Algeria

Algeria continues to deal with the implications of lower oil prices for an economy that is highly dependent on hydrocarbons. Lower hydrocarbon revenues have led to large current account and fiscal deficits, a steep decline in international reserves (although they remain high), and a near depletion of fiscal savings in the oil stabilization fund. After a timid start, reform momentum is building. Last year, the authorities achieved a sizeable reduction in the fiscal deficit. They have adopted, for the first time, a medium-term budget framework that envisages ambitious fiscal consolidation. They have implemented some structural reforms and are working on a long-term strategy to reshape the country’s growth model. The central bank is adapting to changing liquidity conditions by reintroducing refinancing instruments.