ALGERIA ECONOMIC MONITOR - Navigating the COVID-19 Pandemic, Engaging Structural Reforms - World Bank Document
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Public Disclosure Authorized
ALGERIA ECONOMIC
MONITOR
Navigating the
Public Disclosure Authorized
COVID-19 Pandemic,
Engaging Structural
Reforms
Fall 2020
Public Disclosure Authorized
Public Disclosure Authorized
Middle East and North Africa Region
Algeria
Economic Monitor
Navigating the COVID-19 Pandemic,
Engaging Structural Reforms
Fall 2020
ALGÉRIE MONITE
ÉCONOM
Middle East and North Africa Region
Traverser
TABLE OF CONTENTS
List of Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Résumé analytique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
الملخص التنفيذي. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Chapter 1: Developments in 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Growth and Labor Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Public Finances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Monetary and Banking Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
External Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Chapter 2: Navigating the COVID-19 Pandemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Algeria’s Twin Shocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Economic and Employment Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
External Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Public Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Banking and Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Annex 1: Table of Economic Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
iiiList of Figures
Figure 1 GDP Growth Decelerated for a Fifth Consecutive Year… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Figure 2 …Dragged by a Sharp Decline in Oil Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Figure 3 Consumption and Investment Growth Slowed Down... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Figure 4 …with the Services Sector Supporting Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Figure 5 The Private Sector Remained the Main Contributor to Non-hydrocarbon Actvity… . . . . . . . . . . . . . 3
Figure 6 …although the Public Sector Created More Jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Figure 7 Lower BdA Dividends Subtracted from the Budget… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Figure 8 …while Capital Spending Increased Markedly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Figure 9 In the Past Three Years, Financing Needs Have Been Met by Monetary Financing… . . . . . . . . . . .5
Figure 10 …Consequently, Public Debt is Now Mostly Held by the BdA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Figure 11 Liquidity Fell Following the Conclusion of Monetary Financing…… . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Figure 12 …and Most New Credit Was Channeled to SOEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 13 In 2019, inflation moderated as food prices stagnated... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 14 ...while the Real Effective Exchange Rate Slightly Appreciated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Figure 15 The Import Compression Effort Continued… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Figure 16 …Led by a Sharp Decline in the Value of Equipment Imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Figure 17 Despite a Swift Policy Response, a Second Wave of COVID-19 Infections Is Underway . . . . . . . 11
Figure 18 Hydrocarbon Revenues Are Being Hit by the Simultaneous Decline in Prices and
in Production Quotas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Figure 19 Investment and Consumption Both Declined in the First Quarter… . . . . . . . . . . . . . . . . . . . . . . . . . 12
Figure 20 …while Public Industrial Production Data Suggest a Sharper Contraction
in the Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Figure 21 International Trade Collapsed in 2020… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 22 …while the Authorities Allowed the Dinar to Depreciate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Figure 23 Currency in Circulation Increased as Bank Liquidity Declined . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Figure 24 Inflationary Pressures Have Eased with Non-food Inflation Leading the Advances . . . . . . . . . . . 16
iv ALGERIA ECONOMIC MONITOR: NAVIGATING THE COVID-19 PANDEMIC, ENGAGING STRUCTURAL REFORMSLIST OF ACRONYMS
AGEA Association Générale des Entrepreneurs GATMA Groupe Algérien de Transport Maritime
Algériens GDP Gross Domestic Product
ANE Agence Nationale de l’Emploi IEA International Energy Agency
BADR Banque d’Agriculture et du kbpd Thousands of barrels per day
Développement Rural mbpd Millions of barrels per day
BdA Banque d’Algérie MENA Middle East and North Africa Region
BDL Banque de Développement Local mtep Million-ton equivalent of petroleum
BEA Banque Extérieure d’Algérie NEER Nominal Effective Exchange Rate
CNAS Caisse Nationale des Assurances NPL Non-Performing Loans
Sociales NSA Nomenclature des Secteurs d’Activité
CNR Caisse Nationale des Retraites ONS Office National des Statistiques
CNY Chinese Yuan OPEC Organization of the Petroleum Exporting
CPA Crédit Populaire d’Algérie Countries
CPI Consumer Price Index PAJE Programme d’Appui Jeunesse Emploi
DAPS Droits additionnels provisoires de PMI Purchasing Managers’ Index
sauvegarde ppts Percentage points
DZD Algerian dinar REER Real Effective Exchange Rate
EMA Entreprise Métro d’Alger SMEs Small- and Medium-sized Enterprises
ETUSA Entreprise de Transport Urbain et SNTF Société Nationale des Transports
Suburbain d’Alger Ferroviaires
EUR Euro SOEs State-Owned Enterprises
FDI Foreign Direct Investment USD U.S. dollar
FNI Fond National d’Investissement Y/Y Year-over-year
FRR Fond de Régulation des Recettes
vACKNOWLEDGEMENTS
T
his Algeria Economic Monitor provides Representative), and Gabriel Sensebrenner
an update on key recent economic (Program Leader) for invaluable comments during
developments and policies. It places them the preparation and review of this report. They are
in a longer-term and global context, and assesses particularly grateful to the Ministry of Finance of
the implications these developments and changes Algeria, for providing comments on the report before
in policies have on the outlook for Algeria. This its publication. They give special thanks to Muna Abed
Monitor’s coverage ranges from the macro-economy Salim (Senior Program Assistant, MTI) and Isabelle
to financial markets to indicators of human welfare Poupaert (Senior External Affairs Assistant) for their
and development. It is intended for a wide audience, support during the preparation of this report, and to
including policy makers, business leaders, financial Amina Iraqi (Consultant, MTI) for the Arabic translation
market participants, and the community of analysts of the executive summary.
and professionals engaged in Algeria. The cut-off The findings, interpretations, and conclusions
date for data is December 17, 2020. expressed in this Monitor are those of World Bank
The Algeria Economic Monitor is a product of staff and do not necessarily reflect the views of the
the Middle East and North Africa (MENA) team in Executive Board of The World Bank or the governments
the Macroeconomics, Trade and Investment (MTI) they represent. For information about the World Bank
Global practice in the World Bank Group. The report and its activities in Algeria, including e-copies of this
was led by Cyril Desponts (Economist, MTI) and publication, please visit https://www.worldbank.org/
Shahrzad Mobasher Fard (Consultant, MTI) under en/country/algeria.
the general guidance of Eric Le Borgne (Practice For questions and comments on the content
Manager). of this publication, please contact Cyril Desponts
The authors are grateful to Jesko Hentschel (cdesponts@worldbank.org) and Eric Le Borgne
(Country Director), Emmanuel Cuvillier (Resident (eleborgne@worldbank.org).
viiEXECUTIVE SUMMARY
T
his report presents an overview of Algeria’s 38.9 percent of GDP at end-2018 to 44.9 percent
recent macroeconomic developments and of of GDP at end-2019. The current account deficit
its short-term economic outlook. The report remained significant but relatively unchanged in 2019,
is divided into two chapters. Chapter 1 presents the with the fall in hydrocarbon exports being largely
country’s macroeconomic developments in 2019, offset by a managed fall in goods imports (to preserve
which establishes the context for the unprecendented foreign exchange reserves) and the reduction in the
developments of 2020 related to the COVID-19 services trade deficit. The Real Effective Exchange
pandemic. Chapter 2 details the impact of the Rate (REER) slighty appreciated, leading to a loss
COVID-19 pandemic and concurrent crash in oil of international competitiveness. Banking liquidity
prices on various dimensions of Algeria’s economic fell in 2019 amid the conclusion of the monetary
fabric. Finally, the conclusion presents the short-term financing program in March 2019, the financing of the
outlook for the Algerian economy. 2019 budget deficit, and the gradual rise in the bank
In 2019, Algeria’s economic growth rate reserve requirement ratio to 10 percent in the summer
decelerated for a fifth consecutive year amid the of 2019.
protracted social mobilization and political transition, Although second quarter national accounts
which weakened consumer and business confidence data for 2020 are yet to be published, the economic
and spending. At the sectoral level, the structural momentum heading into Q2/2020 remained feeble,
decline of the hydrocarbon industry persisted, with with economic activity contracting by 3.9 percent
the industry declining by 4.9 percent, while the non- Y/Y in Q1/2020. Data on public industrial production
hydrocarbon segment rose by a modest 2.4 percent in Q2/2020 point to a steepening of the overall
in real terms. The unemployment rate remained contraction recorded in Q1/2020 following the
unchanged at 11.4 percent in 2019, with 232,000 introduction of COVID-19-related containment
jobs created between April 2018 and May 2019. The measures. Economic losses among SOEs have
national Consumer Price Index (CPI) remained well been substantial, particularly in the energy and
contained, rising by 2.3 percent in 2019, down from transport sectors. While data on economic losses for
3.5 percent in 2018. Algeria’s overall fiscal balance the private sector are not available, several surveys
worsened from –6.8 percent of GDP in 2018 to reveal that private businesses saw their activities
–9.6 percent of GDP in 2019 as a result of the fall severely impacted by the COVID-19 pandemic, with
in hydrocarbon revenues and increased public notable repercussions on the labor market. The
investment, pushing Algeria’s debt-to-GDP ratio from sectors most affected by the pandemic were those
ixcomprised in transportation, tourism, restaurant, The BdA also eased solvency, liquidity, and non-
hotel, arts and crafts, energy, and retail and wholesale performing loan (NPL) ratio for banks, and allowed
trade businesses. Employees working in small- and the extension of some loans without additional
medium-sized enterprises (SMEs), along with self- provisioning. The exchange rate was allowed to
employed and occasional workers, are expected to be depreciate, easing the budget and external financing
the most adversely affected by the lack of activity. The needs while supporting the Government’s objective
Agence Nationale de l’Emploi (ANE) also reported a to curb the import bill.
decline in the supply of labor. The Algerian economy is projected to post a
In response to the COVID-19 pandemic, significant real GDP contraction in 2020 as a result
authorities took several measures to provide of the twin shocks brought about by the COVID-19
immediate relief to households and to businesses. As pandemic: containment measures and the fall in
of May 2020, there were 322,000 beneficiaries of the hydrocarbon export receipts. There are several
Allocation forfaitaire de solidarité, which provided an downside risks to the economic recovery. These risks
allowance of 30,000 DZD per month to low-income consist of the possibility of a protracted sanitary crisis
job earners over the course of three months. In-kind with the deployment of a vaccine being delayed or
support, consisting of food items and water, was also proving to be less effective, challenges in meeting
distributed to 600,000 households. Furthermore, the rising budget financing requirements (potentially
the Ramadan solidarity grant was extended to 2.2 augmented by the realization of large contingent
million households, with amounts raised from 6,000 liabilities arising from public banks and SOEs), as well
DZD to 10,000 DZD. Other relief measures include as mounting inflation induced in part by higher import
the postponement of the declaration and payments prices. Against this background, the Government
of income taxes for individuals and enterprises, of Algeria has announced far-reaching structural
except for large enterprises, and the relaxation of reforms to transition towards a private-led economic
contractual deadlines and penalties for companies development model, while preserving support to
that experience delays in completing public works. the most vulnerable segments of the population. Its
Banking measures included the lowering of the main success will hinge on the decisiveness of the reform
policy rate by the Banque d’Algérie (BdA) from 3.5 agenda, on the strength of the private sector response,
percent to 3 percent and the lowering of the reserve and on the authorities’ ability to concurrently restore
requirement ratio from 10 percent to 3 percent. macroeconomic equilibria.
x ALGERIA ECONOMIC MONITOR: NAVIGATING THE COVID-19 PANDEMIC, ENGAGING STRUCTURAL REFORMSRÉSUMÉ ANALYTIQUE
C
e rapport fournit un aperçu des récentes 9,6 % du PIB en 2019, sous l’effet de la baisse des
évolutions macroéconomiques en Algérie revenus des hydrocarbures et de l’augmentation
et des perspectives économiques à court des investissements publics, faisant passer le ratio
terme du pays. Le rapport est divisé en deux dette/PIB de 38,9 % du PIB, fin 2018, à 44,9 % du
chapitres. Le chapitre 1 présente les évolutions PIB, fin 2019. Le déficit du compte courant est resté
macroéconomiques du pays en 2019, brossant ainsi important, mais relativement stable en 2019, la baisse
le contexte des évolutions sans précédent survenues des exportations d’hydrocarbures étant largement
en 2020 à la suite de la pandémie de COVID-19. compensée par une baisse voulue des importations
Le chapitre 2 décrit l’impact de la pandémie de de biens (visant à préserver les réserves de devises)
COVID-19 et de l’effondrement simultané des prix du et une réduction du déficit du commerce des
pétrole sur différents aspects du tissu économique services. Le taux de change effectif réel s’est quant
algérien. Enfin, la conclusion aborde les perspectives à lui légèrement apprécié, résultant en une perte
de l’économie algérienne. de compétitivité internationale. La liquidité bancaire
En 2019, le rythme de la croissance de a chuté en 2019 avec la clôture du programme de
l’économie algérienne s’est ralenti pour une financement monétaire en mars 2019, le financement
cinquième année consécutive dans un contexte du déficit budgétaire de 2019 et l’augmentation
de mobilisation sociale et de transition politique progressive du taux de réserve obligatoire des
prolongées, qui a affaibli la confiance et les dépenses banques jusqu’à 10 % durant l’été 2019.
des consommateurs et des entreprises. Du point Même si les données des comptes nationaux
de vue sectoriel, le recul structurel du secteur des doivent encore être publiées pour le deuxième
hydrocarbures s’est poursuivi, marquant un recul de trimestre 2020, il est permis de dire qu’à l’approche
4,9 %, tandis que les secteurs hors hydrocarbures du deuxième trimestre de 2020, l’élan économique
connaissaient une modeste augmentation de 2,4 % est resté faible avec, au premier trimestre 2020, une
en termes réels. Le taux de chômage est resté stable contraction de 3,9 % de l’activité économique en
à 11,4 % en 2019, avec la création de 232 000 emplois glissement annuel. Pour le deuxième trimestre 2020,
entre avril 2018 et mai 2019. L’indice national des les données sur la production industrielle du secteur
prix à la consommation est resté sous contrôle, public indiquent une accentuation de la contraction
passant de 3,5 % en 2018 à 2,3 % en 2019. Le déficit globale enregistrée au trimestre précédent à la suite
budgétaire global de l’Algérie s’est détérioré, passant de l’introduction des mesures de confinement liées à
de 6,8 % du produit intérieur brut (PIB) en 2018 à la COVID-19. Les pertes économiques des entreprises
xipubliques ont été substantielles, en particulier dans l’abaissement de 3,5 % à 3 % du principal taux
les secteurs de l’énergie et des transports. Bien que directeur de la Banque d’Algérie et la diminution
les données sur les pertes économiques du secteur de 10 % à 3 % du taux de réserve obligatoire. La
privé ne soient pas disponibles, plusieurs enquêtes Banque d’Algérie a également assoupli les ratios de
révèlent néanmoins que les entreprises privées ont vu solvabilité, de liquidité et de prêts non performants
leurs activités gravement affectées par la pandémie des banques et a permis l’extension de certains
de COVID-19 avec des répercussions notables sur prêts sans provisionnement supplémentaire. Une
le marché de l’emploi. Les secteurs les plus touchés dépréciation du taux de change a permis d’alléger les
par la pandémie ont été les transports, le tourisme, besoins de financement budgétaire et extérieur, tout
la restauration, l’hôtellerie, l’artisanat, l’énergie et en soutenant l’objectif du Gouvernement de réduire la
le commerce de détail et de gros. En outre, les facture des importations.
petites et moyennes entreprises, et les travailleurs L’économie algérienne devrait afficher une
indépendants et occasionnels auraient le plus contraction importante du PIB réel en 2020, sous l’effet
souffert de l’arrêt des activités. L’Agence Nationale de du double choc des mesures de confinement et de la
l’Emploi fait également état d’une baisse de l’offre de chute des recettes des exportations d’hydrocarbures
main-d’œuvre. causé par la pandémie de COVID-19. Plusieurs
En réponse à la pandémie de COVID-19, les risques à la baisse menacent la reprise économique :
autorités ont pris plusieurs mesures pour apporter la possibilité d’une crise sanitaire prolongée si un
une aide immédiate aux ménages et aux entreprises. vaccin se fait trop attendre ou s’avère peu efficace ;
En mai 2020, on dénombrait 322 000 bénéficiaires les difficultés à répondre aux besoins de financement
de l’Allocation forfaitaire de solidarité d’un montant croissants du budget, potentiellement accrus par la
mensuel de 30 000 dinars algériens versés pendant réalisation d’importants engagements conditionnels
trois mois aux personnes à faible revenu. Un soutien dus aux banques et entreprises publiques ; et
en nature, sous forme de produits alimentaires et l’inflation croissante entraînée en partie par la hausse
d’eau, a également été distribué à 600 000 ménages. des prix des importations. Dans ce contexte, le
En outre, l’allocation de solidarité du Ramadan, Gouvernement algérien a annoncé d’ambitieuses
dont le montant est passé de 6 000 dinars à 10 000 réformes structurelles visant à accélérer la transition
dinars, a été étendue à 2,2 millions de ménages. vers un modèle de développement économique tiré
Parmi les autres mesures d’aide, citons le report de la par le secteur privé, tout en préservant le soutien aux
déclaration et du paiement des impôts sur le revenu tranches les plus vulnérables de la population. La
pour les particuliers et les entreprises, à l’exception des réussite de cette entreprise reposera sur le caractère
grandes entreprises, et l’assouplissement des délais décisif de l’agenda des réformes, sur l’ampleur de
contractuels et des pénalités pour les entreprises la réponse du secteur privé, et sur la capacité des
enregistrant des retards dans l’achèvement des autorités à rétablir simultanément les équilibres
travaux publics. Parmi les mesures bancaires figurent macroéconomiques.
xii ALGERIA ECONOMIC MONITOR: NAVIGATING THE COVID-19 PANDEMIC, ENGAGING STRUCTURAL REFORMSالملخص التنفيذي
مارس ،2019متويل عجز موازنة يف عام 2019واالرتفاع التدريجي يف نسبة
متطلبات االحتياطي املرصيف إىل 10يف املئة يف صيف .2019
قدم هذا التقرير ملحة عامة عن التطورات االقتصادية األخرية يف
الجزائرو التوقعات االقتصادية عىل املدى القصري .التقرير مقسم
إىل فصلني .يعرض الفصل األول تطورات االقتصاد يف البالد يف عام
ي
عىل الرغم من أن بيانات الحسابات القومية للربع الثاين لعام ،2019والذي يحدد سياق التطورات غري املسبوقة لعام 2020املتعلقة
2020مل ت ُنرش بعد ،إال أن الزخم االقتصادي املتجه إىل الربع الثاين من عام بجائحة كوفيد . 19-يوضح الفصل الثاين بالتفصيل تأثري جائحة كوفيد
2020ظل ضعيفًا ،مع تقلص النشاط االقتصادي بنسبة 3.9يف املئة عىل 19-و تأثرياالنهيار املتزامن يف أسعار النفط عىل أبعاد مختلفة من النسيج
أساس سنوي يف الربع األول من . 2020تشري البيانات عن اإلنتاج الصناعي االقتصادي الجزائري .أخ ًريا ،يعرض االستنتاج املنظور قصري املدى لالقتصاد
العام يف الربع الثاين من عام 2020إىل زيادة حدة االنكامش اإلجاميل الجزائري.
املسجل يف الربع األول من عام 2020بعد إدخال تدابري االحتواء املتعلقة
ب كوفيد .19-كانت الخسائر االقتصادية بني الرشكات اململوكة للدولة يف عام ،2019تباطأ معدل النمو االقتصادي يف الجزائر للعام
كبرية ،ال سيام يف قطاعي الطاقة والنقل .يف حني أن البيانات املتعلقة الخامس عىل التوايل وسط التعبئة االجتامعية املطولة والتحول السيايس،
بالخسائر االقتصادية للقطاع الخاص غري متوفرة ،كشفت عدة دراسات مام أضعف ثقة املستهلك ،الرشكات واإلنفاق .عىل املستوى القطاعي،
إستقصائية أن الرشكات الخاصة شهدت تأثر أنشطتها بشدة بسبب استمر التدهور الهيكيل لصناعة الهيدروكربونات ،مع تراجع الصناعة
جائحة كوفيد ، 19-مع تداعيات ملحوظة عىل سوق العمل .وكانت بنسبة 4.9يف املئة ،بينام ارتفع القطاع غري النفطي بنسبة متواضعة 2.4
القطاعات األكرث ترضرا من الوباء هي النقل ،السياحة ،املطاعم،الفنادق، يف املئة بالقيمة الحقيقية .ظل معدل البطالة دون تغيري عند 11.4يف املئة
الفنون والحرف اليدوية ،الطاقة ،البيع القطاعي و تجارة الجملة .كام يف عام ،2019مع خلق 232ألف وظيفة بني أبريل 2018ومايو .2019
أفادت وكالة الوطنية للتوظيف عن انخفاض يف عرض العاملة. ظل مؤرش أسعار املستهلك الوطني تحت سيطرة ،حيث ارتفع بنسبة
2.3يف املئة يف عام ،2019بانخفاض 3.5يف املئة يف عام .2018تدهور
استجاب ًة لوباء كوفيد ، 19-اتخذت السلطات عدة تدابري لتوفري العجز املايل من - 6.8يف املئة من الناتج املحيل اإلجاميل يف عام 2018إىل
اإلغاثة الفورية لألرس والرشكات .اعتبا ًرا من مايو ،2020كان هناك - 9.6يف املئة من الناتج املحيل اإلجاميل يف عام 2019نتيجة النخفاض
322.000مستفيد من ،Allocation forfaitaire de solidaritéوالذي عائدات الهيدروكربونات وزيادة االستثامر العام ،مام أدى إىل إرتفاع
بدل قدره 30،000دينار جزائري شهريًا ألصحاب الوظائف املنخفضةقدم ً نسبة الدين يف الجزائر من 38.9يف املئة من الناتج املحيل اإلجاميل يف
الدخل عىل مدار ثالثة أشهر .كام تم توزيع الدعم العيني املكون من نهاية عام 2018إىل 44.9يف املئة من الناتج املحيل اإلجاميل يف نهاية عام
مواد غذائية ومياه عىل 600ألف أرسة .عالوة عىل ذلك ،تم تقديم .2019ظل عجز الحساب الجاري كب ًريا ولكنه مل يتغري نسبيًا يف عام ،2019
منحة التضامن الرمضانية إىل 2.2مليون أرسة ،مببالغ تم رفعها من 6000 حيث تم تعويض االنخفاض يف صادرات الهيدروكربونات إىل حد كبري من
دينار إىل 10000دينار .وتشمل تدابري اإلغاثة األخرى تأجيل إعالن ودفع خالل انخفاض واردات السلع (للحفاظ عىل احتياطيات النقد األجنبي)
رضائب الدخل لألفراد واملؤسسات ،باستثناء الرشكات الكبرية ،وتخفيف وانخفاض عجز تجارة الخدمات .شهد سعر الرصف الفعيل الحقيقي
املواعيد النهائية التعاقدية والعقوبات عىل الرشكات التي تعاين من ارتفاعا طفيفا ،مام أدى إىل فقدان القدرة التنافسية الدولية .وتراجعت
تأخريات يف إنجاز األشغال العامة .تضمنت اإلجراءات املرصفية تخفيض السيولة املرصفية يف عام 2019وسط انتهاء برنامج التمويل النقدي يف
xiiiتتكون هذه املخاطر من احتامل حدوث أزمة صحية مطولة مع تأخري سعر الفائدة الرئييس من قبل بنك الجزائر من 3.5يف املئة إىل 3يف املئة
نرش اللقاح أو إثبات أنه أقل فعالية ،وتحديات يف تلبية متطلبات وخفض معدل االحتياطي من 10يف املئة إىل 6يف املئة .كام خفف بنك
متويل امليزانية املتزايدة ،والتي من املحتمل أن تزيد من خالل تحقيق الجزائراملالءة املالية ،ونسبة السيولة والقروض املتعرثة للبنوك ،وسمح
املطلوبات املحتملة الكبرية الناتجة عن البنوك العامة والرشكات اململوكة بتمديد بعض القروض دون مخصصات إضافية .تم السامح لسعر الرصف
للدولة ،فضال عن التضخم املتزايد الناجم جزئيا عن ارتفاع أسعار باالنخفاض ،مام أدى إىل تخفيف امليزانية واحتياجات التمويل الخارجي،
الواردات .يف ظل هذه الخلفية ،أعلنت الحكومة الجزائرية عن إصالحات مع دعم هدف الحكومة للحد من فاتورة االسترياد.
هيكلية بعيدة املدى لالنتقال نحو منوذج التنمية االقتصادية التي يقودها
القطاع الخاص ،مع الحفاظ عىل الدعم للفئات األكرث ضعفًا من السكان. من املتوقع أن يسجل االقتصاد الجزائري انكامشً ا حقيق ًيا كب ًريا
وسيعتمد نجاحها عىل مدى حسم برامج اإلصالح ،وعىل قوة استجابة يف إجاميل الناتج املحيل يف عام 2020نتيجة للصدمات املزدوجة لتدابري
القطاع الخاص ،وعىل قدرة السلطات عىل استعادة التوازن االقتصادي االحتواء وانخفاض عائدات تصدير الهيدروكربونات الناجم عن وباء
بشكل متزامن. كوفيد .-19هناك العديد من املخاطر السلبية عىل االنتعاش االقتصادي.
xiv ALGERIA ECONOMIC MONITOR: NAVIGATING THE COVID-19 PANDEMIC, ENGAGING STRUCTURAL REFORMS1
DEVELOPMENTS
IN 2019
Growth and Labor Market goods and services contracting by 6.1 percent and
6.9 percent in 2019, respectively (Figures 1 and 3).
The growth rate of the Algerian economy At the sectoral level, the structural
slowed down for a fifth consecutive year in 2019 decline of the hydrocarbon industry persisted,
amid the protracted social mobilization and with growth in the non-hydrocarbon segment
political transition. With weaker consumer and contributing modestly to economic growth. The
business confidence and spending, Algeria’s real hydrocarbon industry, which represents 25 percent
Gross Domestic Product (GDP) growth moderated of Algeria’s economy, contracted by 4.9 percent in
from 1.2 percent in 2018 to 0.8 percent in 2019. 2019, while the non-hydrocarbon segment of the
Consumption spending, which accounts for 54 percent economy expanded by 2.4 percent. The contraction
of Algeria’s real GDP, rose by 2.0 percent in 2019 in the hydrocarbon industry came as a result of years
(down from 2.7 percent in 2018), driven by slowdowns of underinvestment in the exploration and exploitation
in both private consumption (2.1 percent in 2019 vs. of oil and gas. The authorities are attempting to
2.8 percent in 2018) and in public consumption (1.9 address this issue through a new Hydrocarbon Law,
percent in 2019 vs. 2.3 percent in 2018). Investment, introduced in December 2019, with more favorable
which comprises 36 percent of Algeria’s real GDP, rose terms offered to attract Foreign Direct Investment
by 1.0 percent in 2019, down from 3.1 percent in 2018, (FDI) from international oil companies.1 The services,
with growth in public investment being mostly offset by agricultural, and construction sectors posted more
the decline in private investment. Private investment modest contributions to economic growth compared
was down in part due to the continued freeze in to 2018. The services sector’s lower contribution was
public tenders, arrears to the private sector and lower
business confidence amid judicial enquiries involving 1
Hydrocarbon production declined from 200 to 157
business leaders. Meanwhile, net exports remained billion-ton equivalent of petroleum between 2007 and
relatively unchanged, with exports and imports of 2019.
1FIGURE 1 • GDP Growth Decelerated for a Fifth FIGURE 2 • …Dragged by a Sharp Decline in Oil
Consecutive Year… Production
7.7% 180 8%
8%
5.6% 160 6%
6% 5.1%
140
Energy balance, Mtep
4% 2.2% 3.0% 4%
2.4% 120
Real GDP growth,
Y/Y % growth
2.0%
Y/Y % growth
2% 100 2%
0.2%
0% 80 0%
–2% –0.6% 60
–2.4% –2%
–4% 40
–6% –4.9% 20 –4%
–8% –6.4% 0 –6%
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Hydrocarbon Non-hydrocarbon Total Production Net Exports
GDP GDP per capita Domestic Consumption Growth in Total Production (RHS)
Source: Office National des Statistiques (ONS). Source: Ministry of Energy.
FIGURE 3 • Consumption and Investment Growth FIGURE 4 • …with the Services Sector Supporting
Slowed Down… Growth
8% 5%
4%
6%
Contritbution to real
3%
GDP growth, ppts
Contribution to real
GDP growth, ppts
4% 2%
2% 1%
0%
0%
–1%
–2% –2%
–4% –3%
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Private consumption Exports Imports Agriculture Hydrocarbon Industry
Change in stocks Stat. discrepancy Investment Construction Services Taxation
Public consumption GDP Stat. discrepancy GDP
Source: ONS. Source: ONS.
largely led by lower activity within the transportation to 64 percent, but it was responsible for the creation
and communications industry, and from hotels, cafes, of 37 percent of the 280,000 net jobs created
and restaurants. The agricultural sector’s growth between September 2018 and May 2019. The most
slowdown to 2.7 percent in 2019, from 3.5 percent notable contributions to total value-added in the non-
in 2018, was largely explained by lower yields in the hydrocarbon real sector from the private segment
third quarter compared to a record yield during the
same reference period in 2018. The growth rate of 2
The association of contractors (Association Générale
the construction sector diminished to 3.9 percent in des Entrepreneurs Algériens [AGEA]) characterized
2019, compared to 5.3 percent in 2018, in line with the 2019 as a “lost year” and reported that in the context
slowdown in investment2 (Figures 2 and 4). of weak public demand, over 20,000 construction firms
While the private sector continued to be suspended activities and over 150,000 workers were
temporarily laid off.
the main engine of economic growth in 2019, 3
The real sector is defined by the ONS as the sum of the
the public sector generated more jobs. In 2019, 19 Nomenclature des Secteurs d’Activité (NSA) sectors,
the private sector’s contribution to total value-added therefore excluding finance, insurance, real estate
in the real sector,3 excluding hydrocarbon, amounted sectors, as well as public services.
2 ALGERIA ECONOMIC MONITOR: NAVIGATING THE COVID-19 PANDEMIC, ENGAGING STRUCTURAL REFORMSFIGURE 5 • The Private Sector Remained FIGURE 6 • …although the Public Sector Created
the Main Contributor to More Jobs
Non-Hydrocarbon Actvity…
500
12% 400
Net job creation, thousands
300
10%
200
Conttribtion to growth of the
8% 100
real sector, ppts
0
6% –100
–200
4%
–300
2% –400
2014 2015 2016 2017 2018 2019
0%
2014 2015 2016 2017 2018 2019 Private sector Public sector
Private sector Public sector
Source: ONS.
Note: The change in job creation for 2019 corresponds to the September 2018 to May
Source: ONS. 2019 period in light of data limitations. In previous years, this has been calculated
Note: The real sector is defined by the ONS as the sum of the 19 NSA sectors, and on an annual basis from the month of September of a given year to September of the
excludes the financial and real estate sectors, as well as public services. following year.
of the economy stemmed from agriculture (+1.2 September 2018 to 11.4 percent in May 2019). Labor
ppts), construction (+0.8 ppts), and transportation market outcomes differed across male and female
and communications (+0.7 ppts). Private investment populations, however, with the male unemployment
comprised 64 percent of total investments. While the rate declining from 9.9 percent to 9.1 percent, while
net registration of small- and medium-sized enterprises the female unemployment rate rose from 19.4 percent
(SMEs) increased by 7.2 percent in H1/2019 against to 20.4 percent, within the context of a male and a
the same reference period in 2018, registered female labor market participation rate of 66.8 percent
employment grew by 4.8 percent over this timeframe.4 and 17.3 percent, respectively, in May 2019. Labor
FDI’s potential role for accessing capital, transferring market conditions have marginally deteriorated in
knowledge, and accessing international markets recent years, with the unemployment rate rising from
also remained limited, with inward FDI averaging 0.6 10.6 percent in September 2014 to 11.4 percent in
percent of GDP yearly over the 2017–2019 period. May 2019.
The 2020 Budget Law aimed to address this low FDI
level by including a provision to lift the 51/49 rule on
foreign ownership for non-strategic sectors (Figures
Public Finances
5 and 6).
Algeria’s central government overall fiscal bal-
Net job creation exceeded the rise in the
ance deteriorated from –6.8 percent of GDP
number of individuals entering the labor force,
in 2018 to –9.6 percent of GDP in 2019 as a
leading to a fall in the number of unemployed.
result of the fall in hydrocarbon revenues and
Between September 2018 and May 2019, 280,000
increased public investment. Government rev-
jobs were created (with the employment rate rising
enues declined by 1.2 percent of GDP due to lower
from 36.8 percent in September 2018 to 37.4 percent
hydrocarbon revenues, while non-hydrocarbon
in May 2019) which, combined with an increase in the
revenues remained stable with the increase in tax
labor force participation of 267,000 individuals (with
the labor participation rate rising from 41.7 percent in
September 2018 to 42.2 percent in May 2019), led to a 4
Ministère de l’Industrie et des Mines, November 2019.
decline in the number of unemployed by 13,000 (with Based on Caisse Nationale des Assurances Sociales
the unemployment rate falling from 11.7 percent in (CNAS) registration.
Developments in 2019 3FIGURE 7 • Lower BdA Dividends Subtracted from FIGURE 8 • …while Capital Spending Increased
the Budget… Markedly
35% 50%
Public expenditures, % of GDP
30%
Government revenues, % of GDP
40%
25%
30%
20%
15% 20%
10% 10%
5%
0%
0% 2014 2015 2016 2017 2018 2019
2014 2015 2016 2017 2018 2019
Personnel expenditure Material and supplies
Tax revenues BdA dividends Current transfers Interest payments
Other non-tax revenue Hydrocarbon revenues Capital spending Net lending and CAS operations
Source: Ministry of Finance. Source: Ministry of Finance.
revenues being offset by the decline in dividends short-term debt has also been gradually replaced
from the Banque d’Algérie (BdA).5 The increase in by one- and two-year bonds, with yields however
tax revenues was mainly related to the increase of gradually increasing from 2 percent to 5 percent
income tax revenues in the context of rising public between 2016 and 2019. The financing of the 2019
employment, the rise in petroleum tax rates and the deficit, equivalent to 9.6 percent of GDP, was derived
increase in customs duties following the imposition from liquidity drawdowns from SOEs in the amount of
of significant import safeguard duties.6 Meanwhile, 807 billion DZD, with Sonatrach contributing most of it
government expenditures rose by 1.6 percent of (708 billion DZD11), and the remainder stemming from
GDP, with current expenditure growth of 1.4 percent the monetary financing by the BdA (1 trillion DZD).
relative to 20187 and capital expenditure growth (Figures 9 and 10).
of 17.7 percent.8 Treasury interventions surged
(+66.9 percent, to 863 billion DZD), in the context
of increased public support to SOEs. Meanwhile, a 5
BdA dividends are drawn from gains made by
transfer from the national investment fund (Fond na- exchanging the current account surplus between 2000
and 2014 and selling foreign exchange reserves at a
tional d’investissement, or FNI) to the Caisse Natio-
more preferable exchange rate in subsequent years.
nale des Retraites (CNR), in an amount equivalent 6
The DAPS (Droits additionnels provisoires de
to 3.3 percent of GDP, was drawn from earmarked sauvegarde) imposed tariffs of up to 200 percent on
monetary financing, significantly raising spending selected products.
through Special Accounts.9 7
When excluding the 2.5 percent of GDP transfer to the
Algeria’s debt-to-GDP ratio is estimated national pension fund in 2018 (Caisse Nationale des
Retraites [CNR]).
to have risen from 38.9 percent of GDP in 2018 8
Although the entirety of the investment might not have
to 44.9 percent in 2019, with the financing met been spent by sectoral ministries.
by a drawdown from Sonatrach and monetary 9
The 2018 transfer to the CNR amounted to 2.5 percent
financing. As of end-2019, over 70 percent of Algeria’s of GDP.
public debt was held by the BdA within the context of 10
Out of the total amount of 6,556 billion DZD, 38 percent
a large monetary financing program initiated in 2017 would serve to finance the deficit, 28 percent to settle
the Treasury’s debt to Sonatrach and Sonelgaz and
and worth 32.1 percent of 2019 GDP.10 This long-term
settle the 2015 Growth Bond, 27 percent to the National
debt carries an annual interest rate of 0.5 percent. Investment Fund, and 8 percent for the CNR to refinance
Meanwhile, external debt amounts to only 0.8 percent its debt to the CNAS.
of GDP. In recent years, the country’s domestic 11
Sonatrach 2019.
4 ALGERIA ECONOMIC MONITOR: NAVIGATING THE COVID-19 PANDEMIC, ENGAGING STRUCTURAL REFORMSFIGURE 9 • In the Past Three Years, Financing FIGURE 10 • …Consequently, Public Debt Is Now
Needs Have Been Met by Monetary Mostly Held by the BdA
Financing…
50%
4 20 45%
18
3 40%
16
Budget deficit, % of GDP
Central government debt,
2 14 35%
Deficit financing,
trillions of DZD
1 12 30%
% of GDP
10 25%
0 8 20%
–1 6
4 15%
–2 10%
2
–3 0 5%
2014 2015 2016 2017 2018 2019
0%
2014 2015 2016 2017 2018 2019
Other sources Oil savings Monetary financing
Growth bond Budget deficit (RHS) Central bank Banks and financial institutions External Oil savings
Source: Ministry of Finance; World Bank calculations. Source: BdA and IMF.
Note: Other sources of financing are negative in 2017 and 2018 mainly because Note: Gross public debt is computed as the sum of claims from the central bank,
monetary financing was used to reimburse State debts to SOEs. banking and financial institutions, and multilateral and bilateral creditors.
Monetary and Banking Developments 50.2 percent over the same period. Stress tests
realized in 2019 suggest that while market risks remain
Banking liquidity fell in 2019 amid the conclusion contained, the exposure of the six public banks, which
of the monetary financing program, the financing account for 85 percent of credit to the economy, to
of the 2019 budget deficit and the gradual rise their three main customers is substantial.
in banks’ reserve requirement ratio. The BdA’s The national Consumer Price Index
quantitative easing program started in September (CPI) rose by 2.3 percent in 2019, down from
2017 and ended in March 2019, with 4,726 billion 3.5 percent in 2018. The national CPI, which has
DZD injected into the economy (23 percent of 2019 been on a declining trend since peaking in the
GDP) out of a total of 6,556 billion DZD.12 This, summer of 2016 following the large 2015 currency
combined with the drawdown in SOE liquidity to devaluation, edged up modestly against the stability
finance the budget deficit and the increase in bank of the exchange rate, the weaker public and private
reserve requirement ratios from 4 percent in January demand growth, the moderation in administered
2018 to 10 percent in the summer of 2019, resulted prices, and the monetary tightening by the BdA.13
in a fall in banking deposits included in broad The value of the Algerian dinar against the U.S. dollar
money (M2). (USD), in which Algeria’s exports are predominantly
Bank lending to SOEs increased by invoiced, depreciated modestly from 116.6 DZD/
14.4 percent in 2019 against an increase of USD in 2018 to 119.4 DZD/USD in 2019. On the
4.2 percent for the private sector, suggesting a other hand, the value of the Algerian dinar against
crowding out of private investment. Although the
private sector generates 64 percent of total value-
added in the real sector, lending to the private sector
12
The sterilization program intended to curb inflationary
represented 48.0 percent of total bank lending, while pressures absorbed 37 percent of the total monetary
financing.
lending to SOEs represented 50.1 percent of total 13
IMF (2017) shows that the Algerian CPI is highly
bank lending. The ratio of non-performing loans rose persistent in the short-run and reacts most to growth in
from 9.2 percent in 2014 to 13 percent in 2018, with the money supply and the exchange rate, although with
the bank provision rate falling from 65.2 percent to a four-quarter lag.
Developments in 2019 5FIGURE 11 • Liquidity Fell Following the FIGURE 12 • …and Most New Credit Was
Conclusion of Monetary Financing… Channeled to SOEs
8% 60%
Conitrbution to M2 growth, ppts
6%
50%
4%
Bank sector claims,
40%
2%
% of GDP
0% 30%
–2% 20%
–4% 10%
H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2
2014 2015 2016 2017 2018 2019
0%
2014 2015 2016 2017 2018 2019
Currency in circulation Liquid deposits
Broad money On Government On SOEs On Private Sector
Source: BdA. Source: BdA.
FIGURE 13 • In 2019, Inflation Moderated as FIGURE 14 • ...while the Real Effective Exchange
Food Prices Stagnated... Rate Slightly Appreciated
7 105
6 100
5 95
Exchange rate indices,
Contribution to CPI
Q1/2014=100
4 90
growth, ppts
3 85
80
2
75
1
70
0
65
–1 60
H1/2014
H2/2014
H1/2015
H2/2015
H1/2016
H2/2016
H1/2017
H2/2017
H1/2018
H2/2018
H1/2019
H2/2019
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014 2015 2016 2017 2018 2019
Food CPI Non-food CPI USD/DZD EUR/DZD Real Effective Exchange Rate
Source: ONS. Source: BdA and IMF.
the Euro and Yuan, against which almost all of External Accounts
Algeria’s imports are traded, appreciated modestly
from 137.5 DZD/EUR in 2018 to 133 DZD/EUR in The current account deficit remained relatively
2019 and from 17.6 DZD/CNY in 2018 to 17.3 DZD/ unchanged in 2019 with the fall in hydrocarbon
CNY in 2019. As a result, the Real Effective Exchange exports being largely offset by the fall in goods
Rate (REER) slighty appreciated, leading to a loss of imports and the reduction in the services trade
international competitiveness. This was entirely led by deficit. The current account deficit was equivalent to
the depreciation of the Nominal Effective Exchange 10.0 percent of GDP in 2019, down from 9.5 percent
Rate (NEER), while price differentials based on the of GDP in 2018. The trade balance in goods recorded
CPI remained relatively unchanged. The value of the a deficit of 5.6 percent of GDP in 2019, up from 4.3
local currency also remained relatively unchanged in percent of GDP in 2018, while the services trade deficit
the parallel market, trading at a 50 percent discount improved from 3.7 percent of GDP in 2019, down from
against the USD and the Euro compared to the official 4.7 percent of GDP in 2018. The decline in exports
foreign exchange market. (Figures 13 and 14). of goods from 23.4 percent of GDP in 2018 to 20.5
6 ALGERIA ECONOMIC MONITOR: NAVIGATING THE COVID-19 PANDEMIC, ENGAGING STRUCTURAL REFORMSFIGURE 15 • T
he Import Compression Effort FIGURE 16 • …Led by a Sharp Decline in the Value
Continued… of Equipment Imports
40% 0% 15%
10%
Current account balance,
Contribution to growth of
20% –5%
goods imports, ppts
5%
% of GDP
% of GDP
0% –10% 0%
–5%
–20% –15%
–10%
–40% –20% –15%
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Hydrocarbon exports Other exports Food Equipment
Imports Factor income and transfers Energy and lubricants Finished products
Current account (rhs) Raw and semi-finished products Total
Source: BdA. Source: Ministry of Finance.
percent of GDP in 2019 was only partially offset by depletion of international reserves, which dropped
the decline in imports of goods from 27.7 percent of to US$61.5 billion at end-2019 according to the
GDP in 2018 to 26.1 percent of GDP in 2019. This IMF,14 covering 13.6 months of imports of goods and
comes despite the introduction of additional import services, down from US$78.6 billion a year earlier.
restrictions and the nominal depreciation of the (Figures 15 and 16).
Algerian dinar, which led to a contraction in imports
of equipment, raw and finished products, and food
products. The current account deficit led to a further 14
Excluding Special Drawing Rights.
Developments in 2019 72
NAVIGATING THE
COVID-19 PANDEMIC
Introduction consequently fallen by 0.3 ppts to 52.1 in September
following four consecutive months of increase. The
The global economy is navigating an uncertain economic recovery will largely be determined by the
path of recovery following a deep and timing of the commercialization and the effectiveness
synchronous recession caused by lockdowns to of the COVID-19 vaccine, with significant downside
contain the COVID-19 pandemic. The first wave of risks related to economic and financial conditions.
the COVID-19 pandemic hit almost all of the world’s Within the Middle East and North Africa
economies during the second quarter of 2020, with (MENA) region, economies have been exposed to
G20 countries’ real GDP level estimated to have the twin shocks of recession-induced lockdown
contracted by 9.1 percent Y/Y, and China constituting measures as well as the abrupt fall in foreign
the only G20 country recording growth in the quarter revenues. Iraq, Algeria, Iran, and Libya experienced
(+11.8 percent Y/Y) following the contraction it posted a major fall in oil revenues, while Morocco, Tunisia,
in the previous quarter. The swift and aggressive Lebanon, and Jordan experienced a contraction
response of central banks across the world to keep in international tourism receipts and remittances.
financing conditions loose helped provide the space Given the limited availability of fiscal buffers across
needed for governments to ramp up spending to the MENA countries, much of the measures to date
respond to the health and economic needs of the have consisted in eliminating unessential public
population. The recovery remains uneven, however, spending and reallocating these funds to health care
with activity within the goods sector improving, while
the services sector, particularly international travel,
remaining feeble. The second wave of infections in
15
The composite PMI is an indicator of economic health
for manufacturing and service sectors that provides
the fall, which has daily new cases exceeding 500,000
information about current business conditions. A PMI
globally, with over 7,500 deaths being recorded above 50 represents an expansion when compared with
daily, has led to renewed lockdowns. The global the previous month. A PMI reading under 50 represents
composite Purchasing Managers’ Index (PMI)15 has a contraction, and a reading at 50 indicates no change.
9expenditures, and measures to provide economic In August 2020, President Tebboune
relief to households and firms. chaired the National Conference on the Economic
To limit the spread of the virus in Algeria, and Social Recovery Plan which is expected to
the Government imposed stringent containment lead to an economic diversification strategy.
measures on individuals and on businesses early The Conference, structured around 11 workshops
on in the pandemic. These measures included, facilitated by sectoral Ministers, brought together
notably, the cancellation of flights and the imposition the Government, public institutions, trade and labor
of quarantines on repatriated Algerians, the closure unions, and economists. This Conference will lead to
of schools, universities, restaurants, and shops. The the development of a Socio-Economic Recovery Plan
State also ordered the cancellation of all public and which will lay out the steps toward transitioning away
private events, including demonstrations and religious from the hydrocarbon-led model and to be articulated
activities, and the shutdown of public transportation into three time horizons, namely end-2020, end-2021
services. Furthermore, half of civil servants and and end-2024.
workers within the economic public sector were placed
on mandatory leave with full compensation. Finally,
since the spring, the Government has imposed curfews
Algeria’s Twin Shocks
with varying degrees of stringency in the wilayas (i.e.,
The COVID-19 pandemic took the Algerian
governorates). It also limited exports of strategic goods,
economy by storm. The first case of COVID-19
such as food along with medical and hygiene items in a
in Algeria was reported on February 25, 2020. On
bid to raise the preparedness of the country.
March 2, 2020, two new cases of COVID-19 were
The COVID-19 pandemic hit Algeria as a
confirmed, with daily cases being reported thereafter
new Government, tasked with leading political
and the first death being reported on March 12, 2020.
and economic reforms and rebalancing state
During the first wave of the pandemic, confirmed
finances, was formed. Abdelmadjid Tebboune, who
daily new cases peaked at 675 on July 24, 2020.
was elected President in December 2019, appointed
Following the flattening of the curve in August and in
Adbdelaziz Djerrad as Prime Minister who formed a
September, cases began to rise again in October. As
new Government in January 2020. The first COVID-19
of December 22nd, 2020, there was a total of 96,069
case, which was recorded in Algeria on February
confirmed cases and 2,687 deaths (Figure 17). Given
25, happened days after the publication of the
the limited number of testing kits available, however,
Government’s Action Plan, which envisaged reforms
the number of confirmed cases have likely materially
to accelerate the transition to private sector led growth,
underestimated the true number of cases.
while preserving Algeria’s social model. The twin
The Government adopted a swift policy
shocks of the COVID-19 pandemic and concurrent fall
response to the pandemic. The Government’s
in oil prices, however, forced the State to undertake
allocations to the healthcare sector amounted to DZD
a number of measures to mitigate the impact of the
3.7 billion (US$ 473.6 million) for medical supplies, 16.5
COVID-19 pandemic on households and firms. The
billion DZD (US$128.9 million) for bonus payments
pandemic also rendered urgent the acceleration of
to healthcare workers, and 8.9 billion DZD (US$69.5
structural reforms to restore long-term macro-fiscal
million) for the sector’s development. Significant
equilibria and foster private sector development.
imports of health products and equipment took place,
The Supplementary Budget Law enacted on June
4, 2020, included provisions to address the health
impact of the COVID-19 pandemic. In October 2020, 16
Since the start of the pandemic, the Government
the Minister of Finance revealed that 65,531 billion
allocated 12,643 billion DZD to the health care sector,
DZD (0.3 percent of 2019 GDP) had been allocated 24,702 billion DZD to vulnerable households, 24,390
across different sectors in response to the COVID-19 billion DZD to agents of the State, and 3,317 billion DZD
pandemic.16 to the repatriation of Algerians stranded abroad.
10 ALGERIA ECONOMIC MONITOR: NAVIGATING THE COVID-19 PANDEMIC, ENGAGING STRUCTURAL REFORMSFIGURE 17 • Despite a Swift Policy Response, a FIGURE 18 • Hydrocarbon Revenues Are Being Hit
Second Wave of COVID-19 Infections by the Simultaneous Decline in Prices
Is Underway and in Production Quotas
3,000 100
1,2 90
Number of daily new cases/total
90
2,500 80
Index, 100=strictest
80
number of deaths
2,000 70
60 1,0
1,500 50 70
40
1,000 30 0,8 60
proudction, mbpd
Algerian crude oil
500 20
10 50
US$
0 0 0,6
2/25/20 4/25/20 6/25/20 8/25/20 10/15/20 40
3/25/20 5/25/20 7/25/20 9/25/20 11/25/20
Daily change in number of confirmed cases Total number of deaths 0,4 30
Stringency Index (RHS)
20
Source: Johns Hopkins University for the reported number of cases and Oxford 0,2
COVID-19 Government Response Tracker for the Stringency Index. 10
Note: The Stringency Index measures the extent of the government’s response to
0,0 0
contain the COVID-19 pandemic over time on a scale of 0 to 100 (100=strictest).
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
It is a composite measure based on a simple average across nine response
indicators: school closures, workplace closures, cancellation of public events,
restrictions on gathering size, public transport closures, stay at home requirements,
restrictions on internal movement, restrictions on international travel, and public Crude oil production Sahara Blend prices (RHS)
information campaign. The underlying data reflect the strictest response at the
sub-national level. Source: International Energy Agency (IEA) for crude oil production and OPEC for
Sahara Blend prices.
with import procedures being simplified to facilitate Algeria committed to reduce its oil production by 200
trade. Local hospitals were established, and SOEs kbpd. As a result, Algeria’s oil production between
were asked to contribute, with Getex, which operates January and November 2020 declined by 11.9
in the textile industry, mandated to produce masks; percent relative to the same reference period last
Saidal, which operates in the pharmaceutical industry, year.18 (Figure 18).
requested to produce hand sanitizers; and ENIE,
which manufactures electronic products, mandated
to produce ventilators. In-kind support (food, water)
Economic and Employment Losses
was also distributed to 600,000 impacted families.
Although second quarter data are yet to be
The Government’s efforts were complemented
published,19 the economic momentum heading
by China’s gifting of surgical masks, test kits, and
into Q2/2020 remained feeble, with economic
artificial breathing apparatus, and the deployment of
activity contracting by 3.9 percent Y/Y in
its medical teams to Algeria to help with the pandemic.
Q1/2020. Consumption spending grew by 1.2
Concurrently, international oil prices
percent in Q1/2020 (against 2.4 percent in Q1/2019),
declined steeply at the end of February as the
led by a 0.8 percent rise in private consumption and
COVID-19 pandemic gripped the world. Sahara
a contraction in public consumption by 2.0 percent.
Blend prices fell from US$50.9 per barrel in February
Investment spending posted a steep Y/Y contraction
2020 to US$17.9 per barrel in March 2020 as oil
of 5.0 percent in Q1/2020. Exports declined by 11.8
demand from China—which represents 14 percent of
total world demand17—fell sharply, leading to a supply
overhang, and as OPEC+ members failed to reach 17
According to the IEA, China’s oil demand was 13.7
an agreement on production cuts. At the OPEC+ mbpd in 2019 while world demand stood at 99.8 mbpd.
extraordinary meeting held in April 2020, member 18
IEA, April 2020.
countries agreed to cut production until end-2020. 19
On the ONS website, as of December 17, 2020.
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