Algeria is still struggling to reform after oil boom

May 23, 2006 02:00 AM

Algeria's economy is booming, billion-dollar developments are planned and oil and gas export revenues are soaring, but many Algerians are still unhappy about living conditions in the North African country.
Algeria's economic growth is expected to reach 5.8 % this year, and 8 % in 2008. Energy revenues in the OPEC member will likely go beyond $ 50 bn, up from $ 45.6 bn in 2005.

The statistics are impressive: foreign debt, estimated at $ 15.5 bn, is expected to shrink to $ 5 bn by the end of 2006; foreign exchange reserves are estimated at $ 63 bn, and the government last year launched a five-year economic development plan worth $ 80 bn to restore hope among the 33 mm inhabitants.
But hope is in short supply. Officials say unemployment was at 15.3 % in 2005, down from 17.7 % in 2004, and 23.7 % in 2003. Labour Minister Tayeb Louh said recently that the jobless rate will be less than 10 % in 2009.

This is posing an urgent and sensitive challenge to Africa's second largest country. Providing jobs and improving housing, health and education are key to stabilizing a society still reeling from a decade of violence in the 1990s.
One of Africa's most brutal conflicts, the struggle between security services and Islamist armed groups cost an estimated 200,000 lives and caused damage estimated at $ 20 bn. The violence was sparked when the military cancelled legislative elections in 1992 that a radical Islamic party was set to win. Anger at an unresponsive government, lack of jobs and poor provision of basic services helped boost support for militant Islamist groups.

Algeria is still struggling to reform after decades of central planning but corruption, red-tape and lack of transparency are obstacles to luring much-needed foreign investment and know-how.
Oil and gas account for around 97 % of export revenues. Algeria's oil output is estimated at 1.4 mm bpd, with plans to increase this to 2 mm bpd by 2010. Outside hydrocarbons, Algeria's exports -- at around $ 600 mm in 2005 -- are marginal.

Source: AP
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