Algerian Economy PART1
I report here the contents of an article published in the revue IMPACT INTERNATIONAL by Dr. Abdelhamid Brahimi (prime minister 1984-88 and now Director General of the Centre for Maghreb Studies, london). The title is: ECONOMY OF REPRESSION AND FOUR YEARS OF GROSS NATIONAL CORRUPTION.
Algeria has changed beyond recognition as it stands on the edge of an abyss. Nearly four years of repression have had a disastrous impact on the country's economy. The widespread feeling of insecurity,the growth of corruption-estimated at between 1.5 and 2 billion USD annually- the military regime's isolation within the country and the loss of authority by the state have also contributed to the economic malaise. However, the lack of a policy of economic recovery and any dynamic investment policy will lead Algeria into long-term economic decline.
The GDP (Gross Domestic Product) per head of population has sunk dramatically from 2500 USD per annum in 1980's to 1100 USD in 1994 ie a drop of 56% in six years. The overall GDP has sunk from 43.17 billion USD in 1992 to 33.12 billion USD in 1995, in other words, a drop of 23.3%.
The continual marginalisation of agriculture has led to a sustained increase in the import of foodstuffs. In 1995 nearly 90% of the country's agricultural and foodstuff needs depended on imports. Compared with 1992-94, there was a 25% fall in agricultural production.
In 1995, with the exception of the hydrocarbon ( oil and gas) sector, the state and private industr functioned at 20% of capacity ie 80% of the existent industrial capacity was not used. The figure for industrial output has been constantly downward 6% in 1992, 15% in 1993 and 10% in 1994.
Activity in the building ad construction sector has also fallen considerably. Only about 40000 homes were completed in 1994, compared with 130000 in 1984, although the housing crisis remains at crisis point.
The rate of investment, ( ratio of investment to GDP), has never been so low in 30 years. In 1994 and 1995 Algeria benefited by more than 18 billion USD in fresh money, following two successive rescheduling of debts. A large part of this resource was used to increase the import of foodstuffs and armaments. In fact, the imports of foodstuffs (35% of total imports) and industrial consumable (14%) alone made up 49% of total imports in 1994, unprecedented since 1966. Military expenditure went up by 20% in 1994, and is likely to continue to rise. And all this, at the expense of investment in production.
Unemployment, constantly increasing, exceeded 30% in 1995, affecting, particularly, the young. Algerians between the ages of 16 and 29 make up 83% of the unemployed, while constituting only 27% of the total population.
The unemployment crisis will worsen with the dismissal of more than 400.000 workers, resulting from the policy of privatisng public enterprises, according to IMF's prescription. The possibilities for creating employment are very poor, considering the low level of investment.
Please check out Part 2.