Chamber of Commerce Country Factsheet Last update: 18.06.2019
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After more than a century of rule by France, Algerians fought through much of the 1950s to achieve independence in 1962. Algeria's primary political party, the National Liberation Front (FLN), was established in 1954 as part of the struggle for independence and has since largely dominated politics. The Government of Algeria in 1988 instituted a multi-party system in response to public unrest, but the surprising first round success of the Islamic Salvation Front (FIS) in the December 1991 legislative elections led the Algerian army to intervene and postpone the second round of elections to prevent what the secular elite feared would be an extremist-led government from assuming power. The army began a crackdown on the FIS that spurred FIS supporters to begin attacking government targets. Fighting escalated into an insurgency, which saw intense violence from 1992-98, resulting in over 100,000 deaths - many attributed to indiscriminate massacres of villagers by extremists. The government gained the upper hand by the late-1990s, and FIS's armed wing, the Islamic Salvation Army, disbanded in January 2000.
Abdelaziz BOUTEFLIKA, with the backing of the military, won the presidency in 1999 in an election that was boycotted by several candidates protesting alleged fraud, and won subsequent elections in 2004, 2009, and 2014. The government in 2011 introduced some political reforms in response to the Arab Spring, including lifting the 19-year-old state of emergency restrictions and increasing women's quotas for elected assemblies, while also increasing subsidies to the populace. Since 2014, Algeria’s reliance on hydrocarbon revenues to fund the government and finance the large subsidies for the population has fallen under stress because of declining oil prices.
Source: The CIA World Factbook - Algeria
Algeria's economy remains dominated by the state, a legacy of the country's socialist post-independence development model. In recent years the Algerian Government has halted the privatization of state-owned industries and imposed restrictions on imports and foreign involvement in its economy, pursuing an explicit import substitution policy.
Hydrocarbons have long been the backbone of the economy, accounting for roughly 30% of GDP, 60% of budget revenues, and nearly 95% of export earnings. Algeria has the 10th-largest reserves of natural gas in the world - including the 3rd-largest reserves of shale gas - and is the 6th-largest gas exporter. It ranks 16th in proven oil reserves. Hydrocarbon exports enabled Algeria to maintain macroeconomic stability, amass large foreign currency reserves, and maintain low external debt while global oil prices were high. With lower oil prices since 2014, Algeria’s foreign exchange reserves have declined by more than half and its oil stabilization fund has decreased from about $20 billion at the end of 2013 to about $7 billion in 2017, which is the statutory minimum.
Declining oil prices have also reduced the government’s ability to use state-driven growth to distribute rents and fund generous public subsidies, and the government has been under pressure to reduce spending. Over the past three years, the government has enacted incremental increases in some taxes, resulting in modest increases in prices for gasoline, cigarettes, alcohol, and certain imported goods, but it has refrained from reducing subsidies, particularly for education, healthcare, and housing programs.
Algiers has increased protectionist measures since 2015 to limit its import bill and encourage domestic production of non-oil and gas industries. Since 2015, the government has imposed additional restrictions on access to foreign exchange for imports, and import quotas for specific products, such as cars. In January 2018 the government imposed an indefinite suspension on the importation of roughly 850 products, subject to periodic review.
President BOUTEFLIKA announced in fall 2017 that Algeria intends to develop its non-conventional energy resources. Algeria has struggled to develop non-hydrocarbon industries because of heavy regulation and an emphasis on state-driven growth. Algeria has not increased non-hydrocarbon exports, and hydrocarbon exports have declined because of field depletion and increased domestic demand.
Long-term economic challenges include diversifying the economy away from its reliance on hydrocarbon exports, bolstering the private sector, attracting foreign investment, and providing adequate jobs for younger Algerians.
Source: The CIA World Factbook - Algeria
Subject descriptor 2014 2015 2016 2017 2018 Gross domestic product, constant prices 3.800 3.900 3.574 2.912 2.631 Gross domestic product, current prices 213.518 166.838 168.318 178.431 184.189 Gross domestic product per capita, current prices 5,458.875 4,174.823 4,129.268 4,295.731 4,351.671 Inflation, average consumer prices 2.917 4.784 5.900 4.800 4.300 Volume of imports of goods and services 10.061 -7.138 -6.390 6.286 -5.880 Volume of exports of goods and services 0.311 5.372 3.023 -0.135 1.584 Unemployment rate 10.600 11.194 9.899 10.430 11.119 Current account balance -9.436 -27.452 -25.342 -24.480 -18.765 Current account balance -4.419 -16.454 -15.056 -13.720 -10.188
Source: IMF Statistics - Algeria
Luxembourg and the country
Existing conventions and agreements
Non double taxation agreement
In order to promote international economic and financial relations in the interest of the Grand Duchy of Luxembourg, the Luxembourg government negotiates bilateral agreements for the avoidance of double taxation and prevent fiscal evasion with respect to Taxes on Income and on fortune with third countries.
Air Services agreement
The Statec Foreign Trade statistics provide information on the trade of goods - by product and by country. This information is collected respectively through the INTRASTAT declaration and on the basis of customs documents.
You can see the statistics on the website of the Statec.
Contact point in Algeria
Luxembourg is represented by the Royal Embassy of the Netherlands situated in Alger
Sébastien HARDY | Conseiller Economique & Commercial
Bureau économique et commercial (Hub Brussels) -Ambassade de Belgique
Lotissement 11 Décembre 1960, Villa N°32 -3ème étage -El Biar– ALGER
Tél : (+00.213) 021.79.10.27/021.79.10.11/021.79.11.10
Country risk as defined by Office du Ducroire for Algeria
Ducroire is the only credit insurer covering open account deals in over 200 countries. A rating on a scale from 1 to 7 shows the intensity of the political risk. Category 1 comprises countries with the lowest political risk and category 7 countries with the highest. Macroeconomics experts also assess the repayment climate for all buyers in a country.
Other Useful Links
- CIA World factbook on Algeria
- GDP evolution in Algeria
- Index of Economic Freedom - Algeria 2015
- Investment Climate Statement - Algeria 2015
- Investir en Algérie
- Présentation de l'Algérie
- World Bank Open Data - Algeria
The Chamber of Commerce and the country
- 16.04.2018 - 19.04.2018
- 12.03.2018 - 15.03.2018