Algeria Requires $8-10Bn Per Annum Investment Over 10 Years Says BouteflikaAlgeria Requires $8-10Bn Per Annum Investment Over 10 Years Says Bouteflika

VOL. XLIV

No 47

19 November 2001

ALGERIA

Algeria Requires $8-10Bn Per Annum Investment Over 10 Years Says Bouteflika

Algeria’s economy needs to grow at an average annual rate of 7% over 10 years, requiring an investment of $8-10bn per year, according to the Algerian President, Abdelaziz Bouteflika. Addressing the James Baker Foundation in Houston on 3 November, Mr Bouteflika said that since greater investment is vital to Algeria’s economic recovery, the country is amending its regulatory framework in a bid to promote “direct investment, partnership and technical assistance.”

In addition to passing laws to liberalize and reform the telecom and mining sectors, Algeria plans to revitalize and modernize its banking sector and develop capital markets. “As for state-owned banks, our objective is to provide them with banking technologies and organization better adapted to the requirements of a modern economy, with a view to improving the variety and quality of their services and performances,” Mr Bouteflika said. He noted that greater importance is being attached to banking partnerships and the establishment of financial companies in Algeria.

Two laws have recently been passed, said Mr Bouteflika, regarding organization, management and privatization of Economic State-owned Enterprises (EPE). The first is applicable to domestic and foreign investments in production activities defined as “goods and services,” as well as investments in concessions and/or licenses. The second “sets the privatization modalities of EPE, the procedures liable to favor transparent and rapid privatization operations, and provides the means to monitor them.” State-owned companies such as the oil company Sonatrach will have a transparent legal framework to manage their activities and help facilitate partnerships. “The planned measures will reinforce the assets of Sonatrach, which will devote its efforts to the management of its trading and industrial functions,” the president said.

Mr Bouteflika noted that Algeria started its large-scale political and economic reform two years ago, managing to increase foreign exchange reserves at the end of 2000 to $12.5bn, or 16-18 months worth of imports. As a result, Algeria expects to see a current account surplus for the first time in many years by the end of the year.

Foreign debt was reduced to $25.5bn at the end of 2000 and fell to 21% of exports compared to 45% in 1998. At the same time, the inflation rate has stabilized at around 2% since last year, compared to over 5% in 1998 and around 25% in the early 1990s. While the economic growth rate remains low at 4% in 2000, it has improved from a few years ago when it was insignificant or even negative. However, with an unemployment rate of 30% and growing social needs, the government is concerned. “We are obviously aware that we have a long way to go to settle such a troubling problem,” Mr Bouteflika said.