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Ministry of Finance: Algerian economy records remarkable recovery

Algerian economy recorded a remarkable recovery during the first months of the current year through financial indicators that indicate a gradual economic recovery after the social and economic effects that marked 2020.

The circumstantial memorandum issued recently by the Ministry of Finance stressed that Algeria’s economic growth has witnessed a rise of +4.2% in 2021, while the Finance Law predicted +3.98%.

The document of the Ministry of Finance explained that this recovery “is related to the gradual return to economic activity, following the improvement of the health situation and the pandemic’s decline.”

According to the same source, this growth will be supported mainly by the improvement of the hydrocarbon sector, which is expected to reach 10.1 percent growth.

Therefore, the growth rate outside hydrocarbons is expected to reach +3.2 percent in the 2021Complementary Finance Law, compared to +2.4 percent set in the 2021 Finance Law.

As for the construction sector, it is expected to grow by +3.8 percent and commercial services by +3.6 percent in 2021.

In this regard, the ministry noted that the level of exchange reserves “witnessed during the month of May 2021 an upward trend,” a situation considered “unprecedented” and “not observed for several months.”

According to the ministry, the return of Algeria’s economic activity is reflected in the level of tax collections carried out by tax administration, with an increase of 9.5 percent to reach 807.65 billion DA at the end of April 2021 compared to the same period in 2020 (737.69 billion DA).

The ministry stated in this regard that the loans devoted to economy only by public banks amounted to an outstanding amount of more than 9711 billion DA at the end of March 2021 (an increase of 67 billion DA compared to the end of December 2020), of which 4,087 billion are allocated to the private sector.

The Ministry of Finance affirmed that “all this indicates the great effort made by the national banking sector to support the national economic sector to ensure a sustainable recovery.”

More exports, less imports

Meanwhile, Algeria’s trade balance deficit recorded a decrease of 68 percent during the first five (05) months of 2021, as it moved to -1.3 billion dollars at the end of May 2021, compared to 3.9 billion dollars at the end of May 2020, as confirmed by the document of the Ministry of Finance.

The same source added that the goal of achieving a significant increase in the country’s exports, especially those outside hydrocarbons, appears to be on the right track.

On the other hand, hydrocarbon exports increased by +32.7 percent during the first five months of this year, while exports outside hydrocarbons increased by +81.71 percent.

Consequently, trade coverage rate (for imports by exports) improved significantly to reach 92 percent at the end of 2021, compared to 72 percent at the end of May 2020.

Therefore, 2021 will witness a gradual return of economic activity in Algeria to levels that allow to “compensate” losses recorded in 2020 and reduce the imbalances in the state’s accounts, according to the statement of the Ministry of Finance.

To mitigate the social and economic effects of COVID-19 health crisis, the state has dedicated budget allocations for the 2021 fiscal year, amounting to approximately 530 billion DA, as the state succeeded in meeting the population’s needs in the field of income and social and health coverage, according to the ministry document.

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