Algiers — The International Monetary Fund said that the efforts spent by the Algerian authorities in terms of reforms and budgetary consolidation must continue, noting that the external and budgetary margins allow the conduct of these reforms.
“Algeria has to cope with important challenges following the fall in oil prices, we expect will be lasting. To deal with it, Algeria needs to pursue the efforts in terms of reforms and budgetary consolidation,” said Jean-François Dauphin, Adviser at IMF Middle -East and Central Asia department during a news conference.
Dauphin leads an IMF mission to Algiers from 1st to 14 March, as part of the annual discussions led between the Bretton Woods Institution and the Member States.
A “sustained budgetary adjustment and large-scale structuring reforms are needed to reduce the weaknesses” of the Algerian economy, he suggested.
The fiscal and external margins accumulated by Algeria “enable it to progressively implement these reforms and absorb the adjustment impacts,” stressed the head of the mission.
He underlined that “the opportunity to rebuild the Algerian growth model must be seized now, before a more rapid adjustment becomes inevitable.”
To recover the viability of public expenses, the IMF advocates the control of the current expenditure and the improvement of the performance of capital expenditure it calls “much higher” than in the region.
Concerning the subsidies, Dauphin stressed that they should be targeted.
“The generalized subsidies benefit the richest households which have large consumption but they don’t benefit the poor ones.”
He deemed unbearable the fact that the subsidies of various products like energy exceeded in 2015, the double of expenses of national education and health sectors.
“These subsidies are counter-productive. A more targeted social action is more necessary,” he concluded.