Algeria Project

8/7/2019 Algeria Project

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SPECIALIZED FINANCIAL INSTITUTION SYSTEM

Country: Algeria

Submitted By: ALI SARWAR

Roll Number: 448

Section: G-MORNING

Semester: 7 th

Submitted To: Prof M.AKRAM

HAILEY COLLEGE OF COMMERCEUNIVERSITY OF THE PUNJAB

LAHORE


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ALGERIASPECIALIZED FINANCIALINTITUTIONS SYSTEM

Table of contents:

Overview of the CountryBasic InformationDemographic DataEconomic StatisticsLanguagesAlgerian Currency

List of Specialized Financial InstitutionsBanksInsuranceOther

Current Financial SystemCentral Bank and its RoleSpecialized Financial Institutions and their ExplanationsCurrent Financial Crises

Overview of the Country:


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Basic Information:

After more than a century of rule by France, Algerians fought through much of the1950sto achieve independence in 1962. Algeria's primary political party, the NationalLiberation Front (FLN), has dominated politics ever since. Many Algerians in thesubsequent generation were not satisfied, however, and moved to counter the FLN'scentrality in Algerian politics. The surprising first round success of the Islamic SalvationFront (FIS) in the December 1991 balloting spurred the Algerian army to intervene andpostpone the second round of elections to prevent what the secular elite feared would bean extremist led government from assuming power. The army began a crackdown on theFIS that spurred FIS supporters to begin attacking government targets. The governmentlater allowed elections featuring pro government and moderate religious based parties,

but did not appease the activists who progressively widened their attacks. The fightingescalated into an insurgency, which was intensified from 1992 98 resulting in over100,000 deaths many attributed to indiscriminate massacres of villagers by extremists.The government gained the upper hand by the late 1990s and FIS's armed wing, theIslamic Salvation Army, disbanded in January 2000. However, small numbers of armedmilitants persist in confronting government forces and conducting ambushes andoccasional attacks on villages.

The army placed Abdelaziz BOUTEFLIKA in the presidency in 1999 in a fraudulentelection but claimed neutrality in his 2004 landslide reelection victory. Longstandingproblems continue to face BOUTEFLIKA in his second term, including large scaleunemployment, a shortage of housing, unreliable electrical and water supplies,government inefficiencies and corruption, and the continuing activities of extremistmilitants. The Salafist Group for Preaching and Combat (GSPC) in 2006 merged with al Qaida to form al Qaida in the Lands of the Islamic Maghreb, which has since launchedan ongoing series of kidnappings and bombings including high profile, mass casualtysuicide attacks targeted against the Algerian government and Western interests Algeriamust also diversify its petroleum based economy, which has yielded a large cash reservebut which has not been used to redress Algeria's many social and infrastructure problems.

Demographic Data:

Population:33,769,668 (July 2008 est. )


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Age structure:014 years: 26.3% (male 4,528,919/female 4,349,746)1564 years: 68.7% (male 11,699,701/female 11,509,619)65 years and over: 5% (male 779,467/female 902,217) (2008 est.)

Median Age:Total: 26 yearsMale: 25.8 yearsFemale: 26.2 years (2008 est.)

Ethnic groups:Arab Berber 99%, European less than 1%

Note: almost all Algerians are Berber in origin, not Arab; the minority who identify

themselves as Berber live mostly in the mountainous region of Kabylie east of Algiers;the Berbers are also Muslim but identify with their Berber rather than Arab culturalheritage; Berbers have long agitated, sometimes violently, for autonomy; the governmentis unlikely to grant autonomy but has offered to begin sponsoring teaching Berberlanguage in schools.

Religion:Sunni Muslim (state religion) 99%, Christian and Jewish 1%

Economic Statistics: GDP and GDP per head:GDP (purchasing power parity): $240.2 billion (2008 est.)GDP (official exchange rate): $171.3 billion (2008 est.)GDP real growth rate: 3.4% (2008 est.)GDP per capita (PPP): $7,100 (2008 est.)

GDP by sector:Agriculture: 8.1%

Industry: 62.5%Services: 29.4% (2008 est.)

Hydrocarbons industry represents 60% of budget revenues, 30% of GDP, and over 95%of export earnings.

Unemployment rate : 12.9% (2008 est.)Inflation rate (consumer price): 3.6% (2008 est.)


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GDP real growth : 3.4% (2008 est.).

Gold reserves : 173.6 Tons (3.6% gold share of total forex reserves)

Languages

Arabic is spoken as a native language by more than 75% of the population; of these, over 65% speak Algerian Arabic and around 10% Hassaniya. Algerian Arabic is spoken as asecond language by many Berbers. However, in the media and on official occasions thespoken language is Standard Arabic.

The Berbers (or Imazighen) speak one of the various dialects of Tamazight, which add upto around 25% of the population. Arabic remains Algeria's only official language,although Tamazight has recently been recognized as a national language.

French is the most widely studied foreign language in the country, and the great majorityof Algerians speak it fluently, though it is usually not spoken in daily circumstances.Since independence, the government has pursued a policy of linguistic Arabization of education and bureaucracy, with some success, although many university coursescontinue to be taught in French. Recently, schools have started to incorporate French intothe curriculum as early as children start to learn Arabic. French is also used in media andcommerce.

Currency

Etymology

The name "dinar" is ultimately derived from the Roman denarius.

History

The dinar was introduced in 1964, replacing the Algerian new franc at par.

Coins

In 1964, coins in denominations of 1, 2, 5, 10, 20 and 50 santeem, and 1 dinar wereintroduced, with the 1, 2 and 5 santeem struck in aluminum, the 10, 20 and 50 santeem inaluminum bronze and the 1 dinar in cupro-nickel. The obverses showed the emblem of Algeria, while the reverses carried the values in Eastern Arabic numerals. In later


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decades, coins were issued sporadically with various commemorative subjects. However,the 1 and 2 santeem were not struck again, whilst the 5, 10 and 20 santeem were laststruck in the 1980s.

In 1992, a new series of coins was introduced consisting of , , 1, 2, 5, 10, 20, 50 and

100 dinar. The 10, 20, 50 and 100 dinar coins are bimetallic.Coins in general circulation are 5 dinar and higher. Following the massive inflation whichaccompanied the slow transition to a more capitalist economy during the late 1990s, thesanteem and fractional dinar coins have dropped out of general circulation, whilst the 1and 2 dinar coins are rarely used. Nonetheless, prices are typically quoted in santeem ineveryday speech; thus a price of 100 dinar is read as ("ten thousand").

Banknotes

The first series of dinar banknotes issued in 1964 consisted of 5, 10, 50 and 100 dinar denominations. In 1970 500 dinar notes were added, followed by 1000 dinar in 1992.

The 100 dinar note is being replaced by coins. 200, 500, and 1000 dinar notes are incirculation. The 1998 dated 500 and 1000 dinar notes have an additional verticalholographic strip on obverse.

Algerian dinar

Old 200 dinar banknote.

Current Exchange Rates:
http://en.wikipedia.org/wiki/File:200dzd2.jpg


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Saturday, January 9, 2010

1 US Dollar = 74.09713 Algerian Dinar 1 Algerian Dinar (DZD) = 0.01350 US Dollar (USD)

1 Euro = 106.211 Algerian Dinar 1 Algerian Dinar (DZD) = 0.009415 Euro (EUR)

1 Pakistan Rupee = 0.88283 Algerian Dinar 1 Algerian Dinar (DZD) = 1.13272 Pakistan Rupee (PKR)

List of Specialized FinancialInstitutions:

Banks

Banque Algrienne de Dveloppement

Banque De Dveloppement Local BDL

Banque de l'Agriculture et du Dveloppement Rural

BANQUE DU MAGHREB ARABE POUR L'INVESTISSEMENT ERLE COMMERCE

Caisse Nationale D'Epargne et de Prvoyance Algerienne -CNEP Banque

The Housing Bank for Trade and Finance-Algeria

Arab Banking Corporation (ABC corporation)

Insurance


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CAAT - Compagnie Algrienne des Assurances

Caisse Nationale De Mutualite Agricole (CNMA)

Compagnie Internationale d'Assurance et de Rassurance -CIAR

Gnrale Assurance Mditerranenne - GAM

Cardif (Algrie)

Other

Arab Leasing Corporation

BNP Paribas Lease Group El Djazair

Maghreb Leasing

Current Financial System:The Algerian financial system is organized in three sectors: banking, insurance and thecapital markets.

The Banking sector consists of 17 commercial banks; seven are public and theremaining 10 are private. In addition, there are seven financial institutions for leasing andcredit; one specialized bank, the Algerian Development Bank; and seven representativeoffices of foreign banks. The sector is regulated by the Bank of Algeria.

Private Banks have been present in Algeria since the late 1990s, but public banks stilldominate the sector, accounting for more than 94 % of deposits and about 93 percent of credits in 2005.

The Algerian banking system was officially liberalized in the 1990s, with thepromulgation of laws on money and credit. There has been an urgent need to modernizethe sector for some time. Recent efforts have focused mainly on updating the inter bank payments system and bank surveillance. With the new liquidity from the rapidlydeveloping economy, Algerian banks have increased their financing activities. Marketpotential has also attracted a number of large foreign players.


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However, Algerian banks still face some challenges. Banking activity remains quitesmall, with low deposit rates and just 1,278 bank branches or one per 26,200 people.Credit represented only 22.7 % of GDP in 2006, compared to more than 60% inneighboring countries (such as Tunisia and Morocco).

The Insurance sector is organized and regulated by the Ministry of Finance (or morespecifically by Le Conseil National des Assurances). It covers three types of insuranceactivity: direct insurance, international reinsurance and specialized insurance. There arecurrently 16 players operating in the sector. Twelve companies, four of which are stateowned, specialize in direct insurance. Three companies provide specialized insuranceservices, one of which provides coverage for mortgage loans risk. All specializedinsurance companies are relatively new to the market. There is only one companyproviding reinsurance services in Algeria and one company providing mortgageinsurance.

The insurance sector is dominated by the three old state owned companies (CAAR,

CAAT and SAA), which accounted for 66 % of premium revenues in 2003. The marketshare of new companies has been growing steadily in recent years. At the end of 2003,the direct insurance companies collectively ran 691 branches, 64 % of which belonged tothe four state owned insurance companies.

The new insurance law opens the doors for insurance companies to distribute their products by way of other outlet, mainly through commercialization via the banks.

The Capital Markets in Algeria are still underdeveloped and dominated by the bondmarket with 30 debt securities issued since 2003 totaling about 2.1 billion US$. The bondmarket has been more successful in recent years than the stock market. Perhaps the most

interesting development of 2006 was the first issue of a private corporate bond by Capitaland Arab Leasing Company (ALC). Capital is one of the largest private firms in Algeriaas well as a leader in the private sector. Capital raised 5 bn AD ($705 million) in capital,with a 2.93 bn AD (400 million) retractable bond (a bond with a put option) maturing in2011 and 2.07bn AD ($290 million) retractable bond due to reach maturity in 2012.

The six year bond has a 3.75% coupon with an average yield of 3.67%, and 100.34%average price on bidding. Similarly, the seven-year bond has a 4% coupon with anaverage yield of 3.8%, and 101.05% average price on bidding. Both of the bonds arebacked by mortgages.

Assets(inAlgerianDinar)

Share of totalAsset(%)

Share ofGDP (%)

Banks 3231.8 92.8 75.7Public Banks 2903.2 83.4 68.0


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Private Banks 328.6 9.4 7.7Insurance 96.0 2.8 2.2FinancialInstitutions(others)

153.0 4.4 3.6

Total 3480.8 100.0 81.5

Financial System Structure andSoundness:The Algerian financial system is dominated by the banking sector whichaccounts for 93 percent of total financial system assets . Public banks continue to overwhelm the system, representing 90 percent of totalbanking assets, although their share in the extension of credit to the private sector is muchlower at 74 percent. Insurance companies account for less than 3 percent of total financialsystem assets.

The performance and soundness of Algerias banks are distorted byPervasive state support and forbearance .

Bank credit is 34 percent of GDP (60 percent of non-oil GDP), of which 80percent by public banks. Private Banks accounted for 26 percent of credit to the privatesector before the failure of the largest private bank in 2003. Following its failure (itoffered attractive deposit rates to fund related parties), retail depositors have becomeaware of risk and shifted deposits to public and foreign banks. A second small bank wasalso closed in 2003.

Public banks losses have on average represented over 4 percent of GDP eachyear from 1991 to 2002 . The reported budget was almost balanced, on average, over the same period.Financial restructuring of banks and SOEs has occurred in three off-budget rounds in199194, 199598, and 2001 (which was to be the final round and which brought theaverage reported capital ratio to 14 percent). However, a Bank of Algeria (BA) audit of large exposures at end-2002 revealed that public banks require additional injections tomaintain their capital ratios.

Fixed-income and money markets are in their infancy.Bonds swapped for SOE loans represent 90 percent of Treasury domestic debt,

but these bonds were not designed for trading. Treasury also issues a few tradable series(2.5 percent of GDP) of short duration; yields beyond two years have little meaningbecause primary amounts remain symbolic. Securities are held to maturity. BA usesrefinancing ceilings for each bank when injecting liquidity and deposit auctions whenabsorbing. The reference rate is currently BAs deposit rate. As concerns offshore yields,


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Algeria represented 0.24 percent of the emerging market bond index and whatever debt istradable has virtually no liquidity.

The insurance sector is insignificant; life insurance is not yet regulated .Insurance, liberalized in 1995, comprises six state-owned, two mutual, and six

small private insurers, and one state-owned reinsurer. External reinsurance is withreputable Firms. Premiums are 0.5 percent of GDP. Non- life insurance accounts for 99percent of total premiums. With the exception of the automobile branch that suffers fromhigh expense ratios, lines are profitable and the sector meets local prudentialrequirements.

Institutional and informational (accounting) underpinnings for bringingcompanies to the equity market are absent Trading is almost nonexistent on the three listed stocks. The SurveillanceCommission (COSOB), an independent authority, has expended major efforts since 1993to develop the market. Brokers have been licensed and a central depositary created, but

highly opaque financial information, banks inability to provide investors withinformation, and small institutional investors prevent issuance.

The value of Algerias housing deficit is estimated at 25 percent of GDP, yethousing loans to households represent barely 1.5 percent of GDP. Private houses are built on family funds, implying slow uneven completion.Multi- family units, generally developed by municipalities, are financed by the state-owned thrift, CNEP. Starting in 1996, tenants have been allowed to purchase apartments,including through financing from commercial banks. However, CNEPs 2002 portfoliostill accounted for 97 percent of housing finance.

Microfinance is undevelopedWith only a few programs based on government run social services. The design of

existing instruments is inconsistent with international best practices. Rates of return havebeen disappointing, loan authorization takes 312 months, and the rejection rate is 96percent.

Central Bank : Bank of Algeria

Bank of Algeria is government owned . The organization of the bank includes the Conseilde la Monnaie et du Crdit, the Commission Bancaire (Banking Commission) and theBank of Algeria itself.

Current Governor: Mohammed Laksaci

Role of Central Bank:


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The Central Bank of Algeria was established in January 1963 , to replace the ColonialBank of Algeria and act as the government's agent in financial transactions, currencyissue, and other central bank functions. In 1971 the Central Bank assumed the role of supervising the country's three major commercial banks, the most important of which was

the National Bank of Algeria (Banque Nationale d'Algrie), which served both the privateand public sectors and held the bulk of total bank deposits. The other two, the ForeignBank of Algeria (Banque Extrieure d'Algrie) and the Popular Credit of Algeria (CrditPopulaire d'Algrie) were more sector oriented, with the former handling energy andforeign trade and the latter financing smaller sectors.

The Bank of Algeria is responsible for enforcing current legislation, which it implementsdirectly or by delegation of the Banking Commission for ongoing supervision of banksand financial institutions. The Bank of Algeria is responsible for on- and off-sitesupervision on behalf of the Banking Commission. The value of the Algerian Dinar is determined in the interbank foreign exchange marketwhere the central bank (Bank of Algeria) is the main buyer and seller. The Bank of Algeria regulates the foreign exchange market according to the foreign exchange policydecided by the Council and in compliance with Algerias international commitments. Thedinar cannot be subject to multiple exchange rates. The Bank of Algeria is responsible forregulating the money supply, directing and supervising the distribution of credit,supervising the proper management of financial commitments with regards to foreigncountries and regulating the foreign exchange market. The Bank establishes the normsthat each and every bank must conform to such as the liquidity ratios, the authorized useof banks' funds or risk management.

Specialized FinancialInstitutions and theirExplanations:

Arab Leasing Corporation:


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Share Capital

The Share Capital of ALC is 758 000 000 DA

ShareholdersABC ALGERIA 34%

The Arab Investment Company (TAIC) 25%

CNEP Bank 20%

Socit Financire Internationale [International Financial Company] 7%

DIGIMEX 9%

ALGEMATCO 5%

Board of Directors M. Mohamed ASHOKRI ChairmanM. Djamel BESSA Deputy Chairman

Administrator

M. Mohamed El Amine DIDI Administrator

M. Mostapha ZIAD EL ARFAOUI Administrator

M. Rachid ATMANI Administrator

M. Nadir IDIR Administrator

Audit Committee M. Djamel BESSA Chairman

M. Mostapha ZIAD EL ARFAOUI Member

M. Mohamed El Amine DIDI Member

Risk Committee Chairman

M. Nadir IDIR Member


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M. Rachid ATMANI Member

Head Offices

Chemin Ahmed OUAKED Dely Ibrahim Alger Algrie

About

Arab Leasing Corporation (LAC) with capital of 758 million Algerian dinars is the firstleasing company to settle in Algeria. Its purpose is to participate in the movement of economic development in Algeria by providing new tools and simple financing tailoredto their requirements.

ALC was founded in October 2001 , by shareholders following institutions:

ABC-Algeria: 34% T.A.I.C: 25% PSC / Bank: 20% SFI : 7% DIGIMEX: 9% ALGEMATCO: 5%

Strategy

Arab Leasing Corporation (LAC) is the first private company to be approved Leasing inAlgeria in 2002.

The leasing market in Algeria is sufficiently large and attractive. SCA is the referenceinstitution for leasing. His ambition is to remain a market leader in open and highlycompetitive.

The LAC strategy is based on proximity to its customers a comprehensive service andoffer a cost advantage Release (1%).

CLA works to set international standards by working continuously to improve itsorganization and support its development.

Values

ALC's vision took shape as "To be and remain the Algerian leader in our profession" OnLeasing ".

The values of LAC can be summarized:


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The permanent satisfaction of our customers; The trust established with our partners; The enhancement of skills and dynamism of our human resources; Continuous improvement of working conditions and processes; Participation in the development of legal, tax and customs governing the leasing

operations; The contribution to the development of Algerian companies, the implementation of financing medium and long term in the context of economic and financial policy inAlgeria.

Quality

Certification ISO 9001/2000 is not an end in itself. It expresses through the procedures,techniques and methods of evaluation, a management culture of the company.

The foundation of this culture of enterprise management is total quality in the sense thatthe company will aim at all of its compartments and all its functions to maximizeefficiency, which is not limited to measuring results Financial.

In various areas of activity including that of leasing, controlling the internal managementbecomes a comparative advantage as important as interest rates.

This philosophy that fully supports CLA is the reason which led our society to join in thisprocess.

CLA is proud to be the first financial institution to be Algerian certified ISO 9001/2000.

The advantages of leasing ALC

- Leasing can finance medium-term investments without affecting the capacity of debt `sbusiness and is not recorded in balance sheet assets;- Leasing involves rents that are deductible from taxable income is a way of accelerateddepreciation of investment and to gain tax, thus it presents a major tax advantage;- Leasing avoids strong fundraising company minimizing the impact on its cash;- Rents are fixed throughout the contract period, they allow you to manage simple andserene, they do not run after delivery of equipment;- The Leasing allows a considerable gain from the sale of equipment on the secondarymarket;- LAC gives the customer the freedom of choice of equipment and supplier;- LAC supports all business operations and logistics with suppliers selected by thecustomer and what, until delivery;- LAC offers a choice of the periodicity of the lease period will be between 18.24, 30, 36and 48 months.


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Arab Banking(ABC) Corporation:

About

BackgroundArab Banking Corporation Algeria (ABC Bank) is a subsidiary of Arab BankingCorporation, Bahrain.

The Bank was among the first international private bank to be authorized to operate under Algerian legislation by an official decision of the 'Conseil de la Monnaie et du Crdit dela Banque d'Algrie' (Council of Currency and Credit of the Central Bank of Algeria) inSeptember 1998.

ABC Bank began trading on 2nd December 1998, opening its main branch in Bir MouradRais, Algiers.

The bank's initial capital of 1.183 million DZD was increased to 2.670 million DZD in2000 in order to improve shareholder equity, to enable the bank to increase itscommitments and financial capabilities and to meet customer requirements.

As part of its initiative to enhance the quality of services offered to clients, the bank hasintroduced a state-of-the-art IT system and intends to offer additional innovative productsto its growing customer base on an ongoing basis.

Vision

Arab Banking Corporation Algeria has a vision to improve continuously theposition of the Bank within the Algerian Banking Sector and to contribute to thedevelopment of the countrys economy.

Mission

Assure to the shareholders an efficient growth and well calculated premium andprofits on the nominal value of the share, taking advantage in this, from the ArabBanking Corporation entity and to satisfy the diversified clientele.


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Objectives

To leverage ABC's international network for the benefit of its clients.

To provide high quality, personalized banking services to both public and privatesector clients.

To develop innovative services for customers, such as 'Perlon', a customisedpersonal loan service.

To advise and assist customers in building their investment portfolios andprovide financing, where necessary.

To offer comprehensive support for clients' foreign trade operations .

To build ABC Bank into the country's leading financial institution and toparticipate in the development of the Algerian economy.

The combination of a supportive principal shareholder, the application of a well-honedand focused business strategy, the effective mobilisation of the bank's various businessesand a dedicated team of employees, means that ABC Bank is well placed to achievefurther success and continued growth.


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Management

Board of Directors


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M. Mohamed ASHOKRI, Chairman

M. Sadek EL KABER, Vice President

M. Souheil BADRO, Member

M. Fehmi HANNACHI, Member

M. Mohamed Al-Amine DIDI, Member

M. Brahim Djamel KASSALI, Member

M. Osama FARAG, Member

Mm. Nabila BRAHIMI-TALEB , Secretary

Subsidiairy Board Risk Committee ( S B R C )

M. Souheil BADRO President

M. Vijay Srivastava (Representative of ABC BSC Bahrain) Member M. Brahim Djamel KASSALI Member

M. Fehmi HANNACHI Member

AGM Credit Secretary


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Audit Committee

M. Saddek Omar EL KABER President

M. Fehmi HANNACHI Member M. Brahim Djamel KASSALI Member

Head of Internal Audit

Compensation Committee

M. Souheil BADRO President

M. Osama FARAG Member M. Mohamed Al-Amine DIDI Member

Head of Human Ressources Secretary

Corporate Governance Committee

M. Saddek Omar EL KABER President

M. Ossama FARAG Member M. Mohamed Al-Amine DIDI Member

M. Nadir Idir Deputy Chief Executive Officer Secretary

External Audit

M. Samir HADJ ALIM. Amine ZERHOUNI

Head Office and Branches


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Head Office: 54, Avenue des Trois Frres BOUADOU, Alger, AlgrieBranches: 13

Financial Crisis:US Financial crisis to have bad impact on Algerian

economy in medium term

The U.S financial crisis will have a bad impact on the Algerian economy in the mediumterm, said the Minister of Energy and Mines, Mr. Chakib Khelil. He further indicated thatthe Algerian oil incomes will be maintained at $80 billions during the ongoing year, evenif the oil prices will keep dropping because of the financial crisis hitting the States.

According to Mr. Khelil, who paid a visit yesterday to the central province Tipaza, theslumping oil prices in the world market, are owed to the current recession characterizingthe US, and European economy, as well as the US financial crisis, which led to thedecline of the international demand on oil. This crisis will not have direct repercussionson the Algerian economy, immediately, because both Algerian, and US economies arelinked only by oil exports.In this context, the same speaker added that the Algerian exchange reserves will bemaintained at $137 billions, so the major projects launched by the Government, will notbe affected by the US financial crisis as the incomes of Algeria, will reach $80 billions bylate this year.Still, the Chairman of the Organization of Petroleum Exporting Countries, OPEC, saidthe European economy will be seriously affected by the crisis, while it is not clear, yet,whether the Chinese economy will be affected, because oil prices could not be predictedin 2009. Such an issue will be addressed during the OPEC meeting scheduled nextDecember in the Algerian western province Oran.

Algerian government reassures people onfinancial stability

The Algerian government has taken pains to assure the public that the world's currenteconomic crisis will not hit the country because officials have an effective financialstrategy in place, but economic experts remain sceptical.

Prime Minister Ahmed Ouyahia emphasised the issue during a cabinet meeting onTuesday (October 7th).


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"The Algerian economic and financial system is sheltered... from the financial crisis,"Ouyahia said, "because our system has not evolved and our stock market is not fullyintegrated into the world financial markets."

Calling the Algerian economy "a little behind", Ouyahia explained that its relationship

with the world economy is based primarily on the export of hydrocarbons. However, hedid not dismiss the possibility that Algeria may be affected by this crisis in the future.

Governor of the Banque dAlgrie, Mohamed Laksaci, spoke to parliament this week andreassured them on the same issue.

"Although the Algerian economy is having to face certain external impacts inherent in theinternational financial crisis," Laksaci said, "Algeria's early payment of its external debtshas spared the country." This means Algeria did not face increased interest rates or aliquidity crisis.

According to Laksaci, unpublished analysis by the World Bank estimates that countriesin the Maghreb have not seen inflation run as high as in other countries.

Three causes could lead the crisis to hit Algeria, Laksaci said: falling returns on Algeria'sinvestments in the case of a recession, a reduction of worldwide market rates and apossible downturn in the oil market.

Finance Minister Karim Djoudi and Energy Minister Chakib Khelil made similar promises to Algerians last Saturday, claiming the global crisis will have no effect on thecountry's economy.

"I dont think a country like Algeria, with a foreign currency reserve of more than 130billion dollars, will be affected by this crisis," Khelil said Saturday.

Because of the governments financial strategy, Djoudi said, "we have protection inplace."

Nevertheless, Algerian financial experts warned of a possible sudden impact on theeconomy.

"The fact that we do not have a modern financial market with a developed share market,and we do not have a developed, modern banking system which is perfectly integrated

into the world economy, is no reason to celebrate," said Lachemi Siagh, an internationalfinance expert.

"The crisis will generate a general slow-down in the worlds economy and a resulting fallin demand for energy and therefore in prices."

Siagh said that if the crisis is poorly handled, oil prices could drop below $50 a barrel,which in turn would cause a reduction in investment programmes in every field.


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"We must therefore think seriously about this crisis," Siagh said, "and work out somestrategies even if we are not directly affected if the plane crashes, everyone dies."

Former Finance Minister and economist Mourad Benachenhou rejected the idea thatAlgeria is safe from the crisis.

"The financial cataclysm is in fact only just beginning," he said. "No one can predict howthe crisis will develop."

Benachenhou said that more than 80% of Algeria's imports come from countries thattrade in currencies other than the American dollar, and as the dollar continues to losevalue, Algeria is going to feel the effect on its economy.

"I'm not sure that Algeria is protected against the disastrous effects of this crisis," said 25-year-old Souhil. He thought Algerian economy will eventually feel the impact.

Karima, in her thirties, also believes the financial crisis will come to Algeria sooner or later. "Algeria is not on another planet," she said. "Algerian authorities must work out asolution to minimise the damage."

Algeria's economy insulated from globalfinancial crisis

Algeria will not be significantly affected by the world financial crisis but should adoptflexible economic policy to offset a drop in oil revenues, IMF official Joel Toujas-

Bernate was quoted by Reuters as saying Saturday (November 15th) in Algiers. The IMFhas encouraged Algeria to reduce its reliance on hydrocarbon production and diversify itseconomy.

In related news, Algeria aims "to become an international energy operator", EnergyMinister and OPEC President Chakib Khelil said Saturday in his opening address to the4th Algeria Energy Week in Algiers, APS reported. More than 1,700 exhibitors and 240companies from 35 countries will attend three major events through November 19th: the4th Algeria Oil & Gas Exhibition, the sixth International Strategic Conference oninvestment opportunities in Algeria's energy sector and Sonatrach's "Scientific andTechnical Days" forum.

Refrences:

http://findarticles.com/p/articles/mi_qa5441/is_200803/ai_n27899408/ http://workmall.com/wfb2001/ http://fic.wharton.upenn.edu/fic/africa/Algeria.pdf .
http://findarticles.com/p/articles/mi_qa5441/is_200803/ai_n27899408/http://findarticles.com/p/articles/mi_qa5441/is_200803/ai_n27899408/http://workmall.com/wfb2001/http://workmall.com/wfb2001/http://fic.wharton.upenn.edu/fic/africa/Algeria.pdfhttp://fic.wharton.upenn.edu/fic/africa/Algeria.pdfhttp://fic.wharton.upenn.edu/fic/africa/Algeria.pdfhttp://findarticles.com/p/articles/mi_qa5441/is_200803/ai_n27899408/http://workmall.com/wfb2001/http://fic.wharton.upenn.edu/fic/africa/Algeria.pdf


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http://en.wikipedia.org/wiki/Algerian_dinar http://www.efma.com/index.php/efma_observatory/financial_institutions/index/E

N/3/149/240 http://www.algeria-watch.org/en/articles/2008/financial_crisis.htm http://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/newsbriefs/

general/2008/11/16/newsbrief-06 http://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/features/200

8/10/10/feature-01 http://www.arabbanking.com.dz/en/index.asp http://www.arableasing-dz.com/ http://www.bank-of-algeria.dz/ www.wikipedia.com
http://en.wikipedia.org/wiki/Algerian_dinarhttp://en.wikipedia.org/wiki/Algerian_dinarhttp://www.efma.com/index.php/efma_observatory/financial_institutions/index/EN/3/149/240http://www.efma.com/index.php/efma_observatory/financial_institutions/index/EN/3/149/240http://www.efma.com/index.php/efma_observatory/financial_institutions/index/EN/3/149/240http://www.algeria-watch.org/en/articles/2008/financial_crisis.htmhttp://www.algeria-watch.org/en/articles/2008/financial_crisis.htmhttp://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/newsbriefs/general/2008/11/16/newsbrief-06http://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/newsbriefs/general/2008/11/16/newsbrief-06http://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/newsbriefs/general/2008/11/16/newsbrief-06http://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/features/2008/10/10/feature-01http://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/features/2008/10/10/feature-01http://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/features/2008/10/10/feature-01http://www.arabbanking.com.dz/en/index.asphttp://www.arabbanking.com.dz/en/index.asphttp://www.arableasing-dz.com/http://www.arableasing-dz.com/http://www.bank-of-algeria.dz/http://www.bank-of-algeria.dz/http://www.wikipedia.com/http://www.wikipedia.com/http://en.wikipedia.org/wiki/Algerian_dinarhttp://www.efma.com/index.php/efma_observatory/financial_institutions/index/EN/3/149/240http://www.efma.com/index.php/efma_observatory/financial_institutions/index/EN/3/149/240http://www.algeria-watch.org/en/articles/2008/financial_crisis.htmhttp://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/newsbriefs/general/2008/11/16/newsbrief-06http://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/newsbriefs/general/2008/11/16/newsbrief-06http://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/features/2008/10/10/feature-01http://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/features/2008/10/10/feature-01http://www.arabbanking.com.dz/en/index.asphttp://www.arableasing-dz.com/http://www.bank-of-algeria.dz/http://www.wikipedia.com/

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Algeria Project