Algeria’s economy grew by 2.2 percent in 2017, down from 3.3 percent the previous year, due to a decline in the performance of the energy sector, the central bank said in a document seen by Reuters.
It said inflation last year stood at 5.6 percent against 6.4 percent in 2016. The balance of payments deficit declined by $3 billion to $23.3 billion. Algeria, aiming to cut spending after a fall in energy earnings, last year tightened restrictions on imports, resulting in a $1 billion reduction in their total value.
But the country’s foreign exchange reserves declined by $16.8 billion to $97.3 billion in 2017, from $114.1 billion at the end of the previous year.
OPEC member Algeria relies heavily on oil and gas, which account for 60 percent of the budget and 95 percent of total export revenue. State finances have been hit by a fall in crude oil prices since mid-2014.
The North African nation’s energy sector grew by 7.7 percent in 2016 but its performance declined in 2017, the document said, without elaborating. Algeria aims for overall growth of 4 percent this year and expects the energy sector to grow by 6.5 percent, as it sees some oil and gas fields coming online before the end of 2018.
Last week, the International Monetary Fund (IMF) urged acceleration in economic diversification for the sake of overcoming the oil shock consequences. IMF recommended what might push towards reforms, which is gradual cut in the exchange rate and efforts to eliminate the parallel exchange market (black market).
The fund called on the central bank to remain ready to be strict regarding the monetary policy in case inflation pressures continued. It also advised the Algerian government to borrow in order to fund investments in the country and reinforce non-oil revenues.
In the beginning of March, official figures issued by the central bank showed that the monetary security value printed until November reached $20 billion in order to fill the deficit gap and pay of the government internal debt. Central Bank Governor Mohamed Loukal stated earlier that the Algerian foreign debt reached $3.85 billion.
