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Algeria Economy
 
 
 

General

The fossil fuels energy sector is the backbone of Algeria's economy, accounting for roughly 60% of budget revenues, 30% of GDP, and over 95% of export earnings. The country ranks 14th in petroleum reserves, containing 11.8 billion barrels (1,880,000,000 m³) of proven oil reserves with estimates suggesting that the actual amount is even more. The U.S. Energy Information Administration reported that in 2005, Algeria had 160 trillion cubic feet (Tcf) of proven natural gas reserves, the 8th largest in the world.

Since Roman times Algeria has been noted for the fertility of its soil. 25% of Algerians are employed in the agricultural sector. A considerable amount of cotton was grown at the time of the United States' Civil War, but the industry declined afterwards. In the early years of the 20th century efforts to extend the cultivation of the plant were renewed. A small amount of cotton is also grown in the southern oases. Large quantities of a vegetable that resembles horsehair, an excellent fibre, are made from the leaves of the dwarf palm. The olive (both for its fruit and oil) and tobacco are cultivated with great success.

More than 7.5 million acres (30,000 km²) are devoted to the cultivation of cereal grains. The Tell is the grain-growing land. During the time of French rule, its productivity was increased substantially by the sinking of artesian wells in districts which only required water to make them fertile. Of the crops raised, wheat, barley and oats are the principal cereals. A great variety of vegetables and fruits, especially citrus products, are exported. Algeria also exports figs, dates, esparto grass, and cork. It is the largest oat market in Africa. Algeria is also known for Bertolli's olive oil spread, although the spread has an Italian background.

Algeria’s financial and economic indicators improved during the mid-1990s, in part because of policy reforms supported by the International Monetary Fund (IMF) and debt rescheduling from the Paris Club. Algeria’s finances in 2000 and 2001 benefited from an increase in oil prices and the government’s tight fiscal policy, leading to a large increase in the trade surplus, record highs in foreign exchange reserves, and reduction in foreign debt. The government's continued efforts to diversify the economy by attracting foreign and domestic investment outside the energy sector have had little success in reducing high unemployment and improving living standards, however. In 2001, the government signed an Association Treaty with the European Union that will eventually lower tariffs and increase trade. In March 2006, Russia agreed to erase US$4.74 billion of Algeria's Soviet-era debt during a visit by President Vladimir Putin to the country, the first by a Russian leader in half a century. In return, president Bouteflika agreed to buy US$7.5 billion worth of combat planes, air-defence systems and other arms from Russia, according to the head of Russia's state arms exporter Rosoboronexport.

Algeria also decided in 2006 to pay off its full US$8 billion debt to the Paris Club group of rich creditor nations before schedule. This will reduce the Algerian foreign debt to less than US$5 billion in the end of 2006. The Paris Club said the move reflected Algeria's economic recovery in recent years.

Overview

Economy - overview
The hydrocarbons sector is the backbone of the economy, accounting for roughly 60% of budget revenues, 30% of GDP, and over 95% of export earnings. Algeria has the 8th largest reserves of natural gas in the world and is the 4th largest gas exporter; it ranks 14th in oil reserves. Sustained high oil prices in recent years have helped improve Algeria's financial and macroeconomic indicators. Algeria is running substantial trade surpluses and building up record foreign exchange reserves. Algeria has decreased its external debt to less than 10% of GDP after repaying its Paris Club and London Club debt in 2006. Real GDP has risen due to higher oil output and increased government spending. The government's continued efforts to diversify the economy by attracting foreign and domestic investment outside the energy sector, however, has had little success in reducing high unemployment and improving living standards. Structural reform within the economy, such as development of the banking sector and the construction of infrastructure, moves ahead slowly hampered by corruption and bureaucratic resistance.

GDP (purchasing power parity)
$268.9 billion (2007 est.)

GDP (official exchange rate)
$125.9 billion (2007 est.)

GDP - real growth rate
4.6% (2007 est.)

GDP - per capita (PPP)
$8,100 (2007 est.)

GDP - composition by sector
agriculture: 8.1%
industry: 61%
services: 30.9% (2007 est.)


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