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Page 1: 118393 EIU Algeria

Country Report

Algeria

September 2010

Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom

Page 2: 118393 EIU Algeria

Economist Intelligence Unit

The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For 60 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide.

The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group.

London Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom Tel: (44.20) 7576 8000 Fax: (44.20) 7576 8500 E-mail: [email protected]

New York Economist Intelligence Unit The Economist Group 750 Third Avenue 5th Floor New York, NY 10017, US Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 E-mail: [email protected]

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Copyright © 2010 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, by photocopy, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited.

All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it.

ISSN 0269-5723

Symbols for tables �0 or 0.0� means nil or negligible; �n/a� means not available; ��� means not applicable

Printed and distributed by IntypeLibra, Units 3/4, Elm Grove Industrial Estate, Wimbledon, SW19 4HE

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Algeria 1

Country Report September 2010 www.eiu.com © The Economist Intelligence Unit Limited 2010

Algeria

Executive summary 3 Highlights

Outlook for 2010-11 4 Political outlook 5 Economic policy outlook 7 Economic forecast

Monthly review: September 2010 10 The political scene 11 Economic policy 14 Economic performance

Data and charts 16 Annual data and forecast 17 Quarterly data 18 Monthly data 19 Annual trends charts 20 Monthly trends charts 21 Comparative economic indicators

Country snapshot 22 Basic data 23 Political structure

Editors: Edward Bell (editor); David Butter (consulting editor)

Editorial closing date: September 2nd 2010

All queries: Tel: (44.20) 7576 8000 E-mail: [email protected] Next report: To request the latest schedule, e-mail [email protected]

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Country Report September 2010 www.eiu.com © The Economist Intelligence Unit Limited 2010

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Algeria 3

Country Report September 2010 www.eiu.com © The Economist Intelligence Unit Limited 2010

Executive summary

Highlights

September 2010

• The president, Abdelaziz Bouteflika, will remain in power in 2010-11 after securing a third term in the presidential election in 2009, following several amendments to the constitution approved by parliament in November 2009.

• A cabinet reshuffle in May removed several of the president's allies from the government. We expect tension within the political leadership to continue and civil unrest over social conditions to persist.

• Fiscal policy will remain expansionary. A US$286bn investment plan for 2010-14 will be used to improve infrastructure and develop the skills base. The fiscal deficit will average 9.1% of GDP in 2010-11.

• GDP growth will rise to 4.3% in 2010, owing to robust government spending, investment projects and a recovering global economy. Growth will slip to 4% in 2011 as global demand for hydrocarbons falls.

• The Algerian dinar will appreciate against the euro in 2010-11 compared with 2009 as confidence in the single currency is undermined by monetary and fiscal instability in the euro zone.

• In 2010-11, higher oil prices than 2009 will lead to a widening of the trade surplus to an average of US$17.7bn, from US$4.6bn in 2009. This will help keep the current account in surplus.

• The government has increased its protests against the alleged negotiations between Islamist militants and regional and European governments to free hostages.

• The council of ministers passed the 2010 supplementary finance law after weeks of anticipation from local and foreign businesses.

• Under the supplementary budget, new foreign banking operations will no longer be allowed to hold majority stakes in Algerian affiliates.

• Small businesses will no longer be forced to use letters of credit for imports provided their imported supplies do not exceed a threshold of AD2m (US$25,145) annually.

• Orascom Telecom's situation in Algeria remains uncertain as the government appears committed to preventing a sale to any foreign investor.

• Total, a French oil company, has signed a deal with Qatar Petroleum for the construction of a new ethane cracker in Arzew.

• Sonatrach has won a case in the International Court of Appeal over gas prices for shipments to Spain. Gas Natural, a Spanish firm which is meant to purchase the gas, has said it does not agree with the ruling.

Outlook for 2010-11

Monthly review

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Outlook for 2010-11 Political outlook

The president, Abdelaziz Bouteflika, secured a third term in office in April 2009, which will run until 2014. He faces challenges from across the Algerian political scene, as liberals and Islamists resent their exclusion from the political process, weakening the ruling three-party coalition. A cabinet reshuffle in May 2010 removed several allies of Mr Bouteflika from the government, with long-serving technocrats taking their places. Speculation continues about divisions within the ruling coalition, the presidential alliance, and about the possibility that disagreements within the country's leadership may have been behind the replacement of the leadership at Sonatrach, the national oil company, in January following a corruption inquiry. The Economist Intelligence Unit expects rumours about further political change to continue during 2010-11.

The re-election of Mr Bouteflika required constitutional amendments to abolish the two-term limit for incumbents. Although the amendments were passed by an overwhelming majority in parliament, they were harshly criticised by liberal commentators in the local press on the grounds that they concentrate power in the hands of the president, undermining the authority of the prime minister. Concerns were also raised that there could be a return to the post-independence autocratic governance that fostered the rise of extremist Islamism and culminated in violent street protests in the late 1980s. The level of social unrest has increased, with riots in several cities, and public- and private-sector workers organising frequent strikes. High unemployment, poor social conditions and a lack of economic initiative from the government will continue to add to disaffection and cause sporadic outbursts of social unrest.

The influence of the military elite over the political process during the 1990s has been largely curbed by Mr Bouteflika, but the military has retained sufficient power to weaken the president should it wish to do so. The cabinet reshuffle removed several ministers whose zeal for reform appears to have worn out its welcome and, in any event, was not particularly effective. The president has, however, played a key part in the gradual transformation of Algeria since he came to power in 1999, notably by using the authority of his office to marginalise senior members of the military old guard, le pouvoir, who used to be the major powerbrokers in Algerian politics, and strengthen civil leadership. However, this raises concerns about the concentration of power in the hands of one individual and his entourage, and about the lack of an obvious successor. Mr Bouteflika still appears frail following a prolonged illness in late 2005, and doubts remain about the 73-year-old president's ability to serve the full five-year term. The issue of succession is attracting increasing attention, with the prime minister, Ahmed Ouyahia, likely to be one of the few credible successors.

Sporadic attacks by armed Islamists will remain a security concern for Algeria. A small, radical Islamist organisation, al-Qaida in the Islamic Maghreb (AQIM, previously known as the Groupe salafiste pour la prédication et le combat),

Domestic politics

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continues to carry out attacks on the state, including an assault on an army convoy and the murder of a mayor of a small town in August. The government has launched new military operations to track down and eliminate militant groups. Security installations around foreign-owned operations and the capital, Algiers, have been strengthened. However, we do not expect the militants to pose a serious threat to political stability.

Algeria will continue to be a major regional ally of the West in the campaign against Islamist militancy, and will be the main military force behind efforts to weaken AQIM in its Saharan and Sahel neighbours. Relations with the EU will be stable, as Algeria supplies some 25% of the EU's gas imports and security of supply from Russia remains a concern. Relations with France will continue to be strained by underlying resentment about French actions during the colonial era and attitudes after independence, but will remain important, given France's status as Algeria's largest trading partner and host of a large Algerian diaspora. However, recent French-supported military operations against AQIM will create concern in the Algerian military over what they perceive to be foreign intervention in Algeria's backyard. Algerian-US relations will continue to be focused on dealing with militant Islamism, and on oil exports from Algeria. Russia has also signed military equipment deals with Algeria, notably to purchase fighter aircraft. A regional dispute over the sovereignty of Western Sahara has hampered relations with Morocco, making any Maghreb economic co-operation unlikely.

Economic policy outlook

Algeria will maintain tough restrictions on foreign investment in an effort to protect its national economic interests and to promote domestic industries. Since 2009, the government has taken an increasingly more restrictive line towards foreign investment in the country through a variety of measures including a tougher tax regime, a limit of 49% on foreign ownership and policies to reduce the amount of imports coming into the country. The hydrocarbons sector will continue to receive preferential treatment, although project delays, worsening perceptions of the operating environment and the policies of the new energy minister and leadership of Sonatrach will affect the development of the sector.

The privatisation or consolidation of small state-owned firms is unlikely to proceed with much vigour over the next two years. A proponent of privatisation was among the ministers removed from government in May. In any case, limited access to capital market financing for domestic private firms and foreign-ownership caps will also impede progress. The sale of a majority stake in a state-owned commercial bank, Crédit Populaire d'Algérie is unlikely given the government's new restriction on foreign shares in banks. Algeria's private sector is comparatively small because of the security problems of the 1990s, the underdevelopment of financial services and excessive bureaucracy. The government is attempting to address these issues, but progress will remain slow, hampered by the fact that ultimate responsibility for decision-making rests with the president, who has shown little aptitude for economic reform.

International relations

Policy trends

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The government will continue to restrict private credit to consumers, despite the IMF's recommendation that an expansion of credit was crucial to Algeria's future growth prospects. At present, credit is extended only for mortgages and not for consumer goods such as cars. Algerian banks are highly liquid, having taken significant government deposits since 2004, and a credit reference bureau does exist, but we do not expect a relaxation of the consumer credit policy in 2010-11.

Fiscal policy will remain expansionary as the state takes a leading investment role. The government's US$286bn investment plan for 2010-14 will focus on developing the non-hydrocarbons sector and expanding spending on infra-structure, skills development and small- and medium-sized enterprises. The supplementary budget sets out total 2010 expenditure of AD6.5trn (US$81.2bn), 19% higher than previously forecast and includes a AD608bn increase in current spending to make up two years of back pay for public servants. Capital expenditure in 2010 will be AD3trn but will begin to pick up in 2011 as the government's investment strategy takes off. The government is expecting a budget deficit of AD3.6trn in 2010, but this is based on an extremely conservative oil price of US$37/barrel and government-estimated revenue of AD2.9trn. We do not expect Algeria to meet all these spending commitments and now forecast a fiscal deficit of 9% of GDP in 2010 and 9.3% of GDP in 2011, as the government's spending programme will not be matched by an increase in tax revenue and oil prices, although high, will be below the 2008 highs. The government is committed to avoiding borrowing on international markets and will be able to cover the deficits by drawing on the reserves in its oil stabilisation fund, the Fonds de régulation des recettes, which are around AD4trn. The sizeable quasi-fiscal activities of the public-sector banks�which often lend to lossmaking state-enterprises�are not recorded in the government's fiscal accounts.

The official policy aim of Banque d'Algérie (BdA, the central bank) is to control the expansion of the money supply in order to contain inflation, although it does not publish its target for monetary growth. High deposits from Sonatrach will keep liquidity in Algerian banks elevated and cause broad money (M2) to expand modestly in 2010. The BdA will also need to use sterilisation policies to dampen the inflationary effects of rapid money supply growth. Much of the government's investment programme is likely to be channelled through government-controlled banks, increasing the supply of credit to the economy. The BdA is expected to keep interest rates low, to encourage the development of the banking sector, preferring price controls to counteract inflationary pressures stemming from robust domestic demand. The BdA will monitor minimum capital levels to assess the health of the banking sector and will continue to take additional steps where they do not conflict with other government objectives.

Fiscal policy

Monetary policy

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Economic forecast

International assumptions summary (% unless otherwise indicated)

2008 2009 2010 2011

Real GDP growth World 2.7 -0.8 4.5 3.6

OECD 0.4 -3.4 2.5 1.6

EU27 0.6 -4.2 1.4 1.1

Exchange rates ¥:US$ 103.4 93.7 89.5 89.5

US$:� 1.470 1.393 1.293 1.235

SDR:US$ 0.629 0.646 0.661 0.672

Financial indicators � 3-month interbank rate 4.65 1.23 0.82 0.93

US$ 3-month Libor 2.91 0.69 0.64 0.78

Commodity prices Oil (Brent; US$/b) 97.7 61.9 80.0 78.5

Gold (US$/troy oz) 871.8 973.0 1,179.8 1,238.8

Food, feedstuffs & beverages (% change in US$ terms) 28.3 -20.4 0.4 0.8

Industrial raw materials (% change in US$ terms) -5.1 -25.6 32.9 3.4

Note. Regional GDP growth rates weighted using purchasing power parity exchange rates.

We expect world real GDP growth (at purchasing power parity exchange rates) of 4.5% in 2010. In 2011 the fading effect of government stimulus packages in some economies will curb global growth, which will slow to 3.6%. In 2010-11 fiscal and monetary crises will keep growth at only 0.8% in the euro area�a key market for Algerian exports. Increased demand for crude oil from China and the US in particular will lift the price of Brent Blend to an average US$79.3/b in 2010-11.

We expect GDP growth of 4.3% in 2010 as government spending, a rebound in oil prices and lower import costs help the Algerian economy to recover after posting growth of only 2.2% in 2009. Growth in 2011 will be slightly lower at 4% owing to weaker global demand for oil. Bottlenecks in gas developments and OPEC production cuts mean that the hydrocarbons sector will grow modestly. The non-hydrocarbons sector will continue to grow robustly (9.3% in 2009 according to the Ministry of Finance), owing to expansion in construction and utilities following an intensive government-sponsored programme to upgrade infrastructure and provide housing. Agriculture will receive increased financing as the country seeks to improve food self-sustainability. However, recent policies to limit imports will restrict private consumption growth. Large infrastructure investment programmes in various sectors have been pushed through, despite international credit constraints.

Government spending has supported the economy in a difficult international environment, and expansion of the civil service and increases in public-sector wages will continue. Higher than average oil prices will support further large-scale investment projects, demand and government consumption, and will help to counteract slower expansion in hydrocarbons exports resulting from sluggish European growth.

International assumptions

Economic growth

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Domestic price pressures will remain high in 2010 (inflation averaged 5.7% in 2009) owing to robust domestic demand and monopolistic players preventing price reductions in a number of product markets. The government will continue to subsidise many food products, but efforts to crack down on speculators during the Islamic holy month of Ramadan, when demand for food is high, appear to have been unsuccessful in preventing price rises. A weaker euro should mean that some of Algeria's food imports, particularly wheat from France, will be cheaper but an uncompetitive and monopolised import market will keep domestic prices high. Other factors adding to inflationary pressures are government commitments to maintain high public spending; likely increases in electricity and fuel prices; further price rises stemming from government restrictions on imports; and industrial action forcing the government to meet wage demands over and above the recent 25% increase in the minimum wage. The latter will lead to price rises and higher nominal wages at all salary levels. We expect average inflation to weaken to 5% in 2010, as food stocks have been built up, and to fall further, to 4.2%, as measures are taken to dampen demand.

The BdA will continue to operate a managed float of the Algerian dinar, the aim of which is to maintain exchange-rate stability, particularly with the US dollar and the euro. The dinar will slip slightly against the single currency, averaging AD102.9:�1 in 2010, before appreciating to AD95.1:�1 in 2011. The stronger dinar rate in 2011 will keep import expenditure manageable as Algerians buy cheaper European goods. A similar trend will occur against the US dollar, with the dinar averaging AD79.5:US$1 in 2010 and AD77:US$1 in 2011. The central bank retains substantial foreign reserves to be able to maintain or lower the value of the dinar as it deems necessary.

The trade surplus narrowed sharply, to US$4.6bn, in 2009 because of lower international oil prices and lower oil production. Stronger domestic demand and higher commodity prices, especially for food and construction materials, will put upward pressure on the import bill in 2010-11, but the strength of the dinar against the euro and government measures to reduce imports by encouraging domestic production will keep import costs manageable. The trade surplus will widen to US$16.8bn in 2010 and US$18.5bn in 2011 as exports increase in line with rising hydrocarbons prices.

Workers' remittances will remain an important non-merchandise inflow but will be dwarfed by non-merchandise outflows, as efforts to develop the hydrocarbons, power, water and construction sectors continue to draw in foreign inputs. Profit repatriation, largely associated with the energy sector, will be the main debit on the income account, ensuring it remains in deficit despite earnings from Algeria's massive foreign assets (official and unofficial). We expect the current-account surplus to average 2.9% of GDP in 2010-11, compared with an estimated deficit of 2.4% of GDP in 2009.

Inflation

Exchange rates

External sector

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Forecast summary (% unless otherwise indicated)

2008 a 2009 a 2010b 2011b

Real GDP growth 2.8 c 2.2 c 4.3 4.0

Oil production ('000 b/d) 1,360 1,250 c 1,253 1,300

Hydrocarbon exports (US$ m) 76,672 c 42,640 c 52,748 55,350

Unemployment rate (av) 11.3 10.2 9.9 10.0

Consumer price inflation (av) 4.4 5.7 5.0 4.2

Consumer price inflation (end-period) 3.3 5.8 4.1 4.6

Government balance (% of GDP) 3.4 c -7.9 c -9.0 -9.3

Exports of goods fob (US$ bn) 78.6 43.7 54.4 57.3

Imports of goods fob (US$ bn) 38.0 39.1 37.6 38.8

Current-account balance (US$ bn) 34.5 c -3.9 c 5.3 5.7

Current-account balance (% of GDP) 19.7 c -2.4 c 2.9 2.8

External debt (year-end; US$ bn) 5.5 4.4 c 3.8 3.6

Exchange rate AD:US$ (av) 64.58 72.65 79.54 77.00

Exchange rate AD:US$ (end-period) 71.18 72.73 79.67 74.41

Exchange rate AD:¥100 (av) 62.48 77.53 88.88 86.03

Exchange rate AD:� (av) 94.94 101.20 102.87 95.10

a Actual. b Economist Intelligence Unit forecasts. c Economist Intelligence Unit estimates.

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Monthly review: September 2010

The political scene

The Algerian government has stepped up its campaign against the alleged involvement of regional and European governments in negotiations with militants from Al Qaida in the Islamic Maghreb (AQIM), according to local press reports. AQIM has kidnapped a number of Europeans in the Sahel region of North Africa in recent months. A British national, Edwin Dyer, was killed last year after the UK government refused to accede to AQIM's demands. A French aid worker, Michel Germaneau, was killed by AQIM in July after three months in captivity. Two Spanish aid workers were released by AQIM on August 23rd, having been kidnapped while travelling through Mauritania with an aid convoy in November. A third was released in March.

The Algerian government has frequently spoken out against the involvement of Western governments in combating the terrorist threat in North Africa, and in particular against governments who negotiate with militants over the release of hostages. AQIM leader, Abdelmalek Droukdel claimed that "negotiations were under way" over the release of Mr Germaneau and that he was killed in response to armed attempts by France and Mauritania to free him from captivity in northern Mali. The French government has denied that it was negotiating with AQIM over the release, and the president, Nicolas Sarkozy, has said that France will punish Mr Germaneau's killers. Earlier this year, Mali freed four Islamist prisoners, apparently in return for the release of a French hostage, drawing criticism from regional governments, including Algeria. The Algerian government also suspects that the release of the two Spaniards was linked to Mauritania's repatriation of the Malian national convicted of their kidnapping, who has reportedly now disappeared. In an article on August 19th, Echorouk, an Algerian daily paper, described it as a "hostage-swapping deal" and said that Mali was "throwing down the drain" regional agreements on non-co-operation with terrorist organisations. In remarks quoted by Algérie Presse Service, the state news agency, in late July, the foreign minister, Mourad Medelci, said that it was "up to the countries of the region" to deal with security. According to a report in an Algerian daily, Le Jeune indépendant, on August 23rd, Algeria is planning to submit a plan to the UN in September demanding sanctions against countries that free terrorists in return for hostages.

A number of attacks in northern Algeria have also been reported in recent weeks. On August 6th, AQIM members killed the 47-year-old mayor of Baghlia, east of the capital, Algiers, in the province of, Boumerdès according to Echorouk, and three soldiers were killed and four wounded in a bomb attack near Baghlia on August 19th. An AQIM unit in Boumerdès has also been found to have been monitoring parts of Algiers frequented by British, US and European nationals. According to El Khabar, an independent newspaper, judicial investigations have recently been completed into alleged planned attacks by the unit against Western nationals at tourism sites in the capital. AQIM operatives in Boumerdès are carrying out a protection racket in the region, which was a

Algeria campaigns against co-operation with terrorists

Terrorist attacks are reported in the north

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militant stronghold during the civil war of the 1990s, reported the Reuters news agency on August 30th.

The terrorist threat in Algeria is generally considered to be on the wane, with most attacks being isolated incidents outside the capital. The increased incidence of kidnappings in the Sahel region is a concern, but does not affect the general security outlook for the country. The lack of support for the government among a poor, underemployed and politically disaffected population is also a concern, but there is little evidence to suggest that the occasional outbreaks of civil unrest that result will become more any more serious in the medium term.

Economic policy

At a meeting on August 25th, the conseil des ministres (cabinet) agreed the 2010 loi de finances complémentaire (LFC; supplementary budget), updating the existing budget for the 2010 calendar year. A series of new regulations included in the planned legislation continue the trend of restricting the operations of foreign companies in the country, in line with the government's aim of encouraging the development of domestic firms. The measures, outlined in a public statement issued by the cabinet, include "reinforcing" the pre-emptive right of the government to buy any shares ceded by foreign companies in their local operations, and a new regulation limiting foreign banks to a minority share in any new banking operations opened in the country.

The introduction of clear rules on the government's right of first refusal in the sale of local operations by foreign firms will not be welcomed by international businesses operating in the country, but is not surprising. The government was unhappy that the sale of the local cement operations of Orascom Construction Industries (OCI, an Egyptian company) to Lafarge, a French cement company, in early 2008 brought no direct financial benefit to the state. In late April this year it blocked the planned sale of the local mobile-phone operator, Djezzy, by OCI's sister company, Orascom Telecom, to MTN, a South African firm, claiming that the deal breached local rules that gave the government a pre-emptive right of purchase. The new measure simply formalises this arrangement.

The restrictions on stakes of foreign banks in Algeria are new. According to the cabinet statement, the establishment of banks or other financial institutions in Algeria by a foreign investor will be dependent on a 51% share being held by local investors. The ruling extends a regulation introduced in the 2009 LFC that restricts foreign companies to a minority stake in joint ventures with local partners. Up to now, foreign banks have been able to own anything up to 100% of their local ventures. Two French banks, BNP Paribas and Société Générale, and Jordan-based Arab Bank are the sole shareholders in their respective local affiliates, while Natixis, another French bank, has a 91.3% share in Natixis Algérie, Bahrain's Al Baraka Banking Group has a 55.9% stake in Banque Albaraka d�Algérie, and Arab Banking Corporation, also of Bahrain, has a 70% share in ABC Algérie.

Government restricts foreign banking operations

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According to the cabinet statement, banks already operating in the country will be unaffected by the new ruling, which will apply to "all future openings". The measure will "not be retroactive", confirmed general delegate of the Association des banques et des établissements financiers, Abderahmane Benkhalfa, in remarks quoted in El Watan, a local independent paper, on August 30th. However, the LFC will also grant a "golden share" in the capital of private banks and financial establishments to the government, giving it representation but not voting rights. The measure, says the statement, is designed to increase transparency in the banking sector, although international investors are likely to see it as yet another sign of state interference in foreign businesses. The new regulation also stipulates that all overseas banks operating in Algeria will be subject to the same rules as other foreign ventures when it comes to the cession of shares. Any sale be approved by Banque d�Algérie (BdA, the central bank), and the state will be given a pre-emptive right of purchase of any foreign shares. According to the new ruling, any sale not conforming to these rules will be "null and void". The LFC also tightens regulations governing the movement of capital in and out of the country and grants the government the authority to take back public shares granted to private companies under the privatisation programme. The grounds on which this can be done remain vague, with the cabinet statement simply saying that such action can be taken in cases where the company has not "carried out its obligations, notably payment".

According to the cabinet statement, the budget will exempt small companies from the obligation to use letters of credit (LCs) to purchase goods from overseas. The original regulation, which was introduced as part of the 2009 LFC, stipulated that LCs must be obtained to cover purchases of more than US$1,900. It has provoked considerable opposition among local businesses, who claim that smaller companies have found it difficult to shoulder the burden of the extra costs involved in raising LCs. Customs bureaucracy and banks' lack of capabilities to deal with the surge in demand for LCs have created long delays in the procurement of necessary imports, and rather than promoting the development of local businesses, the new measure has made life more difficult, say local executives. In late July the owner of the national airline, Air Algérie, Abdelwahid Bouabdallah, complained that the company had been forced to ground some of its fleet due to the difficulties of importing spare parts under the new rules. The LFC will allow smaller businesses to dispense with LCs for the import of spare parts or components up to a limit of AD2m (US$25,145) a year. Although the measures will be a relief to some smaller firms, they are unlikely to quell demands from local business leaders that the LC rules be lifted completely.

Among other measures designed to support local businesses are the introduction of a tax on imports of heavy goods vehicles and public works machinery, a limit for the price of agricultural land concessions of AD150,000 (US$1,887)/ha, a tax on imported wheat whenever its price undercuts local produce and the prohibition of the sale of government land to foreign investors. The LFC will also exempt local pharmaceutical producers from corporation tax, and the state will guarantee bank loans to strategic public

Small businesses are exempt from letters of credit ruling

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businesses for modernisation. As with the legislation on LCs, the new rules are unlikely to have the desired impact.

Imports(US$ bn)

Source: Banque d'Algérie.

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

0908070605040302012000

The LFC will also bring together a series of measures announced in recent months to combat corruption and fraud. They include the stipulation that local and foreign businesses bidding for a public contract sign a declaration forbidding the commission or acceptance of "all acts of corruption", the creation of a central office to combat corruption and enhanced powers for local judicial authorities throughout the country. The new legislation will also increase the remit of the court of auditors in combating fraud and illegal practices, enabling it to intervene in companies in which the state has a majority share or decision-making authority, and will give the BdA greater powers of oversight of the local banking sector. The new measures coincide with an ongoing investigation into alleged corruption in the award of contracts in a number of ministries and state companies, including the Ministry of public works and state energy company Sonatrach. However, most analysts are sceptical whether the government has either the will or the capacity to root out corruption in a country where it is perceived to have become a routine part of doing business.

Negotiations are yet to begin on the sale of Djezzy by Orascom Telecom to the Algerian government more than three months after the operator agreed to talks, and media reports suggest that despite the collapse of a planned sale to MTN there is still third-party interest in the Egyptian operator. According to reports in the Italian press and banking sources quoted by Reuters in an article on August 18th, a Russian telecommunications group, VimpelCom, is in initial talks over the purchase of a majority stake in Orascom from Naguib Sawiris, the owner of Weather Investments, which owns 50% plus one share in the operator. Although any deal would not involve a direct sale of Djezzy, it is unlikely that it would be free of complications. In late April the government blocked the sale of Orascom Telecom's Algeria operations to MTN, stating that it had a pre-emptive right of purchase. A month later, Orascom agreed to negotiate with the government, but the government has given little indication when these talks might take place. The telecoms minister, Moussa Benhamadi, said in late July that "nothing will be decided" until government experts had valued the

Measures to combat fraud are consolidated

Orascom sale is still unresolved

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business. The finance minister, Karim Djoudi told reporters in late July that talks would "start soon".

The government announced on August 31st that it would begin a valuation of Djezzy as the start of a process to purchase the operator. According to government sources, the valuation should take a maximum of two months and an offer would be made to Orascom afterward. The government also said it wanted to "finalise the issue" within eight months, suggesting the government wants a quick end to the protracted travails of Orascom in Algeria. However, the valuation from the government is likely to be significantly less than a private investor, with initial estimates from the government suggesting US$2bn-3bn. The MTN interest earlier this year had valued Orascom Telecom at around US$7bn.

Economic performance

There is new hope that the planned construction of an ethane cracker at Arzew will finally take off following reports that a deal was agreed in early August for Qatar Petroleum (QP) to buy a 10% stake in the project. Total, a French oil company, was selected to build the 1.4m-tonne/year facility in July 2007, but it has since been on hold pending the resolution of a series of issues. These include the price and availability of gas feedstock for the project and whether it would be financed by international banks, as preferred by Total, or by local ones, as stipulated by the Algerian government. Another stumbling block was the announcement in 2008 that foreign companies would be restricted to a minority stake in joint-venture projects. Total had bid for and won the work on the basis that it would take a majority interest in the plant, but a formal agreement had not been signed. According to local and international media reports, Total has now agreed to reduce its stake to a minority, ceding 2% to the state energy company, Sonatrach, and a further 10% to QP. Total will now have a 39% share of the project, with the Algerian government the majority partner with 51%. The reports are consistent with information obtained by the Economist Intelligence Unit from sources close to the market, who say that a prospective deal with QP has been under negotiation for a number of months. The feedstock issue may also have been alleviated by a contract awarded to Total to develop the gas-rich Ahnet basin in the south-west, which was signed in January, although the use of the gas relies on the construction of a major new pipeline to the region by Sonatrach. The energy and mining minister, Youcef Yousfi indicated in late July that a further upstream licensing round is planned before the end of the year, although the first quarter of 2011 is more likely.

In focus

Regulator announces exploration round

ALNAFT (Agence nationale pour la valorisation des ressources en hydrocarbures, Algeria's energy industry regulator) announced the start of its third oil and gas exploration bid round. Ten areas are up for bidding, including three in the Illizi area near the Libyan border and four in the Berkine region, both of which have proved commercially successful for oil and gas firms in the past. The agency has given

Ethane cracker deal is signed

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March 3rd 2011 as the deadline for all offers to the government. Two earlier bidding rounds in 2008 and 2009 were largely unsuccessful, with only three of 10 areas being awarded in 2008 and only four of 16 awarded in 2008. The poor performance of these rounds was attributed to unattractive terms from the government. In light of recent restrictions on the awarding of service contracts for the energy sector, the 49% cap on foreign ownership and a bumper tax on any excessive profits, it is unlikely that this new round will tempt many more investors than the previous ones. This is also likely to be the first major test for the new management of Sonatrach, Algeria's state oil and gas company. Sonatrach went through a major corruption scandal earlier this year which saw the arrest or removal of several of its executives, including the chief executive. Under the 2005 hydrocarbons law, Sonatrach must be a 51% partner in any investment in the oil and gas sector.

The International Court of Arbitration (ICA) has found in favour of Sonatrach in a case dating back to 2007, when Sonatrach and Gas Natural, a Spanish company, reached an impasse over the price of gas sold to Spain through the Maghreb-Europe pipeline via Morocco. Sonatrach wanted to increase the price by 20% in light of increased global gas prices. The ICA has instructed Gas Natural to make back payments to Sonatrach to cover the difference in price, which could be as much as US$2bn. Gas Natural says it "does not agree" with the decision, but can fund the payment from a contingency fund and a possible price increase. It is the second ICA decision in a year on disputes between the two companies. In December 2009 it instructed Sonatrach to buy out stakes held by Gas Natural and another Spanish company, Repsol, in the Gassi Touil integrated gas development, after the two companies were dismissed from the project in 2007. The Medgaz pipeline, which will deliver gas directly from Algeria to Spain has begun to be filled with gas and should begin operations by the end of the year.

Sonatrach wins gas price dispute

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Data and charts Annual data and forecast

Pl ea se se e g ra p hi c b el ow

2005a 2006a 2007a 2008b 2009 b 2010c 2011c

GDP

Nominal GDP (US$ bn) 103.2 117.3 134.3 174.6 161.5 180.5 201.7

Nominal GDP (AD bn) 7,564 8,521 9,306 11,276 11,730 14,356 15,533

Real GDP growth (%) 5.1 1.8 3.1 2.8 2.2 4.3 4.0

Expenditure on GDP (% real change)

Private consumption 3.9 4.0b 5.7b 7.3 3.5 4.6 4.5

Government consumption 2.1 4.8 7.1 8.8 10.4 11.2 6.6

Gross fixed investment 7.9 7.2 9.8 8.1 5.0 7.8 7.9

Exports of goods & services 6.1 -2.4 -0.6 3.5 0.6 0.5 3.0

Imports of goods & services 9.5 -1.8 7.6 13.5 8.6 8.6 7.8

Origin of GDP (% real change)

Agriculture 1.9 1.8b 1.0b 1.9 4.8 3.0 2.3

Industry 5.6 0.9b 1.7b 3.1 1.1 4.8 4.9

Services 5.3 2.1b 7.7b 2.5 2.8 3.7 3.0

Population and income

Population (m) 32.9 33.5 34.2 34.7a 35.4 35.9 36.3

GDP per head (US$ at PPP) 7,061 7,281b 7,563b 7,829 7,936 8,248 8,607

Recorded unemployment (av; %) 15.4 12.3 11.8 11.3a 10.2 a 9.9 10.0

Fiscal indicators (% of GDP)

Public-sector balance 13.6 13.9 6.2 3.4 -7.9 -9.0 -9.3

Public-sector debt interest payments 1.0 0.8 0.9 0.5 0.2 0.1 0.1

Net public debt 13.7 21.7 11.9 13.5 20.0 23.9 30.3

Prices and financial indicators

Exchange rate AD:US$ (av) 73.28 72.65 69.29 64.58a 72.65 a 79.54 77.00

Exchange rate AD:� (av) 91.28 91.22 94.84 94.94a 101.20 a 102.87 95.10

Consumer prices (av; %) 1.6 2.5 3.5 4.4a 5.7 a 5.0 4.2

Stock of money M1 (% change) 11.9 31.0 33.7 17.3a -0.3 a 24.4 12.3

Stock of money M2 (% change) 10.8 20.1 20.5 16.0a 3.2 a 18.6 13.5

Lending interest rate (end-period; %) 8.0 8.0 8.0 8.0a 8.0 a 8.0 8.0

Current account (US$ m)

Trade balance 26,470 34,060 34,240 40,600a 4,586 a 16,840 18,482

Goods: exports fob 46,330 54,740 60,590 78,590a 43,689 a 54,435 57,298

Goods: imports fob -19,860 -20,680 -26,350 -37,990a -39,103 a -37,595 -38,816

Services balance -2,270 -2,200 -4,090 -7,590 -8,199 -9,281 -10,184

Income balance -5,080 -4,520 -1,830 -1,340 -1,752 -3,488 -3,909

Current transfers balance 2,060 1,610 2,220 2,780 1,430 1,238 1,282

Current-account balance 21,180 28,950 30,540 34,450 -3,935 5,309 5,671

External debt (US$ m)

Debt stock 16,862 5,721 5,757 5,476a 4,375 3,756 3,649

Debt service paid 5,984 13,417 1,394 1,279a 1,517 1,246 937

Principal repayments 5,062 12,792 1,159 1,085a 1,409 1,159 877

Interest 921 626 235 194a 109 87 61

Debt service due 5,742 5,417 -106 279a 1,517 1,246 937

International reserves (US$ m)

Total international reserves 56,582 78,208 110,627 143,544a 149,347 a 148,378 149,575

a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.

Source: IMF, International Financial Statistics.

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Quarterly data Pl ea se se e g ra p hi c b el ow

2008 2009 2010

2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr

Prices

Consumer prices (2000=100) 110.1 111.0 113.5 115.2 115.3 118.2 120.2 120.1

Consumer prices (% change, year on year) 5.0 4.7 4.4 5.8 4.8 6.5 5.9 4.3

Petroleum prices Saharan-46 (US$/barrel) 122.9 115.9 55.7 45.3 58.9 68.6 75.3 77.0

Financial indicators

Exchange rate AD:US$ (av) 63.6 61.2 67.1 72.2 73.0 73.0 72.5 73.3

Exchange rate AD:US$ (end-period) 61.9 60.8 71.2 73.1 73.1 72.5 72.7 73.7

Deposit rate (av; %) 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8

Discount rate (end-period; %) 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0

Lending rate (av; %) 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0

Money market rate (av; %) 3.3 3.1 3.4 3.6 3.6 3.7 3.8 3.6

Treasury bill rate (av; %) 0.2 0.1 0.2 0.5 1.2 1.0 0.4 0.4

M1 (end-period; AD bn) 4,733 4,697 4,965 4,824 4,789 4,851 4,950 5,038

M1 (% change, year on year) 27.3 21.8 17.3 9.4 1.2 3.3 -0.3 4.4

M2 (end-period; AD bn) 6,602 6,636 6,956 6,859 6,878 6,996 7,179 7,333

M2 (% change, year on year) 22.0 18.2 16.0 9.4 4.2 5.4 3.2 6.9

Sectoral trends

Crude petroleum production (m barrels/day) 1.37 1.37 1.35 1.25 1.25 1.22 1.24 1.25

Foreign trade (US$ m)a

Exports fob 22,259 21,300 15,657 11,011 9,946 11,042 11,978 13,859

Imports cif -10,436 -10,189 -10,232 -9,613 -10,671 -8,665 -9,821 -9,125

Trade balance 11,823 11,110 5,425 1,398 -725 2,377 2,157 4,733

Foreign reserves (end-period; US$ m)

Reserves excl gold (end-period) 133,386 140,829 143,243 140,106 144,460 147,969 149,041 147,699

a DOTS estimates.

Sources: IMF, International Financial Statistics, Direction of Trade Statistics; Oil Market Intelligence; International Energy Agency (IEA), Monthly Oil Market Report; Office national des

statistiques, Statistiques Algérie.

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Monthly data Pl ea se se e g ra p hi c b el ow

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Exchange rate AD:US$ (av) 2008 66.85 66.77 65.67 64.97 63.48 62.40 61.50 61.08 60.98 62.26 68.13 70.91

2009 71.39 72.22 72.93 73.12 72.63 73.17 73.27 72.99 72.60 72.27 72.25 72.93

2010 72.92 73.52 73.45 73.62 74.84 n/a n/a n/a n/a n/a n/a n/a

Exchange rate AD:US$ (end-period) 2008 66.60 66.06 65.30 63.85 62.91 61.89 61.34 60.92 60.77 67.07 70.35 71.18

2009 71.85 72.65 73.15 72.68 72.50 73.10 73.04 72.98 72.54 72.35 72.19 72.73

2010 73.49 73.52 73.72 73.60 75.42 n/a n/a n/a n/a n/a n/a n/a

Real effective exchange rate (2000=100; CPI-basis) 2008 75.02 75.41 74.56 73.22 77.58 79.59 79.20 83.56 86.57 90.82 86.77 80.01

2009 81.01 83.65 82.95 82.00 78.87 77.77 79.20 78.67 77.52 77.05 76.47 76.61

2010 77.29 78.54 77.52 77.28 80.57 n/a n/a n/a n/a n/a n/a n/a

M1 (% change, year on year) 2008 26.7 31.9 31.6 31.3 29.8 27.3 29.4 22.2 21.8 23.5 20.0 17.3

2009 12.7 8.1 9.4 8.1 3.8 1.1 1.1 3.0 3.3 0.2 -3.0 -0.3

2010 0.7 3.6 4.4 3.9 7.3 n/a n/a n/a n/a n/a n/a n/a

M2 (% change, year on year) 2008 21.2 25.0 24.6 24.7 23.9 22.0 23.3 18.4 18.2 18.5 16.9 16.0

2009 11.9 8.8 9.4 8.2 5.4 4.2 3.5 5.8 5.4 4.3 2.1 3.2

2010 4.6 5.9 6.9 6.7 9.1 n/a n/a n/a n/a n/a n/a n/a

Industrial production (% change, year on year) 2008 5.3 9.8 6.3 7.0 5.5 3.7 4.4 4.4 1.4 -1.2 -5.3 -7.5

2009 -13.1 -16.8 -14.1 -14.7 -7.8 -7.7 -8.4 -8.4 -6.0 -3.6 -7.8 -5.4

2010 1.0 2.1 2.5 2.8 -5.3 n/a n/a n/a n/a n/a n/a n/a

Deposit rate (av; %) 2008 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8

2009 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8

2010 1.8 1.8 1.8 1.8 n/a n/a n/a n/a n/a n/a n/a n/a

Lending rate (av; %) 2008 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0

2009 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0

2010 8.0 8.0 8.0 8.0 n/a n/a n/a n/a n/a n/a n/a n/a

Consumer prices (av; % change, year on year) 2008 2.1 3.9 5.0 6.8 5.5 2.9 3.7 5.4 4.9 5.4 4.6 3.3

2009 5.5 6.2 5.6 5.8 3.6 4.9 7.3 6.5 5.8 6.0 6.0 5.8

2010 5.2 4.2 3.7 2.5 6.3 n/a n/a n/a n/a n/a n/a n/a

Total exports fob (US$ m) 2008 6,773 7,034 6,256 7,085 7,112 8,063 7,616 7,238 6,446 6,022 4,797 4,838

2009 4,060 3,332 3,619 3,434 3,013 3,500 3,599 3,708 3,735 3,876 3,478 4,624

2010 4,667 4,230 4,961 n/a n/a n/a n/a n/a n/a n/a n/a n/a

Total imports cif (US$ m) 2008 2,586 2,885 3,006 3,332 3,406 3,699 3,985 3,043 3,161 3,274 3,146 3,812

2009 2,798 2,974 3,841 3,609 3,339 3,723 3,529 2,344 2,792 2,884 3,254 3,684

2010 2,712 2,951 3,462 n/a n/a n/a n/a n/a n/a n/a n/a n/a

Trade balance fob-cif (US$ m) 2008 4,187 4,149 3,250 3,753 3,706 4,364 3,631 4,195 3,284 2,749 1,650 1,026

2009 1,262 357 -222 -176 -326 -223 70 1,363 943 993 224 940

2010 1,956 1,279 1,499 n/a n/a n/a n/a n/a n/a n/a n/a n/a

Sources: IMF, International Financial Statistics, Direction of Trade Statistics; Haver Analytics.

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Annual trends charts Pl ea se se e g ra p hi c b el ow

Annual trends charts

Source: Economist Intelligence Unit. Source: Economist Intelligence Unit.

Budget balance (% of GDP)

Public debt (% of GDP)

Source: Economist Intelligence Unit. Source: Economist Intelligence Unit.

Source: Economist Intelligence Unit. Source: Economist Intelligence Unit.

Real GDP growth(% change)

Consumer price inflation(av; %)

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0 World Middle East and North Africa Algeria

11100908070620050.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0 World Middle East and North Africa Algeria

1110090807062005

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0 Middle East and North Africa Algeria

11100908070620050.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0 World Algeria

1110090807062005

Main destination of exports, 2009(share of total) (share of total)

Main origin of imports, 2009

Spain10.8%

Rest of world40.8%

France8.0%

US23.2%

Italy17.2%

Spain8.1%

Rest of world50.3%

France19.6%

Italy12.0%

China10.1%

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Monthly trends charts Pl ea se se e g ra p hi c b el ow

Monthly trends charts

Exchange rate (AD:US$; av)

Consumer price inflation (% change, year on year)

Monetary aggregates (% change, year on year)

Exchange rate (US$:€; av)

Natural gas: Europe price (US$/BTU m)

Oil: Brent, Dubai & WTI spot prices (US$/b; av)

Source: Economist Intelligence Unit.Source: Economist Intelligence Unit.

Source: Economist Intelligence Unit.Source: Economist Intelligence Unit.

Source: Economist Intelligence Unit.Source: Economist Intelligence Unit.

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1.55

1.60

AprJan10

OctJulAprJan09

OctJulAprJan08

OctJulAprJan2007

20

40

60

80

100

120

140

AprJan10

OctJulAprJan09

OctJulAprJan08

OctJulAprJan2007

6.0

8.0

10.0

12.0

14.0

16.0

18.0

AprJan10

OctJulAprJan09

OctJulAprJan08

OctJulAprJan2007

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

AprJan10

OctJulAprJan09

OctJulAprJan08

OctJulAprJan2007

60.0

62.0

64.0

66.0

68.0

70.0

72.0

74.0

76.0

AprJan10

OctJulAprJan09

OctJulAprJan08

OctJulAprJan2007

-10.0

0.0

10.0

20.0

30.0

40.0

50.0 M2 M1

AprJan10

OctJulAprJan09

OctJulAprJan08

OctJulAprJan2007

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Comparative economic indicators Pl ea se se e g ra p hi c b el ow

Comparative economic indicators, 2009

Gross domestic product(US$ bn; market exchange rates)

Gross domestic product(% change, year on year)

Consumer prices(% change, year on year)

Sources: Economist Intelligence Unit estimates; national sources.

Sources: Economist Intelligence Unit estimates; national sources.Sources: Economist Intelligence Unit estimates; national sources.

Sources: Economist Intelligence Unit estimates; national sources.

Gross domestic product per head(US$ '000; market exchange rates)

0 50 100 150 200 250 300 350 400

Bahrain

Jordan

Yemen

Lebanon

Tunisia

Oman

Syria

Sudan

Libya

Iraq

Morocco

Qatar

Kuwait

Algeria

Egypt

Israel

United Arab Emirates

Iran

Saudi Arabia

0.0 5.0 10.0 15.0 20.0 25.0 30.0

Yemen

Sudan

Egypt

Iraq

Syria

Morocco

Jordan

Tunisia

Algeria

Iran

Lebanon

Libya

Saudi Arabia

Oman

Bahrain

Israel

Kuwait

United Arab Emirates

Qatar

-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0

Qatar

Iraq

Jordan

Morocco

Lebanon

United Arab Emirates

Libya

Syria

Bahrain

Israel

Oman

Tunisia

Kuwait

Saudi Arabia

Yemen

Algeria

Sudan

Egypt

Iran

-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0

Kuwait

United Arab Emirates

Libya

Saudi Arabia

Iran

Israel

Oman

Algeria

Jordan

Tunisia

Bahrain

Yemen

Sudan

Iraq

Egypt

Morocco

Syria

Lebanon

Qatar

59.3

38.2

36.8

13.5

11.8

11.2

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22 Algeria

Country Report September 2010 www.eiu.com © The Economist Intelligence Unit Limited 2010

Country snapshot

Basic data

2,381,741 sq km

34.4m (January 1st 2008; Office national des statistiques estimate)

Population of main urban areas in '000s (mid-2006 Economist Intelligence Unit estimates)

Greater Algiers (incl capital) 4,825 Oran 1,150 Constantine 810 Annaba 580

Temperate on the coast, hot and dry in the south

Hottest month, August, 22-29°C; coldest month, January, 9-15°C (average daily minimum and maximum); driest month, July, 1 mm average rainfall; wettest month, December, 140 mm average rainfall

Arabic (official); Berber language (Tamazight) and French are also used

Metric system

Algerian dinar (AD) = 100 centimes or 20 douros

GMT in the winter months; GMT plus one hour in the summer

All Muslim holidays are observed in accordance with the lunar calendar, and the dates are therefore approximate: Prophet's birthday (February 26th 2010) Eid al-Fitr (September 9th-10th); Eid al-Adha (November 15th-16th); Islamic New Year (December 7th). Other public holidays: New Year's Day (January 1st); Labour Day (May 1st); Independence Day (July 5th); Anniversary of the Revolution (November 1st)

Land area

Population

Main towns

Climate

Weather in Algiers (altitude 59 metres)

Language

Measures

Currency

Time

Public holidays

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Algeria 23

Country Report September 2010 www.eiu.com © The Economist Intelligence Unit Limited 2010

Political structure

People's Democratic Republic of Algeria

Based on the constitution of 1976, revised in 1989 and 1997

Bicameral: the lower house, the Assemblée populaire nationale, with 389 members, was first elected in June 1997; the upper house, the Conseil de la nation, which has 144 seats, was formed in December 1997, with two-thirds of its members elected through municipal polls and the remainder appointed by the president

May 17th 2007 (legislative); April 9th 2009 (presidential); November 27th 2007 (provincial and municipal councils); next presidential election due in April 2014 and legislative election in 2012

President, currently Abdelaziz Bouteflika, elected for a third term on April 9th 2009; Mr Bouteflika is also defence minister

Council of Ministers presided over by the prime minister, who is appointed by the head of state. A new government was formed following the May 2007 election. In May 2010 there was a major cabinet reshuffle

Front de libération nationale (FLN), previously the sole legal party; Rassemblement national démocratique (RND); Front des forces socialistes (FFS); Rassemblement pour la culture et la démocratie (RCD); Mouvement de la réforme nationale (Islah, Islamist); Mouvement de la société pour la paix (MSP; Islamist); Parti des travailleurs (Labour Party)

Prime minister Ahmed Ouyahia Deputy prime minister Nourredine Yazid Zerhouni Minister delegate at the Ministry of Defence Abdelmalek Gueneiza

Agriculture Rachid Benaissa Defence Abdelaziz Bouteflika Energy & mining Youcef Yousfi Environment, territorial planning & tourism Cherif Rahmani Finance Karim Djoudi Foreign affairs (minister of state) Mourad Medelci Health & population Djamal Ould Abbes Housing Nourredine Moussa Industry, small- & medium-sized enterprises & investment promotion Mohamed Benmeradi Interior & local government Dahou Ould Kablia Justice Tayeb Belaiz Labour & social security Tayeb Louh National education Boubekeur Benbouzid National solidarity Said Barkat Parliamentary affairs Mahmoud Khedri Post, information technology & communication Moussa Benhamadi Prospective planning & statistics Abdelhamid Temmar Public works Amar Ghoul Trade Mustapha Benbada Transport Amar Tou Water resources Abdelmalek Sellal

Mohammed Laksaci

Official name

Legal system

Legislature

National elections

Head of state

Executive

Main political parties

The government

Central bank governor

Key ministers