــات و موج ــة جدي ــدة م ــن‬ ‫الدينار و إنخفاض أسعار الواردات‪.‬‬
‫زي ــادات يف األج ــور و التحوي ــات ق ــد يعوض ــا بش ــكل كب ــر ديناميكية‬ ‫أدى إنخفــاض ســعر املحروقــات يف عــام ‪ 2023‬إىل تقليــص فائــض‬
‫اإلي ـرادات الجبائي ــة و تباط ــؤ النفق ــات االس ــتثامرية‪ ،‬و م ــن املتوق ــع‬ ‫الحس ــاب الج ــاري و زي ــادة عج ــز امليزاني ــة العمومي ــة و نس ــبة الدين‬
‫أن يــزداد عجــز امليزانيــة يف عــام ‪ 2024‬قبــل أن يســتقر خــال‬ ‫العموم ــي إىل النات ــج املح ــي‪ .‬أدى انخف ــاض أس ــعار تصدي راملحروق ــات‬
‫الس ــنتني التاليت ــن‪ ،‬األم ــر ال ــذي س ــيؤدي إىل زي ــادة الدي ــن العموم ــي‬ ‫و األس ــمدة و الزي ــادة الح ــادة يف حج ــم ال ــواردات إىل انك ــاش رسي ــع‬
‫بحي ــث يتوق ــع ان يتج ــاوز ‪ 55٪‬م ــن النات ــج املح ــي اإلج ــايل بحل ــول‬ ‫لفائــض امليــزان التجــاري‪ ،‬و لكــن اســتمرت احتياطــات الــرف يف‬
‫ع ــام ‪.2026‬‬ ‫اإلرتف ــاع‪ ،‬لتص ــل إىل ‪ 16.1‬ش ــه ًرا م ــن ال ــواردات يف نهاي ــة ع ــام ‪.2023‬‬
‫و ال ي ــزال تقل ــب أس ــعار املحروق ــات ميث ــل الخط ــر الرئي ــي ع ــى‬ ‫وم ــع ذل ــك‪ ،‬ظل ــت إي ـرادات املحروق ــات يف امليزاني ــة العمومي ــة ثابت ــة‪،‬‬
‫توازنــات االقتصــاد الــكيل‪ ،‬حيــث تشــر متطلبــات التمويــل‬ ‫لك ــن م ــع الزي ــادة الكب ــرة يف كتل ــة األج ــور واالس ــتثامر العموم ــي‪،‬‬
‫املتوقعــة إىل أهميــة إعــادة التــوازن التدريجــي للميزانيــة‪ .‬أدت‬ ‫اتس ــع عج ــز امليزاني ــة العمومي ــة ليص ــل إىل ‪ 5.2٪‬م ــن النات ــج املح ــي‬
‫الزي ــادة يف ال ــواردات و اإلنف ــاق العموم ــي إىل اتس ــاع عجزالحس ــاب‬ ‫اإلجــايل‪ .‬تــم متويــل العجــز بشــكل أســايس مــن خــارج القطــاع‬
‫الج ــاري و عج ــز امليزاني ــة العمومي ــة خ ــارج قط ــاع املحروق ــات‪ ،‬م ــا‬ ‫البن ــي ‪ ،‬حي ــث انخفض ــت اإلص ــدارات الس ــيادية‪ ،‬م ــع زي ــادة االدخ ــار‬
‫جعــل أرصــدة االقتصــاد الــكيل أكــر عرضــة لديناميكيــات أســعار‬ ‫النفط ــي إىل ‪ 8.2٪‬م ــن النات ــج املح ــي اإلج ــايل و ارتف ــاع طفي ــف يف‬
‫النفــط العامليــة‪ ،‬يف بيئــة تتســم بقلــة الرؤيــة الجيوســيايس‪ .‬و‬ ‫الدي ــن العموم ــي إىل ‪ 49.2٪‬م ــن النات ــج املح ــي اإلج ــايل‪.‬‬
‫يف حــن أن احتياطيــات الــرف ال تــزال مريحــة‪ ،‬فــإن احتياجــات‬ ‫مــن املتوقــع أن يتباطــأ النمــو يف عــام ‪ 2024‬يف ظــل انخفــاض‬
‫متوي ــل امليزاني ــة تتطل ــب سياس ــات إنف ــاق عموم ــي حكيم ــة و إع ــادة‬ ‫اإلنتــاج النفطــي و الزراعــي‪ ،‬قبــل أن يتحســن يف عــام ‪ .2025‬يف‬
‫التــوازن التدريجــي للميزانيــة‪ .‬و يف الوقــت نفســه‪ ،‬تؤكــد شــحت‬ ‫الســيناريو املرجعــي‪ ،‬مــن املتوقــع أن تظــل تقليصــات حصــص‬
‫األمطــار و ارتفــاع درجــات الحــرارة يف الســنوات األخــرة‪ ،‬مــع مــا‬ ‫النفــط ســارية املفعــول‪ ،‬و مــن املتوقــع ت راجــع طفيــف للناتــج‬
‫له ــا م ــن آث ــار ع ــى اإلنت ــاج الزراع ــي و التضخ ــم و ال ــواردات‪ ،‬ع ــى‬ ‫املح ــي اإلج ــايل للمحروق ــات يف ع ــام ‪ ،2024‬يف ح ــن يتوق ــع أن يظ ــل‬
‫حساســية االقتصــاد الجزائــري لتغــر املنــاخ‪.‬‬ ‫النش ــاط خ ــارج قط ــاع املحروق ــات ديناميك يً ــا‪ ،‬مدعوم ـاً باالس ــتثامر‬
‫ينبغ ــي تكثي ــف الجه ــود ال رامي ــة إىل تش ــجيع اس ــتثامرات القط ــاع‬ ‫و االســتهالك الخــايص بســبب زيــادات أجــور املوظّفــن للســنة‬
‫الخــاص و التنويــع االقتصــادي‪ .‬تؤكــد املخاطــر املرتبطــة بتقلــب‬ ‫الثالث ــة ع ــى الت ــوايل‪ .‬و وف ًق ــا للبيان ــات األولي ــة الص ــادرة ع ــن األق ــار‬
‫‪xiii‬‬
 ‫تكثيــف الجهــود املبذولــة لرقمنــة اإلدارة الجزائريــة‪ ،‬و كذلــك‬ ‫أســعار النفــط و الغــاز العامليــة عــى أهميــة دعــم التنويــع‬
‫بع ــض املنش ــورات الص ــادرة ع ــن بن ــك الجزائ ــر و الدي ــوان الوطن ــي‬ ‫االقتصــادي مــن خــال ترسيــع اســتثامرات القطــاع الخــاص و‬
‫لإلحصــاءات‪ ،‬مبــا يف ذلــك إعــادة تحديــد أســاس الناتــج املحــي‬ ‫االس ــتثامر يف القطاع ــات خ ــارج قط ــاع املحروق ــات و يه ــدف كل م ــن‬
‫اإلج ــايل ألول م ــرة‪ .‬متث ــل مص ــادر البيان ــات البديل ــة املس ــتخدمة يف‬ ‫قانــوين االســتثامر لعــام ‪ ،2022‬و البنــوك و النقــود لعــام ‪ ،2023‬و‬
‫ه ــذا التقري ـر‪ ،‬مث ــل بيان ــات األق ــار الصناعي ــة‪ ،‬ع ــن تط ــور الزراع ــات‬ ‫االنض ــام الرس ــمي إىل اتفاقي ــة التج ــارة الح ــرة يف الق ــارة األفريقي ــة‪،‬‬
‫أو اإلض ــاءة الليلي ــة‪ ،‬اداة مكمل ــة و مفي ــدة لإلحص ــاءات االقتصادي ــة‬ ‫و قانــون األرايض االقتصاديــة لعــام ‪ ،2023‬و إطــاق إصالحــات‬
‫و االجتامعي ــة املعت ــادة و التقليدي ــة‪ .‬م ــع ذل ــك‪ ،‬ف ــإن تحس ــن توف ــر‬ ‫البن ــوك العمومي ــة‪ ،‬إىل تحفي ــز االس ــتثامر الخ ــاص لتعزي ــز التنوي ــع‬
‫البيان ــات االقتصادي ــة الرس ــمية و دق ــة تفاصيله ــا و م ــدى توقيته ــا‪ ،‬ال‬ ‫االقتصــادي‪ .‬و ينبغــي تعزيــز هــذه الجهــود‪ ،‬ال ســيام مــن خــال‬
‫س ــيام في ــا يتعل ــق بنش ــاط االقتص ــادي و االس ــتثامر و س ــوق العم ــل‪،‬‬ ‫ضــان مســاهمة هــذه التدابــر بشــكل فعــال يف تحفيــز بيئــة‬
‫املحس ــنة‬
‫ّ‬ ‫يظ ــل أم ـرا ً يف غاي ــة األهمي ــة‪ .‬س ــتدعم أنظم ــة البيان ــات‬ ‫األعــال‪ ،‬نظــرا ألن االســتثامر العــام‪ ،‬الــذي كان يف الســابق محــرك‬
‫التوجــه نحــو امليزانيــة القامئــة عــى النتائــج و صنــع سياســات‬ ‫النم ــو يف الجزائ ـر‪ ،‬أصب ــح مقي ـ ًدا بش ــكل أك ــر بالنفق ــات الجاري ــة‬
‫القامئ ــة ع ــى البيان ــات‪ .‬ك ــا أنه ــا س ــتوفر بيان ــات اقتصادي ــة دقيق ــة‬ ‫الغــر مرنــة و املتزايــدة برسعــة‪.‬‬
‫و ش ــاملة للباحث ــن و املحلل ــن و املس ــتثمرين املحلي ــن و الدولي ــن‪،‬‬ ‫مواصل ــة تحس ــن أنظم ــة البيان ــات م ــن ش ــأنها أن تدع ــم االس ــتثامر‬
‫م ــا يح ــد م ــن قل ــة الرؤي ــة االقتصادي ــة و يش ــجع االس ــتثامر‪.‬‬ ‫و رســم السياســات العموميــة‪ .‬يف عامــي ‪ 2023‬و‪ ،2024‬تــم‬

‫‪xiv‬‬ ‫‪ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH‬‬

 1
RECENT
ECONOMIC
DEVELOPMENTS

Growth Outside Extractive Sectors Land Law and introducing a “one-stop shop” portal
Remained Robust in 2023 at the Algerian Investment Promotion Agency (AAPI).2
Industrial and services growth remained
Non-extractive GDP growth was robust in 2023, dynamic, while agricultural output decelerated.
supported by a strong acceleration in investment.
1
The rebased national accounts now present “extractive
Non-extractive GDP1 growth reached 3.7 percent in
industries” but do not present the former “hydrocarbon”
2023, with a moderate acceleration during the year.
sector. Extractive industries now mirror the international
The latter was driven by strong investment growth, standard industry classification (ISIC) and do not only
up from 5.3 percent y-o-y in Q1 to 12.3 percent y-o-y account for crude oil and natural gas extraction activ-
in Q4, reaching 8.4 percent in 2023, supported by a ities, but also include mining activities. Hydrocarbon
marked recovery in public investment, including in processing (oil refining, gas liquefaction) is now clas-
sified under the “manufacturing sector”, while some
several large industrial projects. Rapid investment
hydrocarbon-related activities have been reclassified
growth stimulated imports, which grew by 19.4 per-
from the hydrocarbon sector to the dedicated ISIC sec-
cent in 2023, led by equipment and vehicle imports. tions (e.g., construction, transport).
Private consumption remained dynamic (+3.8 per- 2
The new land law, which establishes guidelines for allo-
cent), stimulated by sizeable growth in public wage cating state-owned land for investment projects with the
spending. Satellite nighttime lights data suggest that objective of promoting private investment and creating
jobs, was adopted in November 2023. The implementa-
dynamic activity growth was cross-regional, but that
tion of the land grant program started in Q1-2024. 97 of
it slowed down in Q1-2024. In 2023, the government
1,500 applicants were awarded plots by the Algerian
adopted several measures to foster diversification and Investment Promotion Agency through the new digital
non-hydrocarbon growth, such as making public land platform. State-owned land is awarded for 33 years with
available for private investment projects through the the possibility of renewal.

1
 FIGURE 1 • D
 ynamic growth was supported FIGURE 2 • . ..and stimulated non-extractive
by an acceleration in investment, industries and services
accompanied by a surge in imports

Real GDP and components, indices (2019=100)

130 120

120 110
Real GDP and components,
indices (2019=100)

110 100

100
90
90
80
80
70
70 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Q1Q2Q3Q4 Q1Q2Q3Q4 Q1Q2Q3Q4 Q1Q2 Q3Q4 Q1 Q2 Q3Q4 2019 2020 2021 2022 2023
2019 2020 2021 2022 2023
Agriculture Extractive industries
Imports Consumption Investment GDP Services Nonextractive industries

Source: Office National des Statistiques (ONS). As the indices are in base 100 in 2019, Source: Office National des Statistiques (ONS). As the indices are in base 100 in 2019,
these data compare the current level of the components of real GDP with their level in these data compare the current level of the components of real GDP with their level in
the same quarter in 2019. the same quarter in 2019.

Increasing investment mainly led to higher imports and was 3.8 percent lower than in 2022 and 7.4 percent
indicators of public sector industrial activity also suggest year-on-year in H2-2023. With a further cut to 908 kb/d
strong growth in steel, metal mechanical, electrical, and implemented in January 2024 (–4.9 percent), produc-
electronic industries (SMMEEI), particularly mechani- tion became 13.2 percent lower than the October 2022
cal intermediate metal, mechanic, and electrical goods, peak. Declining production amidst increasing domestic
although public manufacturing production remains consumption translated into a notable reduction in oil
below pre-pandemic levels. Dynamic consumption also exports, driven by crude oil, refined products,4 and only
stimulated sectors serving households, including trade partially offset by a significant increase in condensate
and hospitality. Agricultural output growth decelerated, and Liquified Petroleum Gas (LPG) exports.5 Despite
amid droughts, with vegetation index measures below crude and refined oil production having declined
normal in some of the main crop producing regions since their 2008 peak, it still represents close to half of
of Western Algeria (see Box 3). Standard labor mar- Algeria’s hydrocarbon production.6
ket indicators have not been published since 2019, but
international estimates suggest that unemployment
3
Modeled estimates from the International Labor
rates decreased to their pre-pandemic levels.3
Organization (ILO) suggest that the overall unemploy-
ment rate declined to 12.3 percent in 2023 (–0.2 pp),
that the female unemployment rate declined to 21.5 per-
Extractive Industries Production cent (–0.3pp) and that the youth unemployment rate
Increased in 2023, Despite Lower declined to 31.3 percent (–0.7 pp).
Oil Production 4
Crude oil export volumes during the first nine months
of 2023 were 2.0 percent higher year-on-year, however
Amid successive OPEC quota cuts, oil produc- Q4-2023 exports are estimated to have been well below
tion declined throughout 2023, reducing exports. their Q4-2022 peak value, suggesting a decrease for
the year. Meanwhile, refined petroleum products export
Algeria implemented a voluntary reduction of its crude
declined by 7.4 percent.
oil production quota from 1055 kb/d in October 2022 5
Condensate exports increased by 34.6 percent year-on-
to 1007 kb/d in November 2022 and to 959 kb/d in year, and LPG exports increased by 6.0 percent.
May 2023. As a result, in 2023 crude oil production 6
In million tons of oil equivalent (MTOE).

2 ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH

BOX 1: TIMELY TRACKING OF ECONOMIC DEVELOPMENTS IN ALGERIA WITH ALTERNATIVE
DATA SOURCES

New developments in big data research enable immediate monitoring of economic trends at disaggregated geographical levels. Satellite
data are available with a short lag (less than a month) and are highly disaggregated across time and space. By estimating the relationship
between these alternative data and national accounts over the past years, they can help produce geographically disaggregated output
estimates until Q1-2024.
Nightlights data reliably estimate Algeria’s hydrocarbon and nonhydrocarbon GDP. Nightlights observed via satellites for oil and gas
extraction and processing areas are a good proxy for hydrocarbon output.a Monthly “flaring lights” explain 94 percent of monthly crude
oil production levels and “non-flaring lights” in gas-producing wilayas explain 69 percent of monthly natural gas production levels. The
relationship between nightlights in other areas and non-hydrocarbon GDP is even stronger, with 93 percent of the variation in real non-
hydrocarbon GDP explained. For instance, Desponts and Le Borgne (2023) estimated GDP growth of 3.6 percent y-o-y over the first nine
months of 2023; ONS data, just published, put it at 4.2 percent. Nightlights suggest robust cross-regional nonhydrocarbon growth in 2023,
but lower growth in hydrocarbon-producing regions.
Satellite-based weather and vegetation data can be used to estimate Algerian agricultural production. Satellite-observed normalized
difference vegetation indices (NDVI) for the largest crop producing regions can, by themselves, capture 51 percent of the historical variation
in agricultural GDP, with robust correlations for the NDVIs of Algeria’s largest cereal-producing regions. In 2023, measures of rainfall and
crop growth were below average in the largest crop producing regions, the Western and Eastern Highlands in particular, tracking the
deceleration of agricultural output growth suggested by national accounts (see Box 3).
Data on vessels and their cargo arriving and departing from Algerian ports capture imports and exports in a timely manner. Shipping data
include vessel size, weight, and broad product content, in addition to the port of arrival or departure. Measures of the weight of arriving
ships can be used to estimate the volume of imports and exports. (See Box 2).

FIGURE 3 • Growth in nighttime lights in 2023 FIGURE 4 • S atellite nighttime lights suggest
a slowdown in nonhydrocarbon
activity in Q1-2024

15%
Y-o-y change in nightime light intensity

10%

5%

0%

–5%

–10%
Q1e
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4

Decrease 2019 2020 2021 2022 2023 2024

Increase between 0 and 7.5 percent
Increase between 7.5 and 15.6 percent North-Central North-East North-West
Increase over 15.6 percent Eastern Highlands Four regions

Source: World Bank staff estimates based on NASA data. Source: World Bank staff estimates based on NASA data.
Note: The map uses the old administrative division into 48 wilayas. Note: The regions correspond to the Espaces de Programmation Territoriale (EPT).

a
Cyril Desponts and Eric Le Borgne, “What does satellite imagery tell us about Algeria’s economy?” World Bank Arab Voices Blog. https://blogs.worldbank.org/arabvoices/
what-does-satellite-imagery-tell-us-about-algerias-economy.

Recent economic developments 3

 FIGURE 5 • Increasing natural gas production FIGURE 6 • …
 but hydrocarbon export prices
and exports offset lower oil remained elevated, despite natural
production… gas prices coming down

120 350

Price in US$, indices (Q1-2019=100)

110 300
Indices (Q1-2019=100)

100 250
90
200
80
150
70
60 100

50 50
40 0

Q1e

Q1e
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024

Crude oil production Export of crude oil and condensate Natural gas Weighted price of exported hydrocarbons
Natural gas production Pipeline & LNG exports Crude oil Fertilizer price

Source: JODI, BoA, for exports to Q3-2023, OPEC for crude oil production. Source: BoA, oilprice.com & WB Commodity Price Data for fertilizer price.
Note: Data are presented as a rolling four-quarter average. Note: The weighted hydrocarbon price index uses dollar export values to weight each
hydrocarbon type.

Natural gas production reached a histori- prices decoupled from oil prices in mid-2022 amid a
cal high and the increase in liquefied natural gas surge in European demand as Russia invaded Ukraine,
(LNG) exports offset the decrease in pipeline the renegotiation of long-term contracts and additional
exports. Following a surge in production in 2021 and a sales on spot markets. They peaked in Q4-2022 and
slight decrease in 2022 amid the second mildest winter have decreased in 2023 but remain well above their
in Europe on record, natural gas production increased 2021 levels, while the ratio of gas export prices to
by 6.1 percent year-on-year in 2023, supported by fast lagged oil exports prices is now higher than in 2019,
output growth from new fields during the second half of suggesting that gas supply contracts with Europe now
the year.7 Despite higher domestic consumption amidst generate higher export prices. The prices of fertilizers,
industrial dynamism, natural gas exports remained sta- Algeria’s main non-hydrocarbon export also tracked
ble, and a larger share was exported as LNG, offsetting hydrocarbon prices.8 The value of hydrocarbon exports
decreasing pipeline exports. Italy, Spain, and France decreased by 16.2 percent as the large price decrease
remained the largest buyers of Algerian gas as Euro- more than offset a 4 percent increase in volumes.9
pean countries continued to replace Russian gas in
their energy mix. As a result, extractive sector produc-
tion rebounded after a slight contraction in 2022 as the
The Current Account Surplus Shrunk
increase in natural gas production is estimated to have
but Reserve Accumulation Continued
more than offset lower oil production.
The current account surplus narrowed signif-
While natural gas prices have come down
icantly from its 2022 peak, as export prices
relative to their 2022 peak, they remain well above
their historical levels, supporting hydrocarbon
export revenues even amid lower oil prices. Oil
7
APS, 2023.
8
World Bank (Spring 2022), showed that gas prices
prices peaked in Q2-2022, and the reference price for
were partly linked to oil prices, with a time lag of around
Algerian oil decreased from US$ 103.8 in 2022 to US$ 4 months.
83.6 in 2023, despite higher prices in H2-2023, motivat- 9
Balance of payments data show that hydrocarbon
ing successive quota cuts to support prices. Natural gas exports fell from $59.6 billion to $49.9 billion.

4 ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH

FIGURE 7 • T
 he current account narrowed as FIGURE 8 • …
 even as imports prices eased for
export prices decreased and imports most product categories
expanded…
20 1.4 170

15 1.2
150
10 1.0

Indices (Q1-2019=100)
Billions of US$

5 0.8 130
0 0.6

–5 0.4 90

–10 0.2
70
–15 0.0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2019 2020 2021 2022 2023 50
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Exports G&S Imports G&S Change in forex reserves 2019 2020 2021 2022 2023
Current account NH current Terms of trade (rhs)
account Cereal prices Import prices
PPI, EU Imports, volume
Source: BoA, International Monetary Fund (IMF), ONS and World Bank estimates.
NH = non-hydrocarbon. Source: IMF, and World Bank estimates for Q1-2023. PPI = Producer Price Index.

fell. After the current account deficit peaked in to a 14.9 percent decrease in goods and services
2020 driven by a fall in oil prices amid the pan- exports. Combined with surging import volumes,
demic-induced global recession, surging oil prices this resulted in a rapidly narrowing current account
in 2021 led to a narrowing deficit and the current surplus, down to US$ 5.4 billion or 2.3 percent of
account registered a surplus of US$19.5 billion or GDP. Also contributing to the narrowing current
8.6 percent of GDP in 2022, the first in a decade. In account, non-hydrocarbon exports decreased sig-
2023, lower hydrocarbon export prices contributed nificantly as a small increase in volumes was offset

BOX 2: EXPORT AND IMPORT TRENDS IN Q1-2024

Data on vessels and their cargo arriving to and departing from Algerian ports is available through the UN Comtrade Automatic Identification
System (AIS) database. The data contain the arrival and departure dates of vessels, information on their cargo in broad categories (food,
vehicles, oil, gas, etc.) and the size of their cargo and deadweight tonnage. While the value of imports and exports cannot be determined
from this data, their volume can be approximated and used for generating estimates of real imports in national accounts.
Variables capturing the deadweight tonnage of a few categories of vessels entering and leaving Algerian ports can explain most of the
variation in trade flows. Data on gas exports through pipelines and the tonnage of vessels leaving Algerian ports in the bulk, container,
liquefied gas, and foodstuff categories explain 74 percent of export volumes. On the other hand, the tonnage of vessels arriving into
Algerian ports in the bulk, container, vehicle, and foodstuff categories explain 82 percent of import volumes.
Data on the numbers of vessels suggests that exports remained subdued in Q1-2024, while imports remained high. The overall number of
outgoing vessels declined in 2023, with port calls for the bulk and oil/chemicals category decreasing (–2.7 percent and –4.7 percent year-
on-year, respectively), though container and LPG/LNG shipments accelerated (+16.3 and +2.6 percent), consistent with official data. In
Q1-2024, bulk, container, and oil/chemical shipments remained lower than a year earlier (–13.2 percent, –17.7 percent, and –12.0 percent
y-o-y, respectively), while LPG/LNG exports were 1.0 percent above their Q1-2023 level. On the import side, the number of port calls
increased through 2023 for the largest cargo types (+3.1 percent for bulk, +0.3 percent for containers), and the number of vessels carrying
vehicles doubled amid a targeted relaxation of import controls. In Q1-2024, imports remained elevated for the bulk (+17.5 percent y-o-y)
and vehicles (+14.0 percent) categories, though there was a decrease in container arrivals (–0.8 percent).
(continued on next page)

Recent economic developments 5

 BOX 2: EXPORT AND IMPORT TRENDS IN Q1-2024 (continued)

FIGURE 9 • E
 xports volume decreased in FIGURE 10 • …
 while imports expanded, notably
H2-2023, but remained above those of vehicles
pre-pandemic levels…
350
300
300
250

Number of port calls, indices

Number of port calls, indices

250
200

(Q1-2019=100)
(Q1-2019=100)

200
150
150
100
100
50
50
0

Q1
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
0

Q1
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2019 2020 2021 2022 2023 2024
Bulk Container LPG/LNG 2019 2020 2021 2022 2023 2024
Oil/chemicals Other Bulk Container Vehicles Other

Source: UN Comtrade AIS. Source: UN Comtrade AIS.

by a drop in prices, particularly for fertilizers. Official The Fiscal Deficit Has Expanded and
reserves increased by US$ 7.9 billion during 2023 Public Debt Increased
and reached US$ 68.9 billion, or an estimated
16.1 months of imports. The budget deficit widened, driven by sharply
Imports of goods and services increased increasing wage and investment expenditures.
by 10.3 percent as surging volumes, driven by In 2022, hydrocarbon revenues surged, and the bud-
machinery and transport equipment, offset get deficit shrank to 3.0 percent of GDP, down from
moderating prices. The increase in machinery 6.3 percent in 2021, its lowest level since 2013. In
import volumes was driven by expanding invest- 2023, despite hydrocarbon prices moderating mark-
ment, while increasing car and manufactured article edly and the appreciation of the dinar, hydrocarbon
import volumes suggest dynamic consumption amid receipts remained stable,13 but expenditures grew
a relaxation of import controls for passenger and significantly (+18.4 percent). The government imple-
commercial vehicles.10 Food imports also expanded mented the second tranche of a three-year wage
in a context of low rainfall and subdued agricultural increase program, which would increase wages
production, with Russia becoming Algeria’s largest and compensation spending by nearly 50 percent,
wheat supplier, supplanting the European Union.11
Import prices eased across categories, including for 10
New vehicle dealerships, restricted to selling partially
food, which in turn contributed to an offsetting strong locally manufactured cars since 2016, may now apply to
expansion of import volumes.12 Shipping data sug- import completely built units.
gest that import growth continued during Q1-2024
11
Algérie Eco (February 2024).
12
The overall volume of imports increased by 16.1 percent
(Box 2). Meanwhile, a High Council for Import Reg-
year-on-year during the first nine months of 2023, while
ulation was created to regulate imports, protect the price index for imports decreased by 12.1 percent.
national production, improve information systems, 13
Notably, 78% of hydrocarbon export revenues were used
and fight illegal trade practices. to finance the budget, compared with 65% in 2022.

6 ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH

FIGURE 11 • Increasing expenditures outpaced FIGURE 12 • …
 and the public debt ratio
revenues, widening the fiscal increased as did oil savings.
deficit…
16 60
40
14
50
30 12
40

Trillions of DZD
20 10

In % of GDP
In % of GDP

10 8 30
6
0 20
4
–10 10
2
–20
0 0
H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2
–30 2017 2018 2019 2020 2021 2022 2023
2016 2017 2018 2019 2020 2021 2022 2023
Revenue Expenditure Hydrocarbon revenues Liabilities to the BoA Liabilities to banks
Overall budget Nonhydrocarbon Total (rhs) Public savings (rhs)
balance budget balance
Source: IMF and World Bank estimates.
Source: Ministry of Finance, ONS and World Bank estimates. Note: On the right-hand axis, public debt is related to GDP over four rolling quarters.

expanded public employment, and increased capital at end-2022. In 2023, the government slowed regular
expenditures significantly (+39.1 percent), although Treasury issuances which decreased from 5.0 per-
it remains lower than before the pandemic. Partially cent of GDP to 2.3 percent, and the deficit was in
offsetting these effects, tax revenues increased mark- large part financed by non-bank financing.15 As a
edly (+17.0 percent) from the growing public wage result, oil savings in the FRR continued to increase,
bill and the effect of non-hydrocarbon economic rising to 8.2 percent of GDP. Consequently, public
dynamism on corporate income, consumption, and debt, which only increased by 3.9 percent in nominal
imports.14 The increase in expenditures was also terms, increased from 48.1 percent to an estimated
compensated by that of dividends from state-owned 49.2 percent as share of GDP in 2023 and remains
enterprises, notably from Sonatrach which surged nearly all domestically held at long-term maturities
to reach 2.6 percent of GDP. The overall budget and low interest rates.16
deficit increased by 2.2 percentage points to 5.2 per-
cent of GDP, and the non-hydrocarbon deficit, by
4.3 percentage points to 24.9 percent of GDP, as
With Fresh Food Prices Decreasing,
non-hydrocarbon revenues did not keep up with the
Inflation Started to Moderate in
increase in expenditures.
Late 2023
The public debt/GDP ratio increased, as
Inflation remained high at 9.3% in 2023, but prices
did oil savings as the government resorted to
started to fall driven by fruit and vegetable prices.
non-bank financing to fund the deficit. Public
Consumer prices started to rise rapidly in 2021 (+7.2%),
debt peaked at 55.1 percent of GDP in 2021 as the
government implemented the SOE debt buyback
program but decreased to 48.1 percent in 2022 as
14
Direct taxes rose by 25.0%, driven by PIT and CIT receipts,
while indirect taxes were boosted by VAT receipts.
the deficit shrank and nominal GDP expanded rap- 15
This financing is classified as ‘miscellaneous’.
idly, while significant savings were accumulated 16
In addition, a new fiscal rule in the Budget Law of 2024
in the oil savings fund (Fonds de Régulation des stipulates that withdrawals from the Revenue Regulation
Recettes, or FRR), which reached 6.1 percent of GDP Fund (FRR) must not exceed 11 percent of GDP per year.

Recent economic developments 7

 FIGURE 13 • Inflation eased, as fresh food prices FIGURE 14 • …
 while money supply growth
started to decline in Q2-2023… moderated, and private sector
credit accelerated
12 160
20

Growth and contributions, y-o-y (%, pp)

150
10

Indices (Q1-2019=100)
140 15
8
130 10
CPI (%)

6 120
5
110
4
0
100
2 –5
90
0 80 –10
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q1Q2Q3Q4 Q1Q2Q3Q4 Q1Q2Q3Q4 Q1Q2 Q3Q4 Q1 Q2 Q3Q4
2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023
CPI Non-food CPI (rhs) Currency in circulation Deposits in M2
Fresh food price CPI NEER index (rhs) M2 Credit to private sector

Source: ONS and World Bank estimates. NEER = Nominal Effective Exchange Rate. Source: Investing.com, ONS, and World Bank estimates.

with inflation accelerating in 2022 (+9.3%) and maintain- effective exchange rate (weighted by import partners)
ing the same level in 2023 (+9.3%). The increase in the and the real effective exchange rate (also adjusted for
prices of food products (+13.3%) and in particular fresh inflation differentials) to appreciate.
food products (+22.1%) exceeded general inflation in Monetary policy remains accommodative
2023, which affected the most vulnerable the most, as and private sector credit picked up in Q4-2023, but
food represents more than half of the expenditure of broad money growth continued decelerating. Nom-
the bottom 40% of the population. Until mid-2022, food inal interest rates remain unchanged at 3 percent since
inflation was mainly driven by the “fruits and vegetables” May 2020, which means that real policy rates (adjusted
(mostly locally produced) and “bread and cereal” cate- for inflation) are significantly negative. In April 2023,
gories, which were dependent on rising import prices. In the Bank of Algeria restored the reserve requirement
2023, and despite tighter subsidies on cereal products, rate from 2 to 3 percent, returning to the end-2020
the appreciation of the dinar, and lower import prices, level, to reduce inflationary pressures. However, broad
inflation was supported by strong growth in meat prices. money growth decelerated every quarter, reaching 6.0
However, in the first quarter of 2024, it slowed to 5.0% percent year-on-year in Q4-2023, down from 14.5 per-
year-on-year, the lowest level in three years, due to the cent a year earlier. After averaging 3.6 percent in 2021
sharp drop in fresh fruit and vegetable prices17 and the and 2022, private sector credit growth reached 7.3 per-
slowdown in meat and fish prices, especially following cent year-on-year in H2-2023, the fastest in five years.
the authorization of meat imports at the end of 2023. Coupled with the simultaneous increase in equipment
The authorities continued to support a and vehicle imports, strong private sector credit growth
stable exchange rate in 2023 and early 2024. suggests pent up private consumption.
To ease imported inflation, after fourteen consec-
utive years of depreciation, the Bank of Algeria
(BoA) supported a 6.6 percent appreciation against 17
After increasing by 61% between January 2021 and
the U.S. dollar between July and December 2022. August 2023, they had fallen by 17% by March 2024.
18
In 2020–2021, the European Union (EU) accounted for
Since December 2022, the BoA has kept the official
38% of Algerian imports, compared with 18% for China.
exchange rate approximately stable against the euro The EU accounted for 59% of Algerian exports. As 90%
and the dollar, while the dinar appreciated by 5.2 per- of exports are made up of hydrocarbons, they are never-
cent against the Chinese yuan,18 causing the nominal theless denominated in dollars.

8 ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH

 2
OUTLOOK
AND RISKS

GDP Growth Would Remain Robust, Growth would pick up again in 2025 and
Despite OPEC Quota Cuts and 2026 as oil production quotas and agricultural
Subdued Agricultural Production output recovers. Investment and industrial output
would continue to decelerate somewhat in 2025 and
Growth is expected to remain robust in 2024, 2026 as public investment consolidation continues,
driven by continued non-hydrocarbon dynamism. despite private investment remaining dynamic. The
In the baseline scenario, overall growth is expected service sector would remain dynamic in 2025 and
at 2.9 percent, supported by non-extractive growth, slow slightly with private consumption in 2026. Agri-
projected at 3.4 percent whereas the extractive sec- cultural output is expected to recover from successive
tor is expected to contract by 0.5 percent.19 Private drought episodes, contributing to faster growth in
consumption would remain dynamic as public sector 2025. Natural gas production would grow moderately
wages and transfers continue to increase, in turn stim- as new field projects offset declining legacy fields,
ulating services output, particularly in sectors serving and the easing of OPEC crude oil production quota
households. Investment growth would slow as public would allow for a recovery in the production of petro-
capital expenditures are consolidated based on the leum products Sonatrach’s substantial investment
government’s medium-term budget framework, par- plans to modernize upstream oil and gas opera-
tially offset by dynamic private investment, leading to tions, adopt technological innovations, and boost
a slowdown in industrial production growth but also petrochemical industries, including the production
easing the growth of imports. The overall contribu- of plastics and fertilizers also improve medium-term
tion of net exports would remain negative, with import growth prospects.
growth slowing down, but hydrocarbon exports also
contracting. Based on early weather and crop growth
data, agricultural production is expected to remain 19
Data for Q1-2024 show a rise of almost 2% in primary
weak in 2024 (Box 3). hydrocarbon production, driven by natural gas and LPG.

9
 BOX 3: EARLY SATELLITE INDICATORS OF AGRICULTURAL PRODUCTION

High-frequency satellite data on rainfall, temperature, and vegetation can be used to estimate agricultural production. The Anomaly
Hotspots of Agricultural Production (ASAP) database contains data on rainfall, water adequacy, temperature, solar radiation, vegetation
measures, and weather warnings for each 10-day period between 2000 and 2024 for each wilaya, available with a two-week delay. Official
data on cereal production is available to assign production weights to wilayas.
Algeria’s main crop-producing regions are in semi-arid regions in the western and eastern part of Algeria, which receive less rainfall. The
semi-arid west represents 47 percent of crop production, notably the Tiaret and Sidi Bel Abbes wilayas. The semi-arid east account for
15.2 percent of national crop production, in particular the Oum El Bouaghi and Batna wilayas. Yet, these regions receive less rainfall than
the humid and semi-humid coastal region from Algiers to the Tunisian border, which accounts for 34.8 percent of crop production.
Satellite-based weather and vegetation data can be used to estimate Algerian agricultural production. Satellite-observed normalized
difference vegetation indices (NDVI) for the largest crop producing regions can, by itself, capture 51 percent of the historical variation in
agricultural GDP, with robust correlations for the NDVIs of Algeria’s largest cereal-producing wilayas.
Satellite data on crop development suggest that, despite a late recovery in the Northeast, Algeria’s crop development will be subdued in 2024.
Rainfall in Q4-2023 and Q1-2024 was lower year-on-year in western wilayas, which was already a year characterized by lower-than-usual
rainfall and crop development. In line with rainfall, measures of crop development were well below normal in 2021, 2023, and 2024, with
some recovery in 2022, a year of rapid agricultural output growth. During the 2024 harvest season, crop development recovered modestly
in the humid, semi-humid and semi-arid eastern regions with respect to 2023 but remain much subdued in the semi-arid eastern regions.

FIGURE 15 • D
 uring the 2023-24 crop season, FIGURE 16 • …
 and crop growth measures
rainfall improved in the East but tracked changes in rainfall
worsened in the West…
1.00

0.50
NDVI Z-score

0.00

–0.50

–1.00

–1.50
2017 2018 2019 2020 2021 2022 2023 2024
Decrease
Increase between 0 and 14 percent Humid and semi-humid Semi-arid east
Increase between 14 and 43.6 percent
Increase over 43.6 percent
Semi-arid west National average

Source: ASAP.
Note: Harvest season runs from Q4 to Q2 of the following year. Data for 2024 is for
Source: ASAP. Q4-2023 and Q1-2024.

External and Fiscal Balances Will cereals elevated. Hydrocarbon exports would recover
Again Be Under Pressure in 2025 and level in 2026, but imports would grow
faster, widening the current account deficit. Foreign
The current account is expected to fall below bal- exchange reserves would stabilize and remain ade-
ance in 2024 and reserves would stabilize. In the quate but decrease from a peak of 16.1 months of
baseline scenario, hydrocarbon prices and export imports in 2023 to 8.4 months of imports by 2026 in
volumes decrease in 2024, while imports continue the baseline.
to grow at a decreasing pace as private investment The budget deficit would increase in 2024,
and consumption remain dynamic, and subdued before fiscal consolidation takes hold in 2025
agricultural output keeps the demand for imported and 2026. Hydrocarbon revenues in the budget

10 ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH

 BOX 4: THE 2024 BUDGET LAW

The Budget Law for 2024 (BL2024)a revises the budget deficit upwards FIGURE 17 • A
 fter a steep increase between
relative to the Rectifying Budget Law for 2023 (LBR2023), primarily 2021 and 2024, the 2024 Budget
due to an increase in expenditures. Revenues would increase by 2 Law projects a stabilization in
percent as higher nonhydrocarbon revenues (+10.3 percent) would spending
be mostly offset by lower hydrocarbon receipts (–8.9 percent).
Expenditures would increase by 3.9 percent as a rise in current 20
expenditures (+12 percent) would be only partially balanced by a fall
15
in investment (–7.5 percent).b In 2025 and 2026, the medium-term
budget framework foresees that a stabilization of expenditures and 10

Trillions of DZD
an increase in tax revenues would decrease the deficit.
5
The substantial increase in current expenditures is driven by the
rising wage bill and provisions for in-year budget reallocations. 0
The wage bill would be boosted by the third of three planned
waves of salary increases and return of in-situ promotions. The –5
Ministry of Public Works would receive 36 percent of the new –10
spending, to finance infrastructure projects.c The Ministry of the 2018 2019 2020 2021 2022 2023 2024 2025 2026
Interiord and the Ministry of Education would receive 21 percent
Revenue Expenditure
and 17 percent of the new spending, respectively, since they Overall budget Overall budget balance
account for a large part of the wage bill, and to finance recruitment balance excl. unforeseen
in the education sector.
Note: Data for 2023 comes from the rectifying budget law for 2023, and 2024 to
The BL2024 includes several tax measures to support economic 2026 projections from the 2024 Budget Law.
activity. It abolishes the turnover tax on firms (TAP) and introduces
fiscal incentives to promote non-hydrocarbon exports. It also
reduces the synthetic turnover tax (Impôt Forfaitaire Unique, IFU) for self-employed individuals, to support small businesses. Additionally,
it provides tax exemptions for income derived from the sale of Treasury instruments. It also introduced a new fiscal rule stipulating that
withdrawals from the Revenue Regulation Fund (FRR) must not exceed 11 percent of GDP per year.
a
Published in the official gazette in December 2023.
b
Year-on-year comparisons by expenditure chapter are prevented by the new presentation of expenditure in program budgets, which combine operating and capital
expenditure.
c
Development of green hydrogen production and launch of the 1,000 MW solar power project, as well as the inclusion of operations linked to the Integrated Phosphate Project
and the Bechar-Tindouf (Gara Djebilet) mining line for DZD185 billion.
d
In December 2023, over 320,000 beneficiaries of the vocational integration assistance scheme (DAIP) will have been integrated into permanent jobs. (APS, January
25, 2024).

would be further reduced, more than offsetting the Hydrocarbon Prices Amid
increase in tax revenues. On the expenditure side, ris- Geopolitical Uncertainty Pose
ing current spending driven by the last wave of wage Significant Risks
increases would contrast with a consolidation of cap-
ital expenditures, stabilizing overall spending in 2024. Hydrocarbon prices remain the main risk to fiscal
In 2025 and 2026, the continued consolidation of and external balances, with projected financing
capital expenditures would slightly decrease spend- needs highlighting the importance of a grad-
ing. With oil savings declining, the continued increase ual fiscal rebalancing. Oil prices stabilized at
in the deficit would increasingly translate into grow- US$ 83.6 in 2023, and Algeria’s hydrocarbon exports
ing debt, which would pass 55 percent by 2026. remained stable throughout the year. On the other
The structure of Algeria’s sovereign debt, however, hand, imports recovered, deepening the non-hydro-
remains comfortable as it is almost entirely domesti- carbon current account deficit, and leaving external
cally held and denominated, at long-term maturities balances more vulnerable to changes in global oil
and negative real interest rates. The latter point implies prices. Similarly, the large increase in public spend-
a notable transfer of resources from domestic savers ing in 2023 and 2024, concentrated in rigid spending
to the state. such as wages, has deepened the non-hydrocarbon

Outlook and Risks 11

 BOX 5: THE PANDEMIC ACCELERATED THE IMPORTANCE TO PIVOT TO A PRIVATE INVESTMENT-LED
GROWTH MODEL

Since 2000, Algeria’s growth model has relied on public investment and current spending, largely financed through hydrocarbon budget
revenues. In support of the recovery from the 1990s crisis, public investment surged in the 2000s and became the engine of Algerian
growth. When it stabilized, and current spending surged after 2008, the Algerian economy pivoted from being investment-driven to being
private consumption driven. When the oil price shock hit in 2015, the consolidation of public spending affected consumption, investment,
and caused growth to moderate across regions.
As the contribution of investment to growth declined, so did aggregate productivity. Since 2000, agricultural productivity increased as the
share of workers employed in that sector halved. This first led to increased employment in the construction sector, as the state deployed
massive public investments, and then to rising employment in services, once growth came to rely on private consumption. Productivity in
receiving sectors was comparable or lower, while industrial sector productivity declined amidst stable employment but lower value-added,
causing aggregate productivity to decline as consumption replaced investment as the driver of growth.
After the COVID-19 pandemic, Algeria’s growth and productivity growth further relies on private investment, and structural reforms to
accelerate it. As hydrocarbon prices fell during the COVID-19 crisis, the authorities partially froze public investment, which halved as a
share of GDP between 2019 and 2022, to reach 6.5 percent. Meanwhile, current spending increased by 2.4 pp, to 23.6 percent of GDP,
as wage and transfer increases. As a result, the rigidity of public spending increased markedly, shrinking the margin to increase public
investment in support of the recovery.

FIGURE 18 • T
 he growth slowdown was driven FIGURE 19 • P
 ublic investment is now smaller,
by investment, notably public and the margin to raise it is
investment, and accompanied by limited, raising the importance of
declining productivity faster private investment
1.8 6% 80%
1.6 5%
70%
1.4 4%
Contribution to growth (pp)

1.2 60%
3%
1.0
2% 50%
0.8
1%
0.6
40%
0.4 0%

0.2 –1% 30%

0.0 –2%
2000– 2005– 2010– 2015– 2020– 20%
2004 2009 2014 2019 2023
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Private consumption Public consumption 2023
Private investment Public investment Share of public investment in total investment
Aggregate productivity GDP (rhs) Share of rigid spending in total spending

Source: ONS, Ministry of Finance, Bank staff estimates. Source: ONS, Ministry of Finance, Bank staff estimates.
Note: Public investment refers to central government capital spending. Total factor Note: Rigid spending refers to spending on wages, interest payments, pensions,
productivity is defined as the Solow residual. and social assistance.

budget deficit, and increased the sensitivity of fiscal weigh on global oil prices. While foreign exchange
balances to global oil prices. Therefore, the latter rep- reserve remains adequate, projected fiscal financing
resent significant risks, both upside and downside, to needs call for prudent public spending policies and a
the outlook, particularly in an environment of height- gradual fiscal rebalancing.
ened geopolitical uncertainty. Developments in the With public investment unlikely to drive
conflict in the Middle East, changes in OPEC quo- future economic growth, accelerating non-hydro-
tas, and the evolution of global demand in particular carbon private sector investment remains a

12 ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH

priority. The risks associated with global hydrocar- budgeting and support evidence-based policymak-
bon prices point to the importance of supporting ing. It would also provide accurate and exhaustive
diversification by accelerating private sector invest- economic data to researchers and analysts, potential
ment in non-hydrocarbon sectors, and concurrently domestic and international investors, alleviating eco-
strengthening the macroeconomic policy framework nomic uncertainty and fostering investment.
by increasing non-hydrocarbon sources of export and Recent droughts and forest fires under-
budget revenues. The 2019 Hydrocarbon Law, the score the vulnerability of Algeria and the region
2022 Investment Law, the 2023 Monetary and Bank- to climate change. Over the last decade, historically
ing Law, formal adhesion to the African Continental high temperatures and low rainfall slowed agricultural
Free Trade Area (ACFTA), the 2023 Land Law, and output growth and, especially in recent years, led to
initiation of state-owned bank reforms20 are all aimed a contracting production. Beyond these immediate
at boosting investment and improving diversification. impacts, temperature, and rainfall projections of the
Strengthening those efforts, in particular by ensur- impacts of climate change also suggest that produc-
ing that they contribute effectively to the improvement tion levels could permanently decrease and variability
of the business environment, is even more important increase, as yields and cultivable areas are reduced.
now that public investment, previously the engine of The risks of climate change go beyond agriculture, as
Algeria’s growth, is increasingly constrained by rigid demonstrated by recent forest fires. They also encom-
and rapidly expanding current expenditures (Box 5).21 pass water access amid lower and more variable
Continuing to strengthen data systems rainfall and potential health impacts, underlining the
would support investment and policymaking. importance of efforts to increase supply—including
Alternative data sources used throughout this report, ongoing large investments in desalination—and
such as satellite crop development or nighttime lights, strengthen demand management. Climate change
provide a useful complement to standard economic and natural disaster risks can be mitigated via adap-
and social statistics. In 2023 and 2024, digitaliza- tation, and financing for disaster risk management to
tion efforts accelerated, as did efforts from the Bank increase human and economic resilience and protect
of Algeria and ONS to strengthen their publications, recent development gains.
with notably the first GDP rebasing. Yet, improving
the availability, granularity, and timeliness of offi- 20
Crédit Populaire d’Algérie (CPA), a large state-owned
cial economic data, most notably relating to activity,
bank, has opened 30 percent of its capital on the Algiers
investment, and the labor market, remains of utmost stock exchange. CPA is the fifth company, and first bank,
importance. Enhanced data systems would support on the Algiers stock exchange.
the authorities’ pivot towards performance-based 21
See Algeria Economic Update Fall 2023, Annex 1.3.

Outlook and Risks 13

 TABLE OF INDICATORS

2020 2021 2022 2023e 2024f 2025f 2026f

Output and prices (In percent, unless otherwise indicated)
Real GDP –5.0 3.8 3.6 4.1 2.9 3.7 3.2
Non-extractive –1.9 2.5 5.0 3.7 3.4 3.8 3.3
Extractive –20.9 19.8 –5.1 4.8 –0.5 3.3 2.4
Real GDP per capita –6.6 2.1 1.9 2.5 1.4 2.3 1.9
Consumer price index (period average) 2.4 7.2 9.3 9.3 7.5 6.4 6.1
GDP (in billions of USD) 164.9 186.3 225.6 239.9 256.7 265.8 275.4
GDP per capita (USD) 3794.4 4216.3 5023.3 5260.2 5547.0 5665.0 5793.9
Crude oil production (thousand barrels per day) 899.2 910.7 1020.0 973.1 920.0 994.0 1039.0
Natural gas production (billions of m3) 87.7 102.8 99.2 105.2 111.6 118.4 125.5
External sector

Current account –11.3 –2.4 8.6 2.3 –1.5 –3.8 –5.3

Trade balance –10.9 –1.3 9.9 3.0 –0.7 –3.0 –4.5
Exports of goods and services 15.1 22.5 30.6 24.5 21.9 21.0 20.3
Hydrocarbon exports 12.1 18.3 26.4 20.8 18.5 17.7 17.1
Nonhydrocarbon exports 3.0 4.2 4.2 3.7 3.4 3.3 3.2
Imports of goods and services 26.0 23.8 20.7 21.5 22.6 24.0 24.9
Gross official reserves (months of imports) 13.5 12.3 15.7 16.1 14.0 11.3 8.4
Exchange rate (Algerian dinar per USD; period average) 126.8 135.1 142.0 135.8
Sahara Blend export price (USD/barrel) 42.1 72.7 103.8 83.6
Central Government Finance

Government revenue 27.0 26.2 29.7 32.9 29.8 28.8 27.7

Hydrocarbon revenuea 9.2 10.4 17.7 19.7 15.2 14.6 13.9
Non-hydrocarbon revenue 17.8 15.9 12.1 13.2 14.6 14.2 13.8
Expenditures 37.5 32.5 32.7 38.1 38.8 37.4 35.3
Current expenditures 24.0 21.8 24.9 27.7 28.3 27.3 25.6
Capital expenditures 9.1 7.7 6.1 8.3 7.2 7.1 6.9
Special Account Balance and Treasury Interventions 4.5 3.0 1.7 2.1 1.5 1.6 1.6
Overall budget balanceb –10.5 –6.3 –3.0 –5.2 –9.0 –8.6 –7.6
Primary overall budget balance –9.7 –5.7 –1.8 –3.9 –7.7 –7.3 –6.2
Non-hydrocarbon overall budget balance –19.7 –16.7 –20.6 –24.9 –23.7 –22.8 –21.1
Total central government debt 45.8 55.2 48.1 49.2 51.2 53.9 55.5
Domestic debt 45.1 54.5 47.6 48.9 50.9 53.7 55.4
External debt 0.7 0.6 0.4 0.4 0.3 0.2 0.1
a
Includes dividends from Sonatrach and hydrocarbon revenues transferred to the oil savings fund.
b
Includes special account balance and Treasury interventions

14 ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH

ANNEX 1: RECENT
SPECIAL SECTIONS
OF THE ALGERIA
ECONOMIC UPDATE
Fall 2023: “Analyses in Algeria’s Algeria, the empirical link between nightlights data
Public Finances.” and economic activity is strong, both for oil produc-
tion (geolocated by gas flaring sites), gas production,
Algeria’s public finances have tracked oil and natural and non-hydrocarbon activity. The strong correlation
gas prices over the last two decades: when hydro- between nightlights and non-hydrocarbon activity
carbon prices fell, budget revenues followed, and allows us to mobilize these data to estimate the recent
the fiscal deficit expanded. At the same time, over- level of economic activity, and to produce spatialized
all government expenditures in Algeria have been estimates of the level and dynamics of activity, useful
cyclically neutral, on average not tracking swings in for sectoral or local development analyses.
output, which compares favorably with peer countries.
Patterns differ for current and capital expenditures.
Fall 2022: “Estimation of the Fiscal
Current expenditures are countercyclical: wages
Multipliers in Algeria.”
and transfers are typically expanded during down-
turns. Capital expenditures are strongly procyclical:
The sharp increase in government spending in 2022
they have been increased when hydrocarbon out-
raises the question of its effects on economic activ-
put expanded. The rigidity of public expenditures has
ity. The propensity of public spending to support
increased in recent years but remains below the aver-
economic activity and generate additional economic
age of peer countries.
activity is captured by the fiscal multiplier. An analysis
conducted on quarterly Algerian data since 2000 finds
Fall 2022: “Estimating Economic a weak multiplier effect of Algerian public spending on
Activity from Nightlights Data.” GDP, notably caused by the effect of an increase on
the deterioration of the trade balance, resulting from
Nightlights data is a tool now commonly used to its impact on imports. The spillover effect of spend-
assess economic activity. Since 2012, satellite data ing on private consumption is observed but is limited,
have been available daily and are publicly available while the analysis finds a more marked effect of pub-
on the Group on Earth Observations website. For lic spending on the construction sector.

15
 Spring 2022: “Does Algeria Benefit conditions. Although Algeria performs well in the MENA
from Rising Gas Prices?” region, and despite notable improvements, multidimen-
sional poverty varies considerably across regions and
The export price of Algerian natural gas follows a between rural and urban areas. The North-Central and
distinct dynamic from the reference price of gas on North-Eastern regions face lower levels of deprivation
international markets. Thus, while the Henry Hub than the rest of the country, while the Central Highlands
gas reference price has gained nearly 50% between region faces a higher level of deprivation. The most vul-
Q2 and Q3-2021, the export price of Algerian natu- nerable regions improved more rapidly between 2013
ral gas has increased by only 0.5% over the same and 2019, showing convergence with the richer regions.
period. Indeed, these prices are established contrac- Health and education have become more important
tually, sometimes on a long-term basis, and based dimensions of deprivation, underscoring the policy pri-
on bilateral negotiations with buyers. An economet- orities for Algeria’s human development.
ric modeling exercise allows us to establish that the
export price of Algerian natural gas is characterized
Fall 2021: “Resilience of Algeria to
by a strong inertia, as well as a delayed linkage to the
Climate and Natural Disaster Risks.”
oil price. The model presented allows to explain 88%
of the variation of the exported natural gas prices.
The Algerian territory is exposed to a range of climatic
and geological hazards, particularly in urban areas,
Spring 2022: “The Impact of which are experiencing rapid population growth and
Macroeconomic Factors on Inflation concentrate a significant share of economic activity.
in Algeria.” Floods are the most frequent disasters in Algeria, but
the greatest economic losses have been caused by
Inflation is on the rise in 2021 and 2022, both globally earthquakes. Algeria has a modern legal framework
and in Algeria, but the underlying causes vary from for disaster risk management (DRM), a clear deci-
country to country. In Algeria, the price increase that sion-making framework for emergency response, and
began in 2021 was driven by food prices. A model of recognizes the importance of protecting strategic
the consumer price index since 2009 shows that it is infrastructure and critical sectors. Serious efforts have
characterized by strong short-term inertia, but that the been made to reduce risk, especially in emergency
depreciation of the dinar, the increase in the price of response management and reconstruction, at the
imported goods, the rise in public spending and the expense of prevention. Moreover, information sharing
increase in currency in circulation explain more than is not systematic, leading to inconsistencies, espe-
40% of the variation in the CPI after two years. In addi- cially in disaster prevention, and enforcement of GRC
tion, the importance of these factors varies according legislation can be improved. Significant efforts should
to the categories of goods and services, reflecting the still be made for comprehensive and cross-sectoral
intensity of imports of these products and the char- climate and disaster risk reduction and management.
acteristics of the Algerian market both in terms of
production and distribution.
Spring 2021: “Effects of COVID-19 on
Inequality in the MENA Region and
Fall 2021: “Evolution of Non- Algeria.”
Monetary Poverty and Inequality in
Algeria.” Survey results from the Middle East and North Africa
(MENA) region confirm that the poorest individuals
The multidimensional poverty indicator improved are more likely to report a deterioration in their living
in Algeria between 2013 and 2019, reflecting prog- conditions since the beginning of the COVID-19 crisis.
ress in all its dimensions: education, health, and living Despite the lack of recent data on household welfare

16 ALGERIA ECONOMIC UPDATE – INVESTING IN DATA FOR DIVERSIFIED GROWTH

in Algeria, the characteristics of vulnerable individu- system. Although officially the number of cases and
als suggest that inequality has also increased. They deaths remains low, the pandemic has highlighted the
are more likely to contract COVID-19 or lose their jobs limitations of the health system. A double burden of
during the pandemic, have less adequate social pro- communicable and non-communicable diseases, as
tection, and are likely to be disproportionately affected well as limited resources, suggest a need to strengthen
by ongoing macroeconomic and fiscal adjustments. it. Although the health system receives substantial
A sustainable and inclusive recovery will therefore public financial support and requires relatively little
require offering the most vulnerable the opportunity individual expenditure, and although life expectancy
to recover what they have lost. and control of noncommunicable diseases are com-
parable to peer countries, health outcomes remain
below those of middle- and high-income countries,
Spring 2021: “Towards an Equitable particularly in terms of equity in maternal and child
Reform of the Algerian Health health conditions. The need for physical and human
System.” resources and for a better distribution of health cov-
erage are major challenges. Finally, declining public
The consequences of the COVID-19 pandemic have financing and health system capacity pose risks to
shown the need for a fair reform of the Algerian health health system resilience.

Annex 1: Recent Special Sections of the Algeria Economic Update 17

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1818 H Street, NW
Washington, DC 20433