Summary of Discussions Held at the Ecole Superieure de Banque, Algiers

In May 2010, as part of a regular visit to Algeria, a group of IMF economists presented the world economic outlook and developments in the Algerian economy to an audience of more than 200—mostly students and professors—at the Ecole Superieure de Banque. The presentation was followed by a lively Q&A session.

In discussing the world economic outlook, the Algeria team noted that the global economic recovery was taking hold, while important differences existed across regions. Among the advanced economies, the United States was off to a better start than Europe and Japan. Among emerging and developing economies, emerging Asia was leading the recovery, while many emerging European economies were lagging behind.

Turning to Algeria, the team focused on the evolution of the country’s economy over the past decade and repercussions of the current economic crisis. The Algerian economy had weathered the crisis well, the team noted, thanks in part to prudent macroeconomic policies and a good performance of the non-oil economy. And relative to 2009, economic prospects should improve in 2010 as international oil prices recover.

On a less sanguine note, the IMF team pointed to the slack Algerian labor market: unemployment is registered at around 10.2 percent and, like in many other countries in the Maghreb region, youth unemployment is disproportionately high. To address this, the team recommended structural reforms to promote investment and the diversification of the Algerian economy. The team also discussed potential lessons for Algeria from the successful economic diversification strategies followed by two other commodity-exporting countries—Chile and Malaysia.

The students were very receptive to the issues raised, with questions focused mainly on the consequences for Algeria of a severe crisis in Southern Europe. The team noted that the country was relatively well hedged against such a crisis, provided that it did not affect international oil prices. Other points of interest for students included the lack of a sovereign rating for Algeria and the role of rating agencies and regulatory oversight. The team explained the  importance of rating agencies for securing financing, and stressed the value of regulatory oversight for building a strong financial system—an area in which the country’s authorities had recently implemented commendable reforms.