IMF Policies for Algeria + Maghreb

As per Prof. O’Donnell’s request for class, I researched some articles concerning IMF policies in Algeria. I found one from 2005 that concerns Maghreb, and one in 2011 just for Algeria. I think there is a good link between the two so I wanted to review both.

IMF Macroeconomic Policy Seminar for Parliamentarians from Algeria, Libya, Morocco and Tunisia

11/30/05

This press release talks about the seminar in which IMF has a role in Maghreb’s macroeconomic policies. While there was a general consensus that the Maghreb region has excellent economic stability, there are still the issues of growing unemployment and the need for individual policy reforms with the guidance of IMF.

Algeria Should Reduce Reliance on Oil, Create More Jobs, Says IMF

1/26/11

This was an interview with Joël Toujas-Bernaté, the IMF’s mission chief for Algeria. He stresses the need for expansion in the Algerian private sector development and diversification of markets (especially outside of oil and gas). Relying solely on natural resources exports could backfire if the price of oil decreases (he references when this happened in the 80’s), and so he suggested an increase in agriculture, including financial support, in order to cut taxiation on basic food items.  He also discussed that youth unemployment is high, many of which are university graduates, so there is a push for vocational training.

Both of these articles addresses the need for policy reforms which reduce imports and taxes, diversify the economy with other exports and job sectors and increases trade and domestic and foreign investment in the country. With this combination, Algeria will have more fields available for eligible workers (thus decreasing unemployment), less taxiation to burden the poor and not risk an economic recession. Of course, this all sounds good in theory, but will Algeria take these steps? I hope so, of course, and this interview was just with the beginning of the Arab Spring. What happened in Tunisia, Egypt and Libya (and this is just their close neighbors) could very well explode in Algeria when, at least, the urban and suburban population is fed up with living in more expensive conditions and creating a bigger gap in the classes. The report in 2005 was a warning for the Maghreb, and the interview in 2011 is the aftermath.

Of course, if we take a look at my previous post, outlining some statistics in Algeria via the World Bank, the country has done well since the recession. But the government can’t rely on oil alone to solve the policy issues.

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