Global: Algeria – Public Finance, Public Debt, Balance of Payment and Money Supply
Posted: 25-12-2008 , 12:20 GMT
Global Investment House - Egypt - Algeria Economic & Strategic Outlook – Public FinanceDecember 2008- In 2008, the government surplus is expected to represent 14.3% of GDP, reaching AD1,694.5bn, implying a remarkable growth rate of 61.0% over 2007. This is attributable to the expected boost in revenues by 34.0%, compared to a 23.6% rise in expenses. The revenues’ acceleration is spurred by the 35.5% expected surge in hydrocarbons proceeds, reaching AD4,029.0bn. Meanwhile, the African Development Bank (AfDB) and the Organization for Economic Co-operation and Development (OECD) estimated that the fiscal surplus would reach AD1,052.5bn in 2007, decreasing by 11.3%, compared to 2006, and representing 11.4% of GDP. The reason behind such decline is attributed to the slowdown of government revenues, as they were estimated to grow at 4.5% y-o-y, compared to a growth rate of 12.2% in expenses. Such slowdown resulted from the lower increase in the proceeds generated from hydrocarbons, as they rose by only 6.2% in 2007, compared to a growth rate of 19.0% in the previous year.
Government Finances
In ADbn
2003
2004
2005
2006
2007E
2008F
Total Revenues and Grants*
1,947.5
2,215.2
3,082.7
3,639.9
3,803.9
5,095.5
Hydrocarbon Revenue**
1,350.0
1,570.7
2,352.7
2,799.0
2,972.9
4,029.0
Tax Revenue
524.9
580.4
640.5
720.9
710.9
912.4
Nontax Revenues*
69.7
63.7
89.5
119.7
N/A
N/A
Grants
2.9
0.4
0.0
0.3
N/A
N/A
Other Non-Distributed Items***
0.0
0.0
0.0
0.0
120.0
154.0
Total Expenditure
1,691.4
1,891.8
2,052.0
2,452.7
2,751.4
3,400.9
Current Expenditure
1,121.0
1,245.5
1,241.4
1,433.7
1,569.6
1,884.1
Personnel Expenditure
398.0
446.8
492.2
531.3
470.9
568.8
Mudjahidins' Pensions
62.7
69.2
79.8
92.5
N/A
N/A
Material and Supplies
58.8
71.7
76.0
95.7
N/A
N/A
Public Services
161.4
176.5
187.5
215.5
N/A
N/A
Current Transfers ****
326.1
396.1
332.7
430.1
N/A
N/A
Interest Payments
114.0
85.2
73.2
68.6
83.1
82.9
Other Non-Distributed Items***
0.0
0.0
0.0
0.0
1,015.6
1,232.4
Capital Expenditure
570.4
646.3
810.6
1,019.0
1,181.8
1,516.8
Budget Balance
256.1
323.4
1,030.7
1,187.2
1,052.5
1,694.5
Special Accounts Balance
187.1
109.9
-129.0
-4.0
N/A
N/A
Net Lending by Treasury
32.6
11.8
5.2
32.0
N/A
N/A
Overall Balance*****
410.6
421.5
896.5
1,151.2
N/A
N/A
* Excluding privatization receipts, classified under nonbank financing
**Including dividends on current profits paid by Sonatrach
***Due to lack of available data in 2007 and 2008, these items represent the difference between totals and available data
****This item covers expenditures for public services, food subsidies, agricultural price support, and cash transfers for the poor
*****Including special accounts, net lending and operations of the Rehabilitation Fund
Source: IMF, AfDB, OECD and Global Research
The total public debt provisional figure represents 18% of GDP in 2007, that is approximately US$24.2bn, implying a y-o-y decline of 17.1%. Algeria was successful in dropping its total government debt, between 2003 and 2007, at a CAGR of 8.5%, mainly through the decline of its external debt.
Public Debt
In US$bn
2003
2004
2005
2006
2007*
Gross Domestic Debt
12.7
13.9
14.2
25.4
N/A
Gross External Debt
21.8
20.4
15.5
3.7
N/A
Total Government Debt
34.5
34.3
29.6
29.2
24.2
*Estimated
Source: IMF, AfDB, CIA World Factbook and Global Research
Preliminary results of June 2008 indicate that the current account surplus was ameliorated by 68.0% y-o-y, reaching US$22.3bn in June 2008, compared to US$13.3bn in June 2007. This was a result of many factors. Exports rose by 61.6%, compensating for the 81.8% jump in imports, leading to an acceleration of 45.2% in the trade balance, as it rose from US$15.2bn in June 2007 to US$22.0bn in June 2008. Meanwhile, the deficit in the services and income account dropped by 61.0%, reaching US$1.1bn, compared to US$2.8bn the previous year. Also, the transfers account was ameliorated by 54.0%, reaching US$1.3bn. The amelioration of the current account balance has offset the increase in the capital account deficit, which became US$2.5bn, up from US$0.7bn, and led to an enhancement in the overall balance of the balance of payment by 57.1% over the same period, as it reached US$19.8bn, up from US$12.6bn.
Balance of Payment
In US$bn
2003
2004
2005
2006
2007*
Jan-Jun
2007*
Jan-Jun
2008*
Current Account
9.6
11.9
21.1
28.2
29.5
13.3
22.3
Capital Account
(1.4)
(1.9)
(4.2)
(11.2)
(0.4)
(0.7)
(2.5)
Direct investment (net)
0.6
0.6
1.1
1.8
1.5
(0.5)
1.0
Loans (net)
(1.4)
(2.2)
(3.1)
(11.9)
(0.9)
(0.9)
(0.3)
Drawings
1.7
2.1
1.4
1.0
0.5
(0.2)
0.6
Amortization
(3.0)
(4.4)
(4.5)
(12.9)
(1.5)
(1.1)
(0.9)
Short-term capital and errors and omissions
(0.6)
(0.3)
(2.3)
(1.1)
(1.0)
(0.3)
(3.2)
Overall Balance
8.2
10.0
16.9
17.0
29.1
12.6
19.8
*Provisional
Source: IMF and Banque d’Algerie
Concerning liquidity, over the period from June 2007 to June 2008, domestic liquidity (M2) in Algeria grew by 22.1%, reaching AD6,602.1bn, which was mainly a result of the 27.5% rise in Money Supply (M1), amounting to AD4,732.7bn, compared to AD3,712.2bn in June 2007. In addition, Quasi money accelerated by 10.4% over the same period, reaching AD1,869.3bn. Net foreign assets witnessed a y-o-y increase of 29.1%, as they stood at AD8,290.4bn, a higher balance than that of domestic liquidity, indicating that these assets are a principal source of funds for the country.
Money Supply
In ADbn
2003
2004
2005
2006
2007*
Jan-Jun 2007*
Opinions - No Opinions found for this article
Keep your contributions civil, tasteful and relevant. Mena reserves the right to be selective in publishing readers' comments
Thank you for participating. Your comment has been saved and will be visible after our moderator's approval
This is attributable to the expected boost in revenues by 34.0%, compared to a 23.6% rise in expenses. The revenues’ acceleration is spurred by the 35.5% expected surge in hydrocarbons proceeds, reaching AD4,029.0bn. Meanwhile, the African Development Bank (AfDB) and the Organization for Economic Co-operation and Development (OECD) estimated that the fiscal surplus would reach AD1,052.5bn in 2007, decreasing by 11.3%, compared to 2006, and representing 11.4% of GDP. The reason behind such decline is attributed to the slowdown of government revenues, as they were estimated to grow at 4.5% y-o-y, compared to a growth rate of 12.2% in expenses. Such slowdown resulted from the lower increase in the proceeds generated from hydrocarbons, as they rose by only 6.2% in 2007, compared to a growth rate of 19.0% in the previous year.
