IMF says Algeria's export base is widening slowly

The International Monetary Fund (IMF) said in an analysis published on Tuesday that Algeria's export base is widening slowly, while oil and gas still dominate sales abroad.

TSA and ObservAlgerie both reported on the analysis, which reviews the results of economic policies carried out in recent years. It looks at their effects on national output and on the diversification of the economy.

The document was signed by Haris Tsangarides, the IMF's mission chief for Algeria, with economists François Painchaud and Véronique Salins.

The IMF said the share of activities outside oil and gas in real gross domestic product (GDP) and in goods exports has risen gradually. Export earnings from products other than oil and gas have also grown over the past decade.

Oil and gas still dominate

The IMF said these efforts are beginning to pay off. Sales abroad outside oil and gas are concentrated on a few products, such as chemicals, metals and farm produce.

Large projects need careful planning

The IMF said Algeria's large projects can raise productive capacity, improve connections and create new opportunities, but they need large sums of money.

The IMF said higher investment in recent years has added to demand for imports and increased external pressures and pressure on the budget. It said projects must be planned, ranked and carried out with care, because choosing the right projects matters as much as the amount spent.

Pressure on the budget

The IMF warned that continued budget deficits and financial pressures could threaten the future of the investment programme.

It also recommended a better choice of state-financed projects, more effective public spending and more tax income from outside oil and gas.

What the IMF recommends for firms

The IMF recommends better access to finance and skills, so that firms can grow, adopt new technologies and take up new opportunities. It also recommends steady support for entrepreneurship, so that more young companies can grow.

The authors said public investment can lay the basis for a more dynamic private sector, which would be more competitive and could increase exports.

To become more competitive, firms need efficient infrastructure, access to finance, suitable skills and effective institutions, the IMF said. Companies invest more willingly when rules are predictable and competition between state and private firms is fair.

The IMF said these reforms, carried out together, would support investment and private sector activity over time.

The IMF also pointed to Algeria's natural resources, its place among African energy exporters and its trade ties with Europe, which it said could help other activities grow.