Algeria - Balance of payments

Algeria long had a current-accounts deficit, which before independence was covered by the French government. While the departure of Europeans after independence contributed to a more equitable balance of trade (Europeans had been the chief consumers of foreign goods), it also caused a heavy withdrawal of capital and a decrease in French aid, resulting in a continued deterioration of Algeria's payments position. However, with the continued growth of the petroleum sector, Algeria recorded substantial payments surpluses during the 1970s. In 1986, the fall of oil prices brought about a large deficit and an economic restructuring through the IMF that was intended to help service the country's debt and begin government privatization. In 1991, many import restrictions were abolished, although foreign exchange and external credit access were still restricted. By 1996, Algeria promulgated a liberalized trade regime in which nearly all export restrictions were removed and foreign investment was encouraged.

Debt rescheduling by the Paris Club and other lenders allowed the Bank of Algeria in the late 1990s to increase its reserves of hard currency. Algeria must increase its non-hydrocarbon exports, however, in order to generate enough foreign exchange so that when oil prices are low, it will be able to pay for necessary imports and to service its external debt, which stood at $24.7 billion in 2001.

The US Central Intelligence Agency (CIA) reports that in 2002 the purchasing power parity of Algeria's exports was $19.5 billion while imports totaled $10.6 billion resulting in a trade surplus of $8.9 billion.

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