2018年-IMF国际货币组织全球_Algeria_2018_Article_IV_Consultation_74页_1mb

Summary of the 2018 Article IV Consultation with Algeria

Core Content

The 2018 Article IV Consultation with Algeria, conducted by the International Monetary Fund (IMF), assessed the country's economic developments and policies in response to the prolonged decline in oil prices since 2014. The consultation aimed to evaluate the effectiveness of the authorities' new economic strategy, which included increased fiscal spending in 2018, central bank financing, and tighter import controls, and to recommend sustainable and inclusive growth measures.

Main Views and Key Information

Economic Challenges

• Algeria has been heavily impacted by the fall in oil prices since 2014, which has led to significant fiscal and current account deficits.
• Real GDP growth slowed sharply, with a contraction in hydrocarbon production and a stable nonhydrocarbon sector.
• Unemployment rose to 11.7 percent in 2017, with particularly high rates among youth (28.3%) and women (20.7%).
• Inflation decreased from 6.4% in 2016 to 5.6% in 2017, but remained above the central bank's target of 4%.

Fiscal and Current Account Deficits

• Despite a sizeable fiscal consolidation in 2017, the fiscal deficit remained large, decreasing from 13.5% of GDP to 8.8%.
• The nonhydrocarbon fiscal deficit decreased by less than 2% of nonhydrocarbon GDP, reflecting limited progress.
• The current account deficit narrowed slightly to -12.9% of GDP in 2017, but remained substantial.

External Position and Reserves

• International reserves fell by US$17 billion to US$96 billion, but still stood at 19 months of imports and above the IMF's adjusted reserve adequacy metric.
• External debt remains negligible at 2.4% of GDP, while domestic public debt increased significantly since 2016.

Monetary Policy and Financing

• The central bank (Bank of Algeria, BA) financed the fiscal deficit through monetary operations, including buying sovereign securities with long maturities at a 0.5% interest rate.
• Monetary financing was used to cover about 23% of 2017 GDP, and the central bank raised the reserve requirement ratio to 8% to absorb liquidity.
• The authorities considered monetary financing as a less risky alternative to external borrowing or further exchange rate depreciation.

Structural Reforms

• The government initiated several structural reforms, including energy subsidy reform, pension system reform, and business environment improvements.
• Efforts were made to modernize the monetary policy framework and promote private sector development.
• Reforms to improve labor market participation, particularly for women, and to enhance governance and transparency were highlighted.

Risks and Recommendations

• The new strategy, while aiming to stabilize the economy and support growth, carries significant risks, including increased inflation, worsening fiscal and external imbalances, and reduced economic resilience.
• The IMF recommended a more gradual fiscal consolidation, avoiding reliance on monetary financing, and strengthening the macroprudential framework.
• Structural reforms should be implemented promptly to foster a more diversified, private-sector led economy.
• The central bank should maintain independence, tighten monetary policy if inflationary pressures arise, and ensure sterilization of liquidity from monetary financing.

Key Policy Recommendations

• Gradual fiscal consolidation should be pursued without relying on monetary financing.
• Exchange rate depreciation should be gradual, combined with efforts to eliminate the parallel foreign exchange market.
• Monetary policy should remain independent and focused on containing inflation.
• Structural reforms should be accelerated to support a more diversified and inclusive growth model.
• Robust safeguards should be put in place if monetary financing continues, including strict quantitative and time limits.

Conclusion

• The IMF Executive Board acknowledged the authorities' efforts but emphasized the need for a more sustainable and less risky approach to economic adjustment.
• The consultation underscored the importance of structural reforms, fiscal discipline, and monetary independence in restoring macroeconomic stability and promoting long-term growth.