ALGERIA ECONOMIC MONITOR Accelerating Reforms to Protect the Algerian Economy Spring 2021 Middle East and North Africa Region Algeria Economic Monitor Accelerating Reforms to Protect the Algerian Economy Spring 2021 ALGÉRIE MONITE ÉCONOM Middle East and North Africa Region Traverser © 2021 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. 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TABLE OF CONTENTS List of Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Résumé analytique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii ٍ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv ‫فاو صخلم‬ Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Chapter 1: Recent Economic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Economic Growth and Labor Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Public Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Money and Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 External Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Chapter 2: Economic Outlook and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Chapter 3: COVID-19’s Effects on Inequality in MENA and Algeria . . . . . . . . . . . . . . . . . . . . . . . .21 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Why Inequality Increases Due to COVID-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Evidence from the MENA Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 The Impact of COVID-19 on Inequality in Algeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 The Protracted Effects on Inequality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Chapter 4: Towards an Equitable Reform of Algeria’s Health System . . . . . . . . . . . . . . . . . . . . . .29 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Health Outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Health System Organization and Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Health Financing System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Data appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 iii List of figures Figure 1  Global Hydrocarbon Demand and Prices Recovered at End-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Figure 2  The Number of COVID-19 Cases Peaked in November 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Figure 3 Activity Partially Recovered in S2-2020… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Figure 4  …While the Number of Jobseekers Has Surged . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Figure 5  Falling OPEC Quotas Brought Crude Oil Output Down… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Figure 6  …While Natural Gas Production Has Surged at End-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Figure 7  The Overall Budget Deficit Increased in 2020… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Figure 8  …As Revenues Fell and Spending Increased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Figure 9  Leftover Monetary Financing Bridged Financing Needs in 2020… . . . . . . . . . . . . . . . . . . . . . . . . . .10 Figure 10 …as Oil and Treasury Savings Were Exhausted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 11 Banking Liquidity Fell Again as the Crisis Unfolded... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 12 …and Was Again Accompanied by a Slowdown in Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 13 The Algerian Dinar Depreciated Markedly in 2020… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Figure 14 …and Inflation Edged Up in Early 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 15 The Current Account Deficit Gradually Deepened… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 16 …and Imports of Machinery and Equipment Fell Drastically . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Figure 17 Mobile Connectivity Index, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Figure 18 Average Download Speeds Are Lower in Algeria… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Figure 19 Internet Access at Home is Highly Unequal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Figure 20 Probability of Declaring a Deterioration in Living Standards, as Compared to the Month Before The Interview, Tunisia (2020) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Figure 21 Portion of Respondents to High Frequency Phone Surveys Receiving Support from Public cash transfer Programs Following COVID-19 by Consumption Quintile . . . . . . . . . . . . . . . 23 Figure 22 Access to Home-Based Internet and PC by Welfare Quintile, % of Individuals, 2019 . . . . . . . . . . 25 Figure 23 Highest Educational Attainment by Quintile, % of Adult Individuals, 2019 . . . . . . . . . . . . . . . . . . . 25 Figure 24 Average Number of Persons Per Room by Welfare Quintile, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Figure 25 Living Conditions of Households by Welfare Quintile, % of Households, 2019 . . . . . . . . . . . . . . . . 26 Figure 26 Yearly Increase in the Number of Jobseekers, Per Skill Level (% Growth) . . . . . . . . . . . . . . . . . . . 26 Figure 27 Type of Employment by Asset Index Quintile, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Figure 28 Employed Population Distribution by Sector and Gender, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Figure 29 Labor Force Status by Gender, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Figure 30 Top Causes of Death in Algeria, 2009–2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Figure 31 Top Risk Factors for Death and Disability in Algeria, 2009–2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Figure 32 Life Expectancy Versus GDP Per Capita, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Figure 33 Life Expectancy at Birth Versus Current Health Expenditure Per Capita, 2017 . . . . . . . . . . . . . . . . 32 Figure 34 Total Fertility Rate Versus GDP Per Capita, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Figure 35 Evolution of Total Fertility Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Figure 36 Adolescent Fertility Rate and GDP Per Capita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 37 Distribution of Adolescent Fertility by Socioeconomic Characteristics . . . . . . . . . . . . . . . . . . . . . . .33 Figure 38 Maternal Mortality Rate Versus GDP Per Capita, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 39 Evolution of Maternal Mortality Rate, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 40 Under-5 Mortality Rate Versus GDP Per Capita, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Figure 41 Evolution of under-5 Mortality Rate, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Figure 42 Neonatal, Post-Neonatal, Infant, and under 5 Mortality by Socioeconomic Characteristics . . . . . 34 Figure 43 DTP3 Coverage Versus GDP Per Capita, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 iv ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY Figure 44 MCV2 Coverage Versus GDP Per Capita, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Figure 45 Percentage of Children under 5 Who Did Not Seek Treatment for Diarrheal Disease . . . . . . . . . 36 Figure 46 Stunting, Wasting, and Obesity among Children under-5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Figure 47 Prevalence of at Least One NCD by Socioeconomic Characteristic . . . . . . . . . . . . . . . . . . . . . . . . .37 Figure 48 Nurses and Midwives Per 1,000 Persons, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Figure 49 Physicians Per 1,000 Persons, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Figure 50 Hospital Beds Per 1,000 Persons, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Figure 51 Domestic General Government Health Expenditure as a Percentage of General Government Expenditure, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Figure 52 Current Health Expenditure as a Percentage of Gross Domestic Product, 2018 . . . . . . . . . . . . . . 38 Figure 53 Current Health Expenditure Per Capita Over Time, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Figure 54 Current Health Expenditure Per Capita Disaggregated by Financing Source, 2018 . . . . . . . . . . . 39 Figure 55 Distribution of Per Capita Health Financing in Algeria Across Financing Agents . . . . . . . . . . . . . .39 Figure 56 General Government Spending on Health Versus Expenditures through Insurance Schemes 39 Figure 57 Out of Pocket Health Expenditure Per Capita Versus GDP Per Capita, 2018 . . . . . . . . . . . . . . . . . 40 Figure 58 Pooled Health Spending as a Share of Total Health Spending, 2018 . . . . . . . . . . . . . . . . . . . . . . . . 40 Figure 59 Coverage within a Health Insurance Scheme for Population above Age 15 . . . . . . . . . . . . . . . . . .40 Figure 60 Coverage within a Health Insurance Scheme for Children under 5 . . . . . . . . . . . . . . . . . . . . . . . . . 41 List of tables Table 1 Confirmed Deliveries of COVID-19 Vaccines to Algeria, as of June 1st, 2020 . . . . . . . . . . . . . . . . . . 3 Table 2 Monetary Policy Measures Introduced Since March 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Table 3 NCD Indicators and Risk Factors, Algeria, 2016–17 (percent Ages 18–69 Years) . . . . . . . . . . . . .36 List of boxes Box 1 The Impact of the COVID-19 Pandemic on Firms Globally and in Algeria . . . . . . . . . . . . . . . . . . . . . 7 Box 2 Leveraging Digital Tools for an Inclusive and Resilient Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Box 3 The Sixth Multiple Indicator Clusters Survey (MICS6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 TABLE OF CONTENTS v LIST OF ACRONYMS ANEM Agence Nationale de l’Emploi JODI Joint Organizations Data Initiative BPS Business Pulse Survey kbpd Thousands of barrels per day BdA Banque d’Algérie mbpd Millions of barrels per day Caisse Nationale de Sécurité Sociale des CASNOS MENA Middle East and North Africa Region Non-Salariés MICS Multiple Indicator Cluster Survey CNAS Caisse Nationale des Assurances MSPRH Ministère de la Santé, de la Population et Sociales des Travailleurs Salariés de la Réforme Hospitalière CNR Caisse Nationale des Retraites mtep Million-ton equivalent of petroleum CPI Consumer Price Index NEER Nominal Effective Exchange Rate DZD Algerian dinar ONS Office National des Statistiques EIA U.S. Energy Information Administration OPEC Organization of the Petroleum Exporting EPT Espace de Programmation Territoriale Countries EUR Euro PCH Pharmacie Centrale des Hôpitaux FDI Foreign Direct Investment ppt Percentage points FRR Fond de Régulation des Recettes REER Real Effective Exchange Rate GDP Gross Domestic Product SOEs State-Owned Enterprises GSMA Global System for Mobile USD U.S. dollar Communications Association vii ACKNOWLEDGEMENTS T his Algeria Economic Monitor provides an prepared by Dan Pavelesku (Consultant, EMNPV) and update on key recent economic developments Federica Alfani (Consultant, EMNPV), and Chapter 3 and policies. It places them in a longer-term was prepared by Denizhan Duran (Health Economist, and global context and assesses the implications HMNHN). these developments and changes in policies have The authors are grateful to Jesko Hentschel on the outlook for Algeria. This Monitor’s coverage (Country Director) and Emmanuel Cuvillier (Resident ranges from the macro-economy to financial markets Representative), for invaluable comments during the to indicators of human welfare and development. It is review of this report, as well as to Johannes Hoogeveen intended for a wide audience, including policy makers, (Practice Manager, EMNPV), Luc Laviolette (Program business leaders, financial market participants, and Leader, HMNDR), Rekha Menon (Practice Manager, the community of analysts and professionals engaged HMNHN) for their technical advice and guidance. in Algeria. The report is divided into four chapters. They give special thanks to Amel Henider (consultant, Chapter 1 presents the country’s macroeconomic EMNM1), Muna Abed Salim (Senior Program Assistant, developments in 2020 and early 2021. Chapter 2 MTI) and Isabelle Poupaert (Senior External Affairs presents the short- to medium-term outlook for the Assistant) for their support during the preparation of this Algerian economy. Chapter 3 details the impact of report. The World Bank team is also particularly grateful the COVID-19 pandemic on inequality in Algeria to the Ministry of Finance of Algeria, for providing based on evidence across the Middle East and North comments on the report before the publication. African (MENA) region. Finally, Chapter 4 looks at The findings, interpretations, and conclusions the key challenges in the country’s health sector as expressed in this Monitor are those of World Bank the COVID-19 pandemic eases. The cut-off date for staff and do not necessarily reflect the views of data and forecasting is June 11, 2021. the Executive Board of The World Bank or the The Algeria Economic Monitor is a product governments it represents. For information about of the MENA unit in the Macroeconomics, Trade the World Bank and its activities in Algeria, including and Investment (MTI) Global Practice in the World e-copies of this publication, please visit https://www. Bank Group. The report was led by Cyril Desponts worldbank.org/en/country/algeria. (Economist, EMNM1), under the general guidance of For questions and comments on the content Eric Le Borgne (Practice Manager, EMNM1). Chapter of this publication, please contact Cyril Desponts 1 was prepared by Cyril Desponts and Shahrzad (cdesponts@worldbank.org) and Eric Le Borgne Mobasher Fard (Consultant, EMNM1), Chapter 2 was (eleborgne@worldbank.org). ix EXECUTIVE SUMMARY I n 2020, the dual shock posed by stringent March 2020 and March 2021 (+29 percent), according non-pharmaceutical interventions (NPIs) to to the Agence Nationale de l’Emploi (ANEM). Smaller contain the COVID-19 pandemic and the firms, those concentrated in the informal segment of severe fall in hydrocarbon revenues added to the economy, and in the services and construction Algeria’s economic woes. The Algerian government sectors were more adversely impacted. In all, GDP is imposed stringent NPIs following the first diagnosed expected to have contracted by 5.5 percent in 2020. case of COVID-19 in February 2020, coinciding with The temporary decline in international oil the introduction of NPIs worldwide. Meanwhile, the prices further deteriorated the fiscal balance, external shock to the global demand in hydrocarbon banking liquidity and the external balance, products triggered a steep decline in global oil prices, despite the depreciation of the Algerian dinar. The followed by a fall in OPEC+ crude oil production quotas, overall budget deficit expanded significantly in 2020, causing Algeria’s hydrocarbon production and exports amid a steep decline in oil and tax revenues, and an to dwindle. At the end of 2020, the partial lifting in NPIs increase in budget spending, playing a welcomed worldwide led to a recovery in the global demand for counter-cyclical role. Banking liquidity declined and hydrocarbon products and of their prices. In Algeria, credit growth slowed down despite strong monetary NPIs were gradually lifted since the Summer of 2020, easing policies by the authorities as external revenues and the vaccination campaign begun in January 2021, fell, SOE deposits helped finance the overall budget but it has yet to gather a critical scale to actively support deficit, and retail depositors withdrew their savings. a sustained and resilient economic recovery. External financing requirements expanded as a While the Algerian economy showed signs result of the widening of the current account deficit. of recovery during the second half of 2020, firms Imports of machinery and equipment, and inputs into and workers have been deeply affected by the domestic production contracted sharply as import economic recession. Night-time lights data suggest compression policies continued, to protect foreign that the Algerian economy suffered a broad-based exchange reserves, which fell to around 12.8 months contraction during the first half of 2020, before partly of imports of goods and services at end-2020. recovering during the second half of the year. The The economic outlook points to a results of the Business Pulse Survey (BPS) convey the fragile recovery throughout 2021, and its severity of the shock across firms in all sectors. These sustainability hinges on the acceleration of results are consistent with the substantive rise in the reforms to foster private sector growth and number of registered job seekers by 504,400 between restore macroeconomic balances. Under the xi baseline scenario, GDP is expected to grow by 3.7 more likely to be in occupations where home-based percent in 2021 and 2.5 percent in 2022, when it is work is impossible and lack access to the digital expected to reach its pre-pandemic level. While the tools that would allow it. They are significantly more Algerian economy is expected to benefit from the likely to work in the informal sector, without adequate rebound in gas production in 2021, the recovery in social protection, which has shown to correlate with non-hydrocarbon sectors is expected to be slow and a stronger deterioration in living standards during gradual. Meanwhile, fiscal and external financing the pandemic. The increase in job seekers in Algeria requirements will remain substantial, expected at 18 was indeed significantly more pronounced among percent of GDP and 10 percent of GDP, respectively, low-skilled workers compared to high-skilled workers. making it necessary to return to financing through the Women are also expected to be disproportionally central bank to finance the fiscal deficit and continue affected, with more than half of working women being import compression policies, while further exchange active in the health and social services sectors. Unless rate depreciation is expected. With the increase in targeted compensation mechanisms are introduced, public spending in 2021 expected to be short-lived, the effect of ongoing macroeconomic and fiscal and foreign exchange reserves now covering less adjustment policies will also fall disproportionally on than a year of imports, the acceleration of reforms to the most vulnerable. Therefore, a successful recovery foster private sector growth will be critical to Algeria’s will need to offer the poorest and most vulnerable the structural transformation away from its dependance opportunity to regain what they have lost. on hydrocarbon revenues, and towards a sustainable The impact of COVID-19 over the past year and inclusive economic growth path. Key sources of has also demonstrated the need for an equitable risk to the economic outlook include the deterioration reform of the health system. Even as official case of the domestic sanitary situation, the resumption of and death numbers remained low, COVID-19 has large-scale social mobilization, lower-than-expected exposed the limits of the health system. A double foreign exchange revenues, and insufficient private burden of communicable and non-communicable sector response to the reform agenda. diseases, as well as resource constraints, demonstrate Vulnerable households will deserve the need to strengthen the Algerian health system. particular attention during the recovery, having While the Algerian health financing system features been disproportionally affected by the negative high public financing and relatively low out of pocket consequences of COVID-19. Although there are no spending, and while life expectancy and control of data that measure the welfare impact of the COVID-19 non-communicable diseases are comparable to peer pandemic on Algerians, evidence from across the countries, health outcomes still lag behind other MENA region confirms that poorer households upper-middle income economies, particularly with are more likely to report a worsening of their living regards to the equitable distribution of maternal and standards. Several characteristics of Algerian child health outcomes. Shortages of physical and households suggest that these regional patterns hold human resources, as well as inequitable distribution for Algeria. They live in more crowded environments of financial protection pose significant challenges. and in worse sanitary conditions, making them more Finally, declining government financing and limited susceptible to infection. In line with lower education health system capacity pose risks in ensuring a levels, income earners in poorer households are much resilient health system. xii ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY RÉSUMÉ ANALYTIQUE E n 2020, un double choc est venu s’ajouter rité du choc pour les entreprises et secteurs, ce qui est aux difficultés économiques de l’Algérie, cohérent avec l’augmentation sensible du nombre de causé à la fois par des interventions non chercheurs d’emploi inscrits  ; d’après l’Agence natio- pharmaceutiques (INP) strictes pour contenir la nale de l’emploi (ANEM), ils étaient 504 400 de plus en pandémie de COVID-19 et une forte chute des re- mars 2021 qu’en mars 2020 (+29 %). Les entreprises cettes issues des hydrocarbures. Le gouvernement de plus petite taille, celles qui se trouvent dans le seg- algérien a imposé des INP strictes après le premier ment informel de l’économie et dans les secteurs des cas de COVID-19 diagnostiqué en février 2020, ce services et de la construction ont été les plus durement qui a coïncidé avec la mise en œuvre d’INP au niveau impactées. Somme toute, le PIB devrait s’être contrac- mondial. Dans le même temps, le choc externe de la té de 5,5 % en 2020. demande mondiale en hydrocarbures a provoqué une La baisse temporaire des prix internationaux chute brutale des prix mondiaux du pétrole, puis une du pétrole a détérioré plus encore le solde budgé- baisse des quotas de production de pétrole brut de taire, la disponibilité de la liquidité bancaire et le l’OPEP+, ce qui a entraîné une diminution de la pro- solde extérieur, malgré la dépréciation du dinar duction et des exportations de l’Algérie. À la fin 2020, la algérien. Le déficit budgétaire global s’est considé- levée partielle des INP dans le monde a permis une re- rablement creusé en 2020, dans un contexte de forte prise de la demande mondiale pour les hydrocarbures baisse des recettes pétrolières et fiscales, et d’aug- et de leurs prix. En Algérie, les INP ont été progressive- mentation des dépenses budgétaires, jouant un rôle ment levées depuis l’été 2020, et la campagne de vac- contracyclique bienvenu. La liquidité bancaire a dimi- cination a débuté en janvier 2021, même si elle n’a pas nué et la croissance du crédit s’est ralentie malgré des encore atteint l’ampleur nécessaire pour soutenir acti- politiques d’assouplissement monétaire fortes de la vement une reprise économique durable et résiliente. part des autorités, sous l’effet de la chute des recettes Si l’Algérie a montré des signes de reprise sur extérieures, de la mobilisation des dépôts bancaires la deuxième moitié de 2020, entreprises comme pour financer le déficit budgétaire global, et du retrait travailleurs ont été profondément touchés par la ré- de l’épargne bancaire par les particuliers. Les besoins cession économique. Les données relatives à l’éclai- de financement externe se sont accrus, conséquence rage nocturne suggèrent que l’économie algérienne a du creusement du déficit de la balance courante. Les subi une contraction généralisée sur la première moi- importations d’équipements et d’intrants dans la pro- tié de 2020, avant une relance partielle sur la deuxième duction nationale ont considérablement diminué avec moitié de l’année. Les résultats de l’Enquête sur le Pouls la poursuite des politiques de réduction des importa- des Entreprises COVID-19 (COVEPE) montrent la sévé- tions visant à protéger les réserves en devises, qui sont xiii tombées fin 2020 à environ 12,8 mois d’importations dans des environnements plus denses et dans des de biens et services. conditions sanitaires plus précaires, ce qui les rend Les perspectives économiques laissent pré- plus sensibles aux infections. Les soutiens de famille, sager une reprise fragile en 2021, et la durabilité ayant des niveaux d’éducation plus faibles, sont plus de cette dernière dépendra de l’accélération des susceptibles d’occuper des emplois pour lesquels réformes permettant de favoriser la croissance du le travail à la maison est impossible, et n’ont pas ac- secteur privé et de rétablir les équilibres macroé- cès aux outils numériques qui le rendraient possible. conomiques. Dans le cadre du scénario de référence, Ils sont plus susceptibles de travailler dans le secteur le PIB devrait croître de 3,7 % en 2021 et de 2,5 % en informel, sans protection sociale adaptée, ce qui s’est 2022, retrouvant son niveau d’avant la pandémie. Alors avéré être lié à une plus forte détérioration des niveaux que l’économie algérienne devrait bénéficier du rebond de vie pendant la pandémie. La hausse du nombre de de la production de gaz en 2021, la reprise dans les demandeurs d’emploi en Algérie est de fait nettement secteurs hors- hydrocarbures devrait être lente et pro- plus importante parmi les travailleurs peu qualifiés que gressive. Les besoins de financement budgétaires et chez les travailleurs hautement qualifiés. Les femmes extérieurs resteront importants, attendus à 18 et 10 % devraient également être plus touchées, plus de la du PIB, respectivement, et risquent de provoquer un moitié d’entre elles travaillant dans les secteurs de la retour au financement par la Banque d’Algérie afin de santé et des services sociaux. Sauf à introduire des combler le déficit budgétaire, ainsi que la poursuite des mécanismes de compensation ciblés, les effets des politiques de réduction des importations, tandis que la politiques d’ajustement macroéconomique et budgé- dépréciation du taux de change devrait se poursuivre. taire en cours pourraient également peser de manière Comme la hausse des dépenses publiques en 2021 de- disproportionnée sur les plus vulnérables. Une reprise vrait être de courte durée, et que les réserves en devise réussie devra ainsi donner aux plus vulnérables la pos- couvrent désormais moins d’un an d’importations, l’ac- sibilité de récupérer ce qu’ils ont perdu. célération des réformes visant à encourager le dévelop- L’impact de la COVID-19 sur l’année écou- pement du secteur privé sera essentielle pour conduire lée montre également la nécessité d’une réforme la transformation structurelle de l’Algérie, vers son indé- équitable du système de santé. Même si les nombres pendance des recettes provenant des hydrocarbures, et officiels de cas et de décès restent faibles, la COVID-19 pour qu’elle s’engage sur la voie d’une croissance éco- a montré les limites du système de santé. Un double far- nomique durable et inclusive. Les principales sources deau de maladies transmissibles et non transmissibles, de risque pour les perspectives économiques incluent ainsi que les contraintes en matière de ressources, dé- la détérioration de la situation sanitaire, la reprise de la montrent la nécessité de renforcer le système de santé mobilisation sociale à grande échelle, des recettes en algérien. Même si le système de financement de la san- devises moins importantes que prévu et une réponse in- té se caractérise par un financement public important suffisante du secteur privé au programme de réformes. et des dépenses individuelles relativement faibles, et si Les ménages vulnérables requerront une at- l’espérance de vie et le contrôle des maladies non trans- tention particulière pendant la reprise, ayant subi missibles sont comparables à ceux de pays pairs, les ré- de manière disproportionnée les effets négatifs sultats en matière de santé restent inférieurs aux autres de la COVID-19. Bien qu’il n’existe pas de données économies à revenu moyen supérieur, notamment en permettant de mesurer l’impact de la pandémie de ce qui concerne la répartition équitable des résultats en COVID-19 sur le bien-être de la population algérienne, matière de santé maternelle et infantile. L’insuffisance des éléments probants provenant de l’ensemble de la des ressources physiques et humaines, et l’iniquité de région MENA montrent que les ménages pauvres sont la distribution de la protection financière représentent plus susceptibles de signaler une détérioration de leur des difficultés importantes. Enfin, la perte de vitesse du niveau de vie. Plusieurs caractéristiques des ménages financement public et la capacité limitée du système de algériens vulnérables suggèrent que ces tendances ré- santé sont des facteurs de risque importants quand on gionales s’appliquent à l’Algérie. Ces ménages vivent veut assurer un système de santé résilient. xiv ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY ‫ٍ‬ ‫فاو صخلم‬ ‫آالف شخص بني مارس‪/‬آذار ‪ 2020‬ومارس‪/‬آذار ‪ ،)+29%( 2021‬وذلك‬ ‫يف الجزائر‪ ،‬ويف عام ‪ ،2020‬كان للصدمة املزدوجة التي أحدثتها التدخالت‬ ‫بحسب بيانات «الوكالة الوطنية للتشغيل»‪ .‬وترضرت بشكل أكرب الرشكات‬ ‫الصارمة غري الدوائية الحتواء جائحة فريوس كورونا (كوفيد‪)19‬‬ ‫الصغرى التي تعمل يف القطاع االقتصادي غري الرسمي وأيضاً يف قطاعي‬ ‫واالنخفاض الحاد يف عائدات املنتجات الهيدروكربونية (املحروقات)‬ ‫الخدمات والبناء والتشييد‪ .‬وتشري التوقعات إىل انكامش إجاميل الناتج‬ ‫أثرهام يف زيادة الصعوبات االقتصادية التي تعاين منها البالد‪ .‬ولجأت‬ ‫املحيل الجزائري بنسبة ‪ 5.5%‬يف عام ‪.2020‬‬ ‫الحكومة الجزائرية إىل فرض هذه التدخالت الصارمة بعد اكتشاف أول‬ ‫أدى االنخفاض املؤقت يف أسعار النفط العاملية إىل زيادة تدهور رصيد‬ ‫إصابة مؤكدة بفريوس كورونا يف شهر فيفري‪/‬فرباير ‪ ،2020‬تزامناً مع‬ ‫املالية العامة والسيولة املرصفية وأرصدة املعامالت الخارجية‪ ،‬عىل الرغم‬ ‫تطبيقها يف جميع أنحاء العامل‪ .‬ويف الوقت ذاته‪ ،‬أدت الصدمة الخارجية‬ ‫من االنخفاض يف قيمة الدينار الجزائري‪.‬زاد العجز الكيل يف امليزانية زيادة‬ ‫املتمثلة يف ندرة الطلب العاملي عىل املنتجات الهيدروكربونية إىل تدهور‬ ‫كبرية يف عام ‪ ،2020‬وسط انخفاض حاد يف عائدات النفط والرضائب‪،‬‬ ‫حاد يف أسعار النفط العاملية‪ ،‬أعقبه انخفاض يف حصص إنتاج النفط الخام‬ ‫قابلتها زيادة يف نفقات امليزانية حيث كان لهذه الزيادة دورها اإليجايب‬ ‫يف مجموعة (أوبك‪ )+‬مام تسبب يف تضاؤل إنتاج الجزائر من املنتجات‬ ‫يف مواجهة تقلبات الدورات االقتصادية التي مرت بها البالد‪ .‬أما السيولة‬ ‫الهيدروكربونية وصادراتها‪ .‬ويف نهاية عام ‪ 2020‬حدثت انفراجة حيث‬ ‫املرصفية فقد انخفضت وتباطأ منو االئتامن عىل الرغم من سياسات‬ ‫تراجعت هذه التدخالت غري الدوائية عىل مستوى العامل بشكل جزيئ‬ ‫التيسري النقدي القوية التي اتبعتها السلطات مع انخفاض اإليرادات‬ ‫مام كان له أثره يف انتعاش الطلب العاملي عىل املنتجات الهيدروكربونية‬ ‫الخارجية‪ ،‬وساعدت ودائع الرشكات الوطنية اململوكة للدولة يف متويل‬ ‫وارتفاع أسعارها إىل مستويات معقولة مقارنة مبا كانت عليه أثناء‬ ‫العجز الكيل يف امليزانية‪ ،‬بينام قام األفراد بسحب مدخراتهم‪ .‬وزادت‬ ‫الجائحة‪ .‬وبالنسبة للجزائر‪ ،‬فقد بدأت يف رفع تلك التدخالت تدريجياً‬ ‫االحتياجات للتمويل الخارجي نتيجة زيادة العجز يف ميزان الحساب‬ ‫منذ صيف عام ‪ ،2020‬كام بدأت السلطات الصحية حملة التلقيح ضد‬ ‫الجاري‪ .‬وتقلصت واردات اآلالت واملعدات ومستلزمات اإلنتاج املحيل‬ ‫فريوس كورونا يف جانفي‪/‬يناير‪ ،2021‬غري أن نطاق هذه الحملة مل يشمل‬ ‫بشكل حاد مع استمرار سياسات ضغط الواردات إىل الحد األدىن لحامية‬ ‫عددا ً كافياً من السكان بحيث يسمح بدعم التعايف االقتصادي املستدام‬ ‫احتياطيات البالد من النقد األجنبي والتي انخفضت إىل ما يكفي لحوايل‬ ‫والقادر عىل الصمود‪.‬‬ ‫‪ 12.8‬شهرا ً من واردات السلع والخدمات يف نهاية عام ‪.2020‬‬ ‫ويف حني أظهر االقتصاد الجزائري بوادر تعافيه خالل النصف الثاين من‬ ‫تعاف يتسم تشري التوقعات‬ ‫تشري التوقعات االقتصادية للجزائر إىل تحقيق ٍ‬ ‫عام ‪ ،2020‬إال إن الرشكات والعامل ترضروا بشدة من جراء الركود‬ ‫تعاف يتسم بالهشاشة خالل عام ‪،2021‬‬ ‫االقتصادية للجزائر إىل تحقيق ٍ‬ ‫االقتصادي‪ .‬ويف حني أظهر االقتصاد الجزائري بوادر تعافيه خالل النصف‬ ‫وتعتمد استدامته بشكل مفصيل عىل ترسيع وترية اإلصالحات االقتصادية‬ ‫الثاين من عام ‪ ،2020‬إال إن الرشكات والعامل ترضروا بشدة من جراء‬ ‫لتعزيز النمو يف القطاع الخاص‪ ،‬فضالً عن استعادة التوازنات يف االقتصاد‬ ‫الركود االقتصادي‪ .‬وتشري البيانات املأخوذة من صور األقامر االصطناعية‬ ‫الكيل‪ .‬ويف ظل السيناريو املرجعي‪ ،‬من املتوقع أن ينمو إجاميل الناتج‬ ‫لألضواء الليلية إىل أن االقتصاد الجزائري عاىن من انكامش واسع النطاق‬ ‫املحيل بنسبة ‪ 3.7%‬يف ‪ 2021‬و‪ 2.5%‬يف سنة ‪ ،2022‬ليصل إىل مستويات‬ ‫خالل النصف األول من عام ‪ ،2020‬قبل أن يبدأ يف التعاىف بصورة جزئية‬ ‫ما قبل جائحة كورونا‪ .‬وبينام يُتوقع لالقتصاد الجزائري االستفادة من‬ ‫خالل النصف الثاين من نفس العام‪ .‬أما نتائج «املسح االستقصايئ لجس‬ ‫انتعاش إنتاج الغاز يف سنة ‪ ،2021‬فمن املتوقع أيضاً أن يتسم االنتعاش‬ ‫ني الوقع الشديد لصدمة جائحة كورونا عىل‬ ‫نبض مؤسسات األعامل» فتب ُ‬ ‫يف القطاعات غري النفطية بالتباطؤ والتدرج‪ .‬ويف الوقت نفسه‪ ،‬ستظل‬ ‫جميع الرشكات يف كافة قطاعات االقتصاد الجزائري‪ .‬وتتسق هذه النتائج‬ ‫متطلبات املالية العامة والتمويل الخارجي كبرية‪ ،‬ومن املتوقع أن تبلغ‬ ‫مع االرتفاع الكبري يف عدد الباحثني عن عمل املسجلني مبقدار ‪504,400,‬‬ ‫‪xv‬‬ ‫معيشتهم أثناء الجائحة‪ .‬وكانت الزيادة يف عدد الباحثني عن عمل يف‬ ‫‪ 18%‬و‪ 10%‬من إجاميل الناتج املحيل عىل التوايل‪ ،‬مام يستلزم العودة إىل‬ ‫الجزائر أكرث وضوحاً بني العامل من ذوي املهارات منخفضة املستوى‬ ‫التمويل عن طريق البنك املركزي لتمويل العجز يف املالية العامة ومواصلة‬ ‫مقارنة بنظرائهم من ذوي املهارات عالية املستوى‪ .‬ومن املتوقع أيضاً‬ ‫سياسات ضغط الواردات إىل الحد األدىن‪ ،‬مع توقع املزيد من االنخفاض‬ ‫أن تتأثر النساء بصورة غري متناسبة‪ ،‬ويرجع ذلك إىل أن أكرث من نصف‬ ‫يف سعر رصف الدينار الجزائري‪ .‬ومع التوقع بأن تكون الزيادة يف اإلنفاق‬ ‫الجزائريات العامالت ينشطن يف قطاعي الصحة والخدمات االجتامعية‪.‬‬ ‫خالل عام ‪ 2021‬قصرية األجل؛ ومع حقيقة أن احتياطيات البالد من النقد‬ ‫وما مل يتم استحداث آليات تعويض محددة األهداف‪ ،‬فإن الفئات األشد‬ ‫األجنبي تغطي حالياً أقل من عام واحد من الواردات‪ ،‬فسيكون ترسيع‬ ‫احتياجاً واألوىل بالرعاية من السكان سترضر عىل نحو غري متناسب من‬ ‫وترية اإلصالحات لتعزيز منو القطاع الخاص يف غاية األهمية لتحقيق التحول‬ ‫جراء السياسات الحالية التي تنتهجها الحكومة الجزائرية لضبط أوضاع‬ ‫الهيكيل يف االقتصاد الجزائري بعيدا ً عن االعتامد عىل عائدات املنتجات‬ ‫املالية العامة واالقتصاد الكيل‪ .‬ولهذا‪ ،‬وألجل تحقيق التعايف الناجح من‬ ‫و اقتصادي مستدامٍ وشامل‪.‬‬ ‫الهيدروكربونية‪ ،‬وأيضاً للميض نحو مسار من ٍ‬ ‫األزمة الحالية‪ ،‬يصبح من الرضوري إتاحة الفرصة أمام الرشائح األشد فقرا ً‬ ‫تشتمل املصادر الرئيسية للمخاطر التي تواجه اآلفاق االقتصادية للجزائر‬ ‫واألكرث احتياجاً الستعادة ما فقدوه أثناء الجائحة‪.‬‬ ‫عىل تدهور األوضاع الصحية عىل املستوى املحيل‪ ،‬واستئناف نشاط التعبئة‬ ‫وباإلضافة إىل ما سبق‪ ،‬فقد أوضحت األثار املرتتبة عىل جائحة فريوس‬ ‫االجتامعية عىل نطاق واسع‪ ،‬وانخفاض إيرادات النقد األجنبي عام كان‬ ‫كورونا خالل السنة املاضية أن هناك رضورة ملحة إلصالح نظام الرعاية‬ ‫متوقعاً‪ ،‬عالوة عىل ضعف مستوى االستجابة املتوقعة من القطاع الخاص‬ ‫الصحية يف الجزائر ليكون نظاماً عادالً ومنصفاً للجميع‪ .‬وحتى مع‬ ‫تجاه أجندة إصالح االقتصاد يف البالد‪.‬‬ ‫استمرار االنخفاض يف أعداد حاالت اإلصابة والوفيات التي يعلن عنها‬ ‫من الرضوري إيالء اهتامم خاص لألرس األكرث احتياجاً واألوىل بالرعاية‬ ‫رسمياً‪ ،‬فقد كشفت جائحة فريوس كورونا القدرات املحدودة التي ميتلكها‬ ‫أثناء مرحلة التعايف من األزمة بعد أن ترضرت عىل نحو غري متناسب‬ ‫النظام الصحي يف البالد‪ .‬أما العبء املزدوج الذي متثله األمراض السارية‬ ‫من التداعيات السلبية التي خلفتها جائحة كورونا‪ .‬وعىل الرغم من عدم‬ ‫وغري السارية‪ ،‬فضالً عن القيود املتعلقة بتوفري املوارد‪ ،‬فيشري إىل الحاجة‬ ‫توافر البيانات التي تقيس مدى تأثري جائحة كورونا عىل حياة الجزائريني‪،‬‬ ‫امللحة لتقوية النظام الصحي الجزائري‪ .‬وعىل الرغم من أن متويل النظام‬ ‫إال إن األدلة والشواهد املسجلة يف جميع أنحاء منطقة الرشق األوسط‬ ‫الصحي الجزائري يعتمد يف معظمه عىل التمويل اآليت من الدولة مع‬ ‫وشامل أفريقيا تؤكد أن األرس األكرث فقرا ً هي التي عانت عىل األرجح من‬ ‫ر بسيط نسبياً من اإلنفاق الشخيص املبارش‪ ،‬وبينام يتامثل متوسط‬ ‫قَد ٍ‬ ‫تدهور مستوياتها املعيشية بصورة أكرب‪ .‬ونظرا ً الشرتاك األرس الجزائرية‬ ‫العمر املتوقع ومعدالت مكافحة األمراض غري السارية مع البلدان املناظرة‬ ‫يف العديد من خصائص معيشتها مع نظريتها بباقي أنحاء املنطقة‪ ،‬فمن‬ ‫للجزائر‪ ،‬إال إن النواتج الصحية ال تزال بعيدة عن غريها من البلدان التي‬ ‫املتوقع أن تنطبق هذه األمناط اإلقليمية أيضاً عىل بلد مثل الجزائر؛ حيث‬ ‫تقع يف الرشيحة العليا من البلدان متوسطة الدخل‪ ،‬ال سيام فيام يتعلق‬ ‫يعيش الجزائريون يف بيئات أكرث ازدحاماً ويف ظروف صحية أسوأ‪ ،‬مام‬ ‫بالتوزيع العادل لنواتج الرعاية الصحية املوجهة لألمهات واألطفال‪ .‬أما‬ ‫يجعلهم أكرث عرضة النتقال العدوى بفريوس كورونا‪ .‬وبسبب انخفاض‬ ‫النقص يف املوارد املادية والبرشية‪ ،‬فضالً عن التوزيع غري املنصف لربامج‬ ‫مستويات التعليم‪ ،‬فمن املرجح أن يعمل أصحاب الدخل يف األرس الفقرية‬ ‫الحكومة لتوفري الحامية املالية للجزائريني‪ ،‬فيشكل يف حد ذاته تحديات‬ ‫يف مهن يستحيل فيها منط العمل من املنزل‪ ،‬كام أنهم يفتقرون إىل القدرة‬ ‫كبرية‪ .‬وأخريا ً‪ ،‬فإن الرتاجع يف التمويل الحكومي للنظام الصحي الجزائري‬ ‫عىل الحصول عىل املعرفة واألدوات الرقمية التي متكنهم من العمل وفقاً‬ ‫والضعف يف القدرات املتوفرة لهذا النظام‪ ،‬فإنهام ميثالن معاً مخاطر‬ ‫لهذا النمط‪ .‬وتعمل هذه الفئة عىل األرجح يف القطاع غري الرسمي من‬ ‫ر عىل الصمود يف‬ ‫صحي قاد ٍ‬ ‫ٍ‬ ‫واضحة تقف حائالً أمام ضامن توفري نظامٍ‬ ‫االقتصاد الجزائري حيث ال تتوفر لهم ميزة الحصول عىل حامية اجتامعية‬ ‫مواجهة الجوائح واألزمات‪.‬‬ ‫كافية‪ ،‬وهو األمر الذي ثبت ارتباطه مبا حدث من تدهور أكرب يف مستويات‬ ‫‪xvi‬‬ ‫‪ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY‬‬ INTRODUCTION W orld economies and international of depressed external revenues and domestic trade flows are gradually recovering, activity due to NPIs. Hydrocarbon exporters across supported by the easing of non- the MENA region, such as Algeria, have suffered pharmaceutical interventions (NPIs) and the from depressed international hydrocarbon prices and partial recovery in demand, albeit with diverging demand. In 2020, global gas demand is estimated to trends across sectors and income groups. have declined by 4 percent, and oil demand by 8.6 Following the introduction of stringent NPIs globally percent,3 causing Brent prices to fall from more than at the end of the first quarter of 2020 to curb the US$60 per barrel in the second half of March 2020 spread of the pandemic, the partial lifting of NPIs in to less than US$15 per barrel in the second half of the second half of 2020 resulted in growth in pent-up April 2020. Against the backdrop of large crude oil demand for durable goods and a recovery in economic production cuts agreed at the April 2020 OPEC+ growth and international trade flows. For 2020, the meeting, the volume of oil exports measured across world economy is estimated to have contracted by Algeria, Libya, Iraq and Iran fell from 7.7 million barrels 4.3 percent, with the decline in advanced economies per day (mbpd) in March 2020 to a trough of 6.6 (5.4 percent) exceeding that of emerging market and mbpd in June 2020. Meanwhile, non-hydrocarbon developing economies (2.6 percent).1 The world trade economies across the MENA region have been volume of goods and services is estimated to have severely impacted by the halt in international tourism declined by 9.5 percent in 2020.2 Notwithstanding and in foreign direct investment (FDI). (Figure 1). the partial economic recovery experienced worldwide The Algerian government continued to since the second half of 2020, the recovery of gradually lift stringent NPIs throughout the Fall the services sector lags behind that of the goods- of 2020, in line with the decline in recorded producing sector. The COVID-19 pandemic has new daily COVID-19 cases. Algeria imposed also resulted in a widening of economic inequalities stringent NPIs following the first diagnosed case of across the population, with a higher incidence COVID-19 in February 2020. This included, notably, of unemployment and underemployment being the cancellation of commercial flights, the closure recorded among lower-income households relative to 1 World Bank’s Global Economic Prospects, January 2021. higher-income households. (see Chapter 3). 2 Ibid. The Middle East and North Africa (MENA) 3 United States’ Energy Information Administration (EIA), region has been disproportionately affected by May 2021, and International Energy Agency (IEA), May the COVID-19 pandemic through the dual shock 2021. 1 Global Hydrocarbon Demand and FIGURE 1 •  The Number of COVID-19 Cases FIGURE 2 •  Prices Recovered at End-2020 Peaked in November 2020 80 25% 1,200 4,000 20% 3,500 70 1,000 3,000 15% 800 60 2,500 10% 50 600 2,000 USD per barrel 5% Y/Y change 1,500 40 0% 400 1,000 30 –5% 200 500 –10% 0 0 20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 –15% 10 –20% 0 –25% Daily cases (LHS) Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 Total number of deaths (RHS) Source: Johns Hopkins University, using official estimates. Note: For the number of daily cases, a seven-day moving average is used. The low Global oil demand (RHS) number of COVID-19 cases reported is partly explained by the limited number of tests Oil price (Brent) carried out. Only the Pasteur Institute is allowed to analyze COVID-19 PCR tests. In May 2020, Algeria reported 5,182 tests per million of population, significantly lower Source: U.S. Energy Information Administration. than MENA peers such as Jordan (691,603 tests per million individuals), Lebanon Note: The rebound in March and April 2021 is caused by a significant base effect, as (631,265 tests per million individuals), Morocco (172,637 tests per million individuals) global oil demand remained lower than in March and April 2019 (–3 percent and –4 and Tunisia (119,895 tests per million individuals). (World Bank, May 2021). percent, respectively). of schools, universities, restaurants, and shops, vaccines received between January 28 and February the cancellation of all public and private events, 24 and 364,800 additional doses received from the the shutdown of public transportation services, the COVAX Facility5 on April 3, 2021.6 In all, as of May mandatory leave with full compensation of half of 15th, Algeria received a total of 664,800 doses of the the country’s workers and nightly curfews. NPIs on COVID-19 vaccine across all manufacturers, which workplace, public gatherings and stay-at-home orders would allow for the full vaccination of about 0.9 percent eased starting at the end of April, but some tightening of the Algerian population.7 While there is no up-to-date took effect in July due to the rise in COVID-19 cases. The modest easing of restrictions starting in August 4 As a result, the number of international travelers to the was followed by a second wave of infections, which country is estimated to have declined by 75% in 2020, from peaked in November, and restrictions have eased 16.5 million individuals in 2019 to 3.9 million individuals in ever since. Since February 2021, mosques have been 2020 (APS, January 2021). authorized to reopen, as well as cafes, restaurants, and 5 The COVAX Facility is a partnership between the hotels, albeit with a 50 percent capacity limit. Curfews, Coalition for Epidemic Preparedness Innovations, Gavi, the Vaccine Alliance, UNICEF and the World Health which have been shortened from midnight to 4 am, Organization to provide COVID-19 vaccine supplies are now imposed in only 19 wilayas (governorates). to developing countries to enable health workers and Algerian borders, closed since March 2020,4 were other priority populations vulnerable to COVID-19 to be partially reopened on June 1st, 2021. (Figure 2). protected against the virus. While Algeria has taken several steps to 6 Out of an initial allocation of 1,881,600 doses to the immunize its population against COVID-19, the country in 2021 (UNICEF, April 2021). 7 The total number of vaccines received could be pace of vaccination remains slower than country underestimated, however, as the Pasteur Institute stated peers in the Middle East and North Africa (MENA) that shipments of Sputnik-V and Coronavac vaccines were region. The country’s vaccination campaign launched also received on April 30, without providing the details in January 2021, with 300,000 doses of COVID-19 regarding the size of the shipments. (TSA, May 2021). 2 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY data on vaccination rates, if all vaccines received by percent of the population. Algeria’s agreement with mid-May were deployed, Algeria’s performance would Russia to produce the Sputnik-V vaccine in Algeria be lower than the share of population having received through Saidal Pharmaceuticals, which is expected to at least one dose in Egypt (1.1 percent), Libya (1.6 start in September 2021, would also help accelerate percent), Tunisia (4.8 percent), Lebanon (5.6 percent), the vaccination campaign.9 (Table 1). Jordan (7.9 percent) and Morocco (16.7 percent).8 At the end of May, however, Algeria received close to one and a half million doses of COVID-19 vaccines, 8 Our World in Data, May 2021. which would allow for the full vaccination of 2.5 9 APS, April 2021. TABLE 1 • Confirmed Deliveries of COVID-19 Vaccines to Algeria, as of June 1st, 2020 Individuals to be fully vaccinated Cumulative, % of Delivery date Number of doses Vaccine brand Shipments Cumulative population January 28, 2021 50,000 Sputnik-V 25,000 25,000 0.06 % February 1, 2021 50,000 AstraZeneca 25,000 50,000 0.12 % February 24, 2021 200,000 Sinopharm 100,000 200,000 0.6 % April 3, 2020 364,800 AstraZeneca 182,400 382,400 0.9 % May 19, 2021 170,000 Sputnik-V 85,000 467,400 1.1 % May 21, 2021 758,400 AstraZeneca 379,200 846,600 1.9 % May 31, 2021 500,000 Sinovac 250,000 1,096,600 2.5% Note: Therefore, 2.2 millions doses out of 2.5 million doses received by Algeria (APS, June 2021) are listed. Introduction 3 1 RECENT ECONOMIC DEVELOPMENTS Economic growth and labor market be observed in November and December 2020, however, and appears to be more pronounced in the World Bank analysis suggests that economic North-East and Eastern Highlands regions. activity in Algeria began recovering between July Firms in the non-hydrocarbon segment and October 2020, before contracting again at of the economy have been deeply affected by year end. As national accounts data do not yet go the COVID-19 crisis. On the demand side, private beyond the first quarter of 2020, high-resolution, consumption and investment are both expected to have night-time lights data captured daily by satellite, which registered strong declines, amid significant economic are a widely accepted proxy for changes in economic uncertainty, rising precautionary savings by consumers, activity, are relied upon to obtain a more up-to-date and constrained firm liquidity. On the production side, account of economic developments.10 Night-time restriction on non-essential activities have severely lights data presented in Figure 311 suggest a steep contraction in economic activity between March and May 2020, which remains consistent with the 10 Night-time lights data are available with a lag of three introduction of NPIs, before a partial recovery took months and have been shown to correlate strongly with changes in real GDP levels (Henderson 2012; Donaldson hold during the second half of 2020. Night-time 2016). Several recent studies have assessed the impact lights data specific to the cities of Algiers, Oran and of NPIs to contain the COVID-19 pandemic on night-time Constantine suggest that the economic contraction in lights including in India (Beyer, 2020), China (Gosh, the Spring was higher in large cities given the greater Elvidge 2020), Morocco (Roberts, 2020), Tunisia (World concentration of the services-producing sectors and Bank, 2021), or Syria (Mercy Corps, 2021). the greater enforcement of NPIs. The broad economic 11 Figure 3 presents year-on-year growth in night-time light intensity for four of the eight administrative regions recovery between July and October 2020 appears to (Espaces de Programmation Territoriale, or EPT), which be stronger in the North-West region, and in particular encompass 77 percent of Algeria’s population (as per in the Ain Temouchent, Mascara and Sidi Bel Abbes the last population census in 2008). The figure excludes governorates. Another year-on-year contraction can EPT areas involving oil and gas extraction activities. 5 Activity Partially Recovered FIGURE 3 •  …while the Number of Jobseekers FIGURE 4 •  in S2-2020… Has Surged 30 16 2.5 14 Total number of jobseekers 20 2.0 Y/Y change in night-time Job offers (thousands) 12 light intensity 10 10 1.5 (millions) 8 0 1.0 6 –10 4 0.5 2 –20 0 0.0 Jan-20 Feb-20 Mar-20 Abr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 North-Center North-East North-West Total jobseekers (RHS) Industry East Highlands Average Buildings and public works Agriculture Source: VIIRS Day/Night Band Nighttime Lights, Version 1, Earth Observation Group. Services Note: Data was adjusted to eliminate the bias caused by the Summer solstice, and the bias caused by gas torching activities at the Arzew and Skikda complexes. Source: Agence Nationale de l’Emploi (ANEM). affected the travel, accommodation and food services pandemic, with data from the Agence Nationale de sectors. The construction and manufacturing industries l’Emploi (ANEM) indicating that total job offers fell were also deeply affected as firms were mandated to by 84 percent between February and April 2020. In place half of their workforce on paid leave.12 The Algeria March, the authorities mandated government agencies Business Pulse Survey (BPS) conducted between end- and firms to place half of their workers on leave with July and mid-August 2020 provides insights as to the full compensation, limiting the number of layoffs. This depth of the crisis. During the Summer of 2020, 32 is evidenced by the results of the Algeria BPS, (see percent of firms surveyed remained fully or partially Box 1) with firms opting to place their employees on closed. Some 79 percent of firms reported a fall in sales paid leave (52 percent of firms), reduce their working in Q2/2020 relative to Q2/2019, with sales reported hours (29 percent of firms) and place them on leave to have fallen by 56 percent, on average, and smaller without pay (25 percent of firms). While the number firms and firms in the construction sector witnessing of monthly job offers has now recovered to pre-crisis a steeper decline in sales (See Box 1). Algeria’s state- levels based on ANEM data, the number of registered owned enterprises (SOEs) active in the transportation jobseekers in March 2021 exceeded the March 2020 sector have notably reported major revenue losses amid figure by 504,400 (+29 percent).15 The increase in the the suspension in international, regional, and inter-city travel. Air Algérie, which has cancelled all flights since February 2020, is estimated to have incurred a loss of 12 Nonetheless, the President of the Algeria Contractor Association has estimated a loss of 150,000 jobs in the US$290 million in 2020.13 construction sector (TSA, April 2021). The economic contraction has resulted in an 13 According to the advisor to Air Algérie’s President (Radio increase in the number of unemployed and a major Algérie, December 2020). contraction in hours worked among the employed 14 APS, March 2021. population, which has prevented significant job 15 This estimate is in line with the official estimate of more losses. A study by the Algeria Chamber of Commerce than 500,000 jobs having been lost due to the pandemic according to the Ministère de la Prospective. It compares and Industry at the end of 2020 estimates that nearly to an increase of 369,000 registered job seekers two-thirds of firms have had to either cut, freeze between March 2020 and March 2019, and an increase or delay recruitment due to the COVID-19 crisis.14 of 146,000 registered jobseekers between March 2019 Job offers fell sharply at the onset of the COVID-19 and March 2018. 6 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY number of jobseekers was more pronounced among to place workers on a remunerated leave of absence. low-skilled workers (+34 percent) compared to high- (Figure 4). skilled workers (+24 percent). Although detailed data Production in the hydrocarbon sector, which on job losses remain unavailable, they are expected to contracted for much of 2020, began recovering be concentrated in the private sector given the public in the last quarter of 2020 as a result of a surge sector’s larger compliance with the official directive in natural gas production. Hydrocarbon production Falling OPEC Quotas Brought Crude FIGURE 5 •  …while Natural Gas Production Has FIGURE 6 •  Oil Output Down… Surged at End-2020 1,100 12,000 1,050 10,000 1,000 Crude oil production (kbpd) Million cubic meter 950 8,000 900 6,000 850 800 4,000 750 2,000 700 650 0 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 600 Jan-20 Feb-20 Mas-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Natural gas production Production Production quota Exports, pipeline and LNG Source: OPEC Monthly Oil Market Report and S&P Global. Source: Joint Organisation Data Initiative. BOX 1: THE IMPACT OF THE COVID-19 PANDEMIC ON FIRMS GLOBALLY AND IN ALGERIA The World Bank Group, together with several partner institutions, conducted BPS covering more than 100,000 firms across 51 countries, including Algeria, between April and August 2020 to better understand the short-term impact of the COVID-19 pandemic.a There are a number of salient results that emerge across the various countries. First, the impact of the COVID-19 pandemic has been severe and widespread across firms, with persistent negative impact on sales. Second, the adjustment in employment has operated mostly along the intensive margin (i.e., leave of absence and reduction in hours worked) rather than along the extensive margin, with a small share of firms opting to lay off workers. Third, smaller firms are disproportionately confronted with financial challenges. Fourth, firms are increasingly relying on digital solutions in response to the shock. Fifth, firms are confronted with significant uncertainty about their revenue prospects, which is more prominent among those that have experienced significant losses in sales and were required to reduce their workforce. BPS conducted in Algeria, Djibouti, Morocco, Jordan, and the West Bank and Gaza identified some MENA-specific impacts.b Despite a drastic fall in sales, similar to other regions surveyed, a greater share of MENA firms have been holding on to their workers in the immediate aftermath of the COVID-19 pandemic. A protracted decline in economic activity, however, is threatening to add to firm closures and permanent job losses in the MENA region. In Jordan, for example, BPS conducted in the Summer of 2020 and in the Winter of 2021 indicate that the proportion of firms laying off workers increased from 26 percent to 39 percent, while the share of firms going out of business increased from 12 percent to 17 percent. MENA firms have also been slower to adopt technology in response to the crisis compared to firms across other regions, with a much wider gap experienced between micro- and small-enterprises, and larger companies compared to firms across other regions. The Algeria BPS, conducted during the Summer of 2020, conveys the severity of the COVID-19 shock on Algerian firms. Conducted jointly with the Ministry for Industry and Mines, the BPS targeted a representative sample of 431 (formal) firms between the end of July and mid- August 2020. At the time of the BPS, 32 percent of firms were partially or entirely closed, with firms in the construction and heavy industry sector, in industrial zones, young firms and firms with foreign capital being disproportionately affected by closures. Roughly 79 percent of firms had experienced a sales decrease between Q2/2019 and Q2/2020, with sales declining by 56 percent, on average. In addition to (continued on next page) Recent Economic Developments 7 BOX 1: THE IMPACT OF THE COVID-19 PANDEMIC ON FIRMS GLOBALLY AND IN ALGERIA (continued) the decline in demand which affected 74 percent of firms surveyed, Algerian firms were confronted with reduced employee availability (54 percent of firms), difficulties sourcing inputs (45 percent of firms), and lower financial service availability (39 percent of firms). Finally, the BPS indicated that 52 percent of firms placed employees on paid leave, in line with the Government’s directive, while 25 percent of firms placed employees on unpaid leave, 17 percent of firms laid off workers and 14 percent of firms reduced wages. The Algeria BPS indicated that while Algerian firms showed signs of resilience, they were confronted with considerable uncertainty regarding their future revenue prospects. While the median firm expected to be able to operate for 20 additional weeks at the time of the survey, 47 percent of firms were unable to state how much longer they would be able to withstand the adverse impact of the shock. While 62 percent of firms declared having enough liquidity to support operations over the following three months, 15 percent of firms indicated that they would not be able to continue their operations for more than a month. The degree of uncertainty regarding the timing for the lifting of the NPIs also remained high, with 34 percent of temporarily inactive firms indicating that they were unable to assess when they could resume their operations. Although reliance on digital tools remains limited in Algeria, the BPS indicates that firms have made greater use of it in response to the crisis. Among the firms surveyed, 30 percent started to use digital tools, and 26 percent increased their use of internet, social media, specialized applications, or digital platforms to support their business operations. Among firms that relied on digital tools, the main purposes cited were to increase sales (among 31 percent of firms), for marketing (among 18 percent of firms) or to support their managerial practices (among 17 percent of firms), while digital tools account for 16 percent of these firms’ sales. Meanwhile, 44 percent of firms surveyed indicated that they do not rely on any form of digital tools to support their business operations. To support struggling businesses during the COVID-19 pandemic, various policy measures were introduced across the MENA region, including in Algeria. Authorities across the region introduced support schemes for businesses through tax advantages, State guarantees, subsidized loans, and rebates on business costs. The tourism industry has been specifically targeted by these measures in Egypt, Jordan and Tunisia. Some countries opted for targeted policy measures for larger enterprises, manufacturing or special economic zones (Egypt and Jordan), while others have favored targeted measures for micro-, small- and medium-sized enterprises (Morocco and Tunisia). In Algeria, key policy measures included tax deferrals, as well as monetary policy instruments (see Money and Banking section). Among the policy options presented to firms during the BPS, 40 percent of Algerian firms favored deferred payments on rent and energy bills, while 24 percent of firms and 22 percent of firms favored reductions in taxes and social contributions, respectively. The results of the BPS indicated that only 8 percent of firms had received State support and that 59 percent of firms were not aware of policies in support of business operations. a World Bank, October 2020. b Mohammed et al. (March 2021). is estimated to have declined by 8.5 percent in 2020,16 gas exports to Europe (Algeria’s main gas export led by a decline in oil production. Algeria’s crude oil market) typically increase in the Winter, the growth production fell by 11.9 percent in 2020 relative to 2019 in output relative to 2020 can be partly attributed to as a result of cuts to the country’s OPEC production the economic recovery in Europe, as well as Algeria’s quota, which fell by 23 percent in May 2020, before recovering market share in the European market.17 increasing by 6 percent in July 2020. Natural gas production is estimated to have registered a modest increase in 2020 (+1.9 percent) with the decline in 16 Bank staff estimates based on JODI and Ministère de production during S1-2020 (–6.1 percent relative l’Énergie, January 2021. to S1-2019) being more than offset by a steep and 17 According to Sonatrach, Algeria’s market share in the accelerating increase during S2-2020 (+10.1 percent Spanish gas market increased from 21 percent in Q1- relative to S2-2019). The recovery in hydrocarbon 2020 to 47 percent in Q1-2021, and its share in the production extended to Q1-2021 amid a 1.4 percent Italian gas market increased from 16 percent to 35 percent over that period. This is mainly attributable to the increase in Algeria’s crude oil production quota, a redirection of global LNG supplies towards Asia, as well 25.1 percent increase in natural gas production and a as the decline in the UE’s LNG imports from Norway, due 31 percent increase in liquefaction for export, relative to maintenance works in the country’s sole LNG plant. to the same period in 2020 (Figures 5 and 6). While (European Commission, March 2021). 8 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY Public finance in 2019, with potential upward revisions which may be required in light of the implementation of measures to Algeria’s fiscal position deteriorated significantly support the banking sector, and pressures to finance in 2020 amid a decline in hydrocarbon revenues, the national pension fund’s deficit, which is estimated a surge in the public sector wage bill, and a rise at about 4 percent of GDP in 2020.20 (Figures 7 and 8). in net Treasury lending. Government hydrocarbon Meanwhile, official gross public debt only revenues,18 which represented 40 percent of total increased slightly as leftover monetary financing government revenues in 2019, is estimated to have and SOE deposits bridged most of the Treasury’s fallen by 25 percent due to the combination of volume financing needs. While the official gross public debt and price effects. Meanwhile, declining economic level has increased by 3.4 percent in nominal local cur- activity and import flows led to falling tax revenues, rency terms between 2019 and 2020, it is estimated to notably, from corporate income taxes and value- have risen from 45.1 percent of GDP in 2019 to 49.8 added taxes on imports. While preliminary budget percent of GDP in 2020 amid the contraction of the execution data as at August 2020 suggest a decline GDP base.21 More than half of fiscal financing needs in capital spending and in current transfers, other areas of spending are placing increased pressures on the budget. First, there is a surge in the public 18 Including Sonatrach dividends. 19 Executive decree 19-336 (December 8, 2019) mandated sector wage bill, in part related to the recruitment the recruitment by the public sector of 365,000 youth of youth through the Dispositif d’Aide à l’Insertion in pre-employment contracts under the DAIP program Professionnelle (DAIP).19 Second, there has been over the course of 2019, 2020 and 2021. According to an increase in Treasury net lending in the context the Minister for Labor, Employment and Social Security, of the realization of significant contingent liabilities recruitments under the DAIP program had reached from public banks exposed to struggling state-owned 20,000 individuals in October 2020, and 68,000 as of May 3rd, 2021. enterprises (SOEs), as well as of support measures 20 APS (January 2021). to alleviate the effect of the COVID-19 pandemic. The 21 Around 69 percent of official public debt is owed to the overall budget deficit is expected to have expanded to Banque d’Algérie, at negative real interest rates and long 16.5 percent of GDP in 2020, from 9.6 percent of GDP maturities. The Overall Budget Deficit Increased FIGURE 7 •  …as Revenues Fell and Spending FIGURE 8 •  in 2020… Increased 60 4,000 3,500 Fiscal aggregates, % of GDP 50 Budget execution, 3,000 billions of DZD 2,500 40 2,000 30 1,500 1,000 20 500 0 Hydrocarbon Nonhydrocarbon Current Capital Other 10 0 2015 2016 2017 2018 2019 2020 Total revenues Revenues Spending Total expenditures Overall budget deficit Jan–Aug 2019 Jan–Aug 2020 Non-hydrocarbon budget deficit Source: Ministry of Finance and Bank staff estimates. Source: Ministry of Finance and Bank staff estimates. Note: “Other” spending consists of the Special Account Balance and Treasury Note: Total expenditures include the Special Account Balance and Treasury Interventions. Interventions. Recent Economic Developments 9 Leftover Monetary Financing Bridged FIGURE 9 •  …as Oil and Treasury Savings Were FIGURE 10 •  Financing Needs in 2020… Exhausted 100% 60 80% 50 Share in deficit financing 60% As a % of GDP 40 40% 30 20% 20 0% –20% 10 –40% 0 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 Bonds and bank deposits Treasury savings at CB Gross public debt Treasury savings (incl. FRR) Oil savings Nonbank financing External financing Source: IMF’s Monetary and Financial Statistics (MFS). Note: Gross public debt is measured as the sum of claims from the central bank, Source: Ministry of Finance and Bank staff estimates. banking and financial institutions, and multilateral and bilateral creditors. is expected to have been met by a DZD 1,697 billion the banking reserve requirement ratio was reduced drawdown from the Treasury’s current account, 70 per- from 10 percent to 6 percent between March and April cent of which represented leftovers from the 2017– 2020, and further reduced to 2 percent by February 2019 monetary financing program. Drawdowns from 2021. In addition, the main policy rate was cut from 3.5 Sonatrach’s banking deposits and Algérie Poste de- percent to 3 percent between March and May 2020, posits, and from the Fond de Régulation des Recettes and the refinancing thresholds for public securities (FRR, the oil savings fund)22 are expected to have filled were increased significantly. Nonetheless, broad most of the remaining financing gap. Despite not be- money (M2) stagnated between May and October ing recorded in official public debt, the use of Algérie 2020, with the additional liquidity being fully converted Poste and SOE liquidity (4 percent of GDP in 2019, 4.9 into currency in circulation and banking deposits percent of GDP in 2020) to finance the budget deficit declining further. The partial recovery in oil prices and has led to a surge in nonbank liabilities.23 Meanwhile, the reliance on Treasury savings to finance the budget external public debt, which represented 0.8 percent of deficit allowed banking liquidity and broad money to GDP in 2019, is expected to have decreased further recover in November and December. Nonetheless, (Figures 9 and 10). at end-2020, both the monetary base and banking deposits in M2 remained below their May 2020 level,25 while currency in circulation had increased by 6.2 Money and banking percent over the same period. (Table 1, Figure 11). In 2020, the fall in hydrocarbon revenues induced a sharp decline in Algeria’s banking liquidity, 22 Although the FRR was depleted in 2017, DZD 305 billion despite policy measures to increase it. Bank was deposited into it in 2018. deposits fell between May and October 202024 in 23 Based on execution data as of August 2020. line with the fall in deposits related to oil revenues by 24 Defined as liquid bank deposits outside the BdA and included in M2. Sonatrach. This was compounded by the withdrawal 25 Deposits by the public sector declined by 17.8 percent of savings by Algérie Poste’s retail depositors and the over 2020—in line with the fall in hydrocarbon revenues— drawdown of SOE liquidity by the Treasury to finance while deposits from private firms and households rose the overall budget deficit. To expand banking liquidity, by 10.6 percent and 9 percent, respectively. 10 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY Banking Liquidity Fell Again as the FIGURE 11 •  …and Was Again Accompanied by a FIGURE 12 •  Crisis Unfolded... Slowdown in Credit 3 2.5 2.0 2 Contribution to growth in Contribution to growth (ppt) 1.5 banking claims (ppt) 1.0 1 0.5 0 0.0 –0.5 –1 –1.0 –1.5 Jan-19 Feb-19 Mar-19 Abr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Abr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 –2 Jan-19 Feb-19 Mar-19 Abr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Abr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 SOEs Private sector Currency Deposits in M2 Broad money Other Total Source: IMF’s MFS. Source: IMF’s MFS. Monetary Policy Measures Introduced since March 2020 TABLE 2 •  Policy instrument Pre-pandemic policy COVID-19 policy response Reserve requirement ratio 10% 8% (Mar-2020), 6% (Apr-2020), 3% (Sep-2020), 2% (Feb-2021) Policy rate 3.5% 3.25% (Mar-2020), 3% (May-2020) Public securities refinancing threshold 70–90% 85–95% (Apr-2020) Liquidity coefficient 100% 60% (Apr-2020) Liquidity buffer 2.5% Exempted Existing liabilities Standard Rescheduled, extending interest rate subsidies Refinancing requests Standard Full satisfaction for existing debtors Refinancing period 7 days One month (Apr-20) Source: Banque d’Algérie. Despite the significant easing of prudential percent in 2020.26 The majority of credit continues constraints, credit growth slowed down in 2020, to be allocated to SOEs (52 percent of total credits), affecting both public and private firms. To foster followed by private firms (40 percent) and households credit growth and support firms, the statutory liquidity (8 percent), as at end of December 2020. (Figure 12). coefficient was lowered to 60 percent, mandatory Over the course of 2020, the dinar lost liquidity buffers were suspended, and the Banque 9.8 percent of its value against the U.S. dollar, d’Algérie (BdA) instructed banks to reschedule the debt and 17.7 percent against the Euro, negatively of firms affected by the COVID-19 pandemic, and to impacting Algeria’s terms of trade. Consistent fully satisfy their refinancing requests. Notwithstanding with the decline in oil prices and in Algeria’s foreign these measures, credit growth fell from 12.3 percent in 2018 and 9 percent in 2019, to 3.1 percent over 2020. 26 Data have been extracted from the IMF’s Monetary Credit growth to SOEs declined from 15.2 percent and Financial Survey, which are consistent with a BdA in 2018 and 14.4 percent in 2019, to 3.1 percent in communiqué presenting a credit growth of 2.6 percent 2020, while private sector credit growth fell from for SOEs, 3.5 percent for private firms, and 4.2 percent 10.2 percent in 2018 and 4.2 percent in 2019, to 3.1 for households (BdA, February 2021). Recent Economic Developments 11 The Algerian Dinar Depreciated FIGURE 13 •  …and Inflation Edged Up in Early FIGURE 14 •  Markedly in 2020… 2021 (decrease denotes depreciation) 105 5 Value of the Algerian dinar, CPI contribution and growth (pp) 100 4 Jan-2019=100 3 95 2 90 1 85 0 80 –1 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 –2 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 USD/DZD EUR/DZD REER based on the CPI Food Non-food CPI Source: IMF’s International Financial Statistics (IFS) and Investing.com. Source: ONS. revenues, the dinar depreciated by 6.4 percent the exchange rate depreciation (raising the price of against the U.S. dollar in March and April 2020 and imported equipment, intermediate inputs and final remained broadly stable until December 2020 when it products), the increase in currency in circulation, depreciated by a further 2.3 percent. The dinar also as well as of the effort to streamline milk and wheat fell against the Euro between April and August 2020, subsidies.28 (Figure 14). due to its appreciation against the U.S. dollar. With the US dollar as the invoicing currency of hydrocarbon exports and over 50 percent of imports originating from External sector Europe or China, the steeper depreciation of the dollar The current account deficit widened in 2020 against the Euro negatively affected Algeria’s terms of as a result of the steep decline in the value of trade. Algeria’s real effective exchange rate (REER)27 hydrocarbon exports during the first half of 2020. decreased by 11.1 percent in 2020, led by a 13 percent The fall in hydrocarbon export volumes which began decline in the nominal effective exchange rate (NEER). in the first quarter of 2020 was exacerbated during the Meanwhile, the dinar’s value in the parallel market second quarter of 2020 by the onset of the COVID-19 remained unchanged against the U.S. dollar (172 DZD/USD) and the Euro (201 DZD/EUR). (Figure 13). Inflation as measured by the Consumer Price Index (CPI) remained contained during most 27 The REER is a weighted average of the country’s of 2020, but inflationary pressures increased. currency value in relation to its major trading partners adjusted by the Consumer Price Index. The CPI rose by 2.8 percent between December 28 In June 2020, the use of subsidized milk powder was 2019 and December 2020, as the modest increase restricted to milk and dairy production, and its use in food prices over that period (+1.5 percent) was by economic operators (restaurants, cafés, other compensated by a more pronounced increase in establishments serving beverages) was forbidden. the price of non-food products (+3.7 percent). Data (Executive Decree no 20-153, June 8, 2020). In August for January 2021 suggest a steeper increase in the 2020, the use of subsidized wheat was restricted to the production of flour for direct sale to bakeries, public price of both food and non-food products in early establishments and consumers, and eliminated for the 2021 (+3.4 percent and +4.2 percent against January production of flour to be used in the transformation 2020, respectively). Several factors have placed into other types of flour, semolina and pasta. (Executive upward pressures on the CPI in 2020, most notably Decree no 20-241, August 31, 2020). 12 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY The Current Account Deficit FIGURE 15 •  …and Imports of Machinery and FIGURE 16 •  Gradually Deepened… Equipment Fell Drastically 13 15 10 Contribution to import growth 8 5 Billion USD 3 0 (ppt) –5 –2 –10 –15 –7 T1 T2 T3 T4 T1 T2 T3 –20 2014 2015 2016 2017 2018 2019 2020 2019 2020 Finished Equipment Current account balance Product exports Raw and intermediate Energy Product imports Services exports Food Total Services imports Source: Algeria’s Directorate General for Customs. Source: IMF. Note: Data for 2020 are estimates based on the first 11 months of 2020. pandemic, which curbed the international demand account deficit. Over 2020, the current account for hydrocarbon products, just as international oil deterioration resulted in continued foreign exchange prices declined steeply. Imports also fell significantly, reserves depletion, equivalent to US$46.9 billion as at in line with the decline in domestic demand, the the end of 2020 (–20.5 percent relative to end-2019), Algerian dinar’s depreciation, and the expansion corresponding to 12.8 months of imports of goods of import compression policies that began in 2018 and services.30 (Figures 15 and 16). to protect foreign exchange reserves.29 Imports of machinery and equipment, and of imports of raw and intermediate products, fell even more markedly than in 2019. Meanwhile, BPS results suggest that 45 percent 29 They include an import ban affecting 45 product groups in January 2018, which were followed by the imposition of firms have difficulties sourcing inputs. The steeper of safeguard duties (Droits Additionels Provisoires decline in export compared to imports widened the de Sauvegarde) ranging from 30 percent to 200 current account deficit, in spite of the depreciation percent, to 1095 tariff lines, Since then, more stringent of the Algerian dinar against the U.S. dollar. During administrative and financing conditions for imports have the third quarter of 2020, imports and hydrocarbon been imposed, while imports of services have been exports recovered simultaneously as domestic activity discouraged with several public sector contracts with foreign service providers being terminated. partly recovered and gas production increased, 30 At end-January 2021, they stood at US$ 45.5 billion and leading to a stabilization in the trade balance in at end-February, they had decreased further, according goods. A steep deterioration in the balance of service, to official sources. The indicator excludes Special however, caused a further deepening of the current Drawing Rights. Recent Economic Developments 13 2 ECONOMIC OUTLOOK AND RISKS T he global economic recovery is taking ultimately, the economic recovery. In 2022, domestic hold in 2021, with the Algerian economy vaccine production capacity and the improved expected to benefit from the rebound in availability of vaccines worldwide should allow for a hydrocarbon demand. The partial, but sustained significant increase in the pace of vaccination, and a lifting of NPIs, particularly in developed countries sustained lifting of NPIs. undergoing mass vaccinations, has induced a Over the short- to medium-term horizon, rebound in the global demand for hydrocarbon private investment in Algeria is expected to remain products and in pent-up demand for durable goods, limited, as firms recover from the pandemic supporting a strong economic recovery worldwide. and continue to be confronted with substantial Despite the anticipated gradual increase in OPEC+ economic and policy uncertainty. Even prior to production quotas in 2021, Algeria’s average oil the COVID-19 pandemic, Algeria’s private sector was production will remain unchanged in 2021 relative to suffering from low productivity, a large incidence of 2020, however, but is expected to increase modestly informality, high regulatory burden, limited access to in 2022. Strong international demand for gas in credit and a significant difficulty to hire individuals 2021 is expected to lead to a sustained recovery in which meet the job requirements. While recent domestic gas production.31 data are lacking (e.g., national accounts, firm-level, Meanwhile, the recovery in the non- consumer/business confidence and vaccination hydrocarbon segment of the Algerian economy data), the pandemic is expected to have further will be held back by the slow vaccination pace. worsened firms’ balance sheets and their revenue While Algeria’s vaccination campaign is expected outlook. Access to additional and more timely data, to progressively increase in the second half of combined with a long-term plan to implement the 2021, less than 20 percent of Algeria’s population is much-needed reforms to support private sector expected to be fully vaccinated by the end of 2021. development, would support the economic recovery. NPIs are consequently expected to remain partially in place, with Algerians expected to exert caution in their daily activities throughout 2021, thereby limiting 31 In our baseline scenario, average oil prices are expected the rebound of the services-producing sector and to remain stable, at 62 USD/barrel, in 2021 and 2022. 15 A much-needed reform program to support the context of structurally declining hydrocarbon rev- private sector development—focusing on improv- enues, and the large number of entrants to the labor ing the business environment—exists but its full im- market every year. The quality of the fiscal adjustment plementation is still pending. These include provid- will deserve special attention, to avoid negatively af- ing more favorable terms for international investors in fecting economic growth and vulnerable populations, the hydrocarbon sector, lifting the 51 percent domestic including by protecting social spending and carefully ownership rule imposed on foreign investment (except selecting public investment projects. in strategic sectors of the economy),32 streamlining A fine balance will need to be struck be- administrative business procedures for firms and in- tween meeting public and private liquidity needs dividuals, modernizing the Investment Law, encourag- and preserving monetary stability. To finance an ing public-private partnerships, as well as enhancing overall budget deficit in the double digits as a per- the banking sector’s role in supporting private sector centage of GDP, the authorities have announced a growth. The authorities have also emphasized the need return to financing mechanisms through the BdA.35 to foster growth in the mining, renewable energies, and Meanwhile, private firms and SOEs’ balance sheets pharmaceutical sectors, as well as to upgrade digital have significantly deteriorated as a result of the im- infrastructure in support of increased productivity, in- position of NPIs and the economic recession that clusiveness, and resilience (See Box 2). More specific ensued. This has severely affected public banks’ bal- details regarding the reform agenda and its timeline ance sheets, placing increased pressure for further remain elusive, however, deterring private investment. monetary easing, credit growth and bank recapital- While public spending will support growth in ization. The combined and delayed effect of the di- 2021, bringing the deficit on a sustainable trajec- nar’s depreciation against the U.S. dollar, which will tory would entail a significant fiscal consolidation. alleviate the fiscal and external deficits but continue According to the draft of the amended 2021 Finance to raise import prices, and of monetary injections, will Law, public investment should recover in 2021, to a raise inflationary pressures on the economy, ultimate- level slightly higher than that which prevailed in 2019 ly affecting the population’s standard of living. (+4.6 percent),33 while current spending is expected to A shift to a private sector-led growth model register a significant increase relative to 2019 (+15.7 will also be critical to reducing the large external percent), as the recruitment of employees on pre-em- deficit of the country and protecting international ployment contracts continues to lead to an expansion reserves. Algeria’s current account deficit is expected in the public sector wage bill. Below-the-line Treasury to remain elevated, despite registering moderate interventions, amid increasing support to public banks and firms, will deteriorate the overall budget balance. 32 Decree 21-145 (April 17, 2021) has identified so-called Government hydrocarbon revenues are expected to “strategic sectors”: 1/ mining, hydrocarbon extraction register a moderate increase, due to the recovery in in- and transport, 2/ industries initiated by or in relation ternational oil prices and the Algerian dinar’s deprecia- with SOEs managed by the military, 3/ railway, sea, tion against the U.S. dollar. Meanwhile, tax revenues air transport and road infrastructure management, 4/ pharmaceutical industry. are projected to remain subdued against relatively 33 According to the Ministry of Finance, 44 percent of weak economic activity. While the medium-term bud- investment projects were frozen in 2020, and 54 percent get framework (MTBF) included in the 2021 Finance of those projects are expected to resume. Law only projects a moderate nominal increase in 34 Meanwhile, the 2021 Amending Finance Law for 2021’s spending,34 it does not allow for the deficit to return to increase in public spending projections for 2021 is a sustainable trajectory. While countercyclical public expected to lead to an upward revision in the MTBF’s spending aggregates. spending in 2021 is required to support the economic 35 The BdA would resume purchases of Government recovery, accelerating the transition to an economic bonds, while debt buybacks from banks could take model led by the private sector will be essential to shift place in exchange for the purchase of Government debt. away from public spending-led growth, especially in (APS, November 2020). 16 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY improvements in 2021 and 2022. The recovery in vaccination in 2021, combined with the lifting of hydrocarbon export revenues will be supported by NPIs, including the partial reopening of Algeria’s increased gas volume exports and higher international borders, exposes the country to the resurgence oil prices, with the growth in exports expected to in COVID-19 infections, which could lead to new surpass the growth in imports. Import growth is NPIs being imposed and limit the fragile recovery expected to be limited by tepid domestic demand, in the non-hydrocarbon sector. Our baseline continued import compression policies and the projections assume that the sanitary situation lower purchasing power of the Algerian dinar,36 but is will remain such that NPIs will not need to be projected to rise as domestic demand resumes. This re-imposed. is expected to exert further pressure on the price and 2. The resumption of large-scale social mobi- the availability of imported products, raising domestic lization. While the Hirak movement dissipated prices for producers, businesses, and consumers, after the December 2019 Presidential election as well as the cost of public and private investment and remained relatively idle during the COVID-19 projects. Notwithstanding the moderate contraction of pandemic, small scale mobilizations have resur- the current account deficit, and assuming a lack of faced in 2021, amid rising economic hardship foreign currency inflows, foreign exchange reserves and inequality (see Chapter 3). The resumption of are projected to fall from US$46.9 billion as at end- large-scale mobilization could lead to disruptions 2020 to around US$30 billion as at end-2021 or 7.3 in economic activity and increase uncertainty, months of imports of goods and services.. hindering growth. Private consumption spending will only 3. Lower-than-expected foreign exchange rev- recover gradually due to the fall in the purchasing enues through lower-than-expected hydrocarbon power of consumers amid a decline in labor demand37 and prices would raise fiscal and ex- market income and an expected increase in ternal deficits, increasing the risk of a disorderly consumption prices. Since 2017, the annual growth adjustment (e.g., to the exchange rate or to do- in real GDP per capita has been negative, and real mestic absorption) to protect international re- private consumption per capita has stagnated. In serves which are projected to be relatively thin by 2020, the economic recession has led to a significant end-2022 in our baseline. Higher fiscal financing increase in the number of jobseekers, and the number needs could also lead to additional absorption of of hours worked has fallen, leading to a significant bank liquidity and consolidation of public invest- decline in labor income, thereby decreasing the ment, hampering growth. purchasing power of consumers. This will be 4. Insufficient private sector response. Insuffi- reinforced by the expected depreciation and continued cient progress in implementing structural reforms import compression policies, raising the price of final and policies in support of a sustainable recovery products that are either imported for consumption in the private sector would threaten growth and or used as inputs in the production process. Finally, delay the structural transformation of the Algerian amid significant economic uncertainty and the slow economy away from its dependence on hydrocar- pace of vaccination, precautionary savings are also bon revenues. expected to limit the rebound in private consumption. Under the baseline scenario, GDP growth is 36 The Finance Law for 2021 projects continued exchange expected to reach 3.7% in 2021 and 2.5% in 2022, rate depreciation in 2021, 2022 and 2023. following an estimated 5.5 percent contraction in 2020. 37 The increase in Algeria’s market share in the European The key risks to our growth forecast and gas market might not be sustained, since it is partly due to factors such as the redirection of global LNG medium-term economic outlook include: shipments towards Asian markets amid an increase in the price premium, and maintenance in Norway’s unique 1. The deterioration of the domestic sanitary LNG processing plant, causing a decline in Norwegian situation: The slow projected ramp up in LNG exports. Economic Outlook and Risks 17 BOX 2: LEVERAGING DIGITAL TOOLS FOR AN INCLUSIVE AND RESILIENT RECOVERY Mobile Connectivity Index, 2019 FIGURE 17 •  Average Download Speeds Are FIGURE 18 •  Lower in Algeria 70 40 60 35 50 30 40 25 30 Mb/s 20 20 15 10 10 0 5 Algeria Egypt Morocco Tunisia Algeria Egypt Morocco Tunisia Algeria Egypt Morocco Tunisia Algeria Egypt Morocco Tunisia 0 Algeria Egypt Morocco Tunisia Algeria Egypt Morocco Tunisia Consumer Content and Infrastructure Affordability readiness services Mobile Fixed broadband Source: GSMA, www.mobileconnectivityindex.com. Source: Ookla, Speedtest Global Index, www.speedtest.net/global-index Digital transformation is a critical tool for a country to leapfrog to higher productivity levels, and the COVID-19 crisis has highlighted its vital role in society and for fostering greater economic resiliency. During the confinement, it has allowed workers to telecommute from work, students to pursue classes online, and governments to provide essential services through digital platforms. BPS conducted worldwide since the onset of the COVID-19 pandemic point to increased reliance on digital tools (i.e., internet use, online social media, specialist apps and digital platforms), importantly as it relates to supporting business operations. Digital inequality across firms remain, however, and this has been shown to be more pronounced in MENA countries relative to other developing regions. Impediments to digital technology adoption and innovation in the region include: (i) the high degree of informality; (ii) the lack of digital payment solutions; (iii) the lack of incentives to innovate; and (iv) underdeveloped and costly digital infrastructures (Mohammed et al., 2021). To reap the gains from digital transformationa and allow the necessary increase in Internet traffic in the context of the COVID-19 pandemic (+20% to +50%), digital infrastructure must be sufficiently well developed, especially broadband infrastructure. This means that the mobile broadband infrastructure should be well developed, including in remote areas, but also built upon fiber optic networks (at backhaul level) to deliver high quality services, within the context of increased mobile traffic. In addition, and to avoid concentrating all the traffic on mobile networks, the fixed broadband infrastructure must be well developed, particularly in urban areas, in order to better meet the needs of enterprises and administrations. In Algeria, the Mobile Connectivity Index reveals that despite comparatively high consumer readiness and affordability, the digital infrastructure is lagging behind peer countries such as Egypt, Morocco and Tunisia and this in part explains the fact that content and services are less developed.b Broadband networks in Algeria are confronted with repeated service disruptions, offering consumers with a low quality of service, and this has been exacerbated by the COVID-19 crisis. (Figure 17). Mobile and fixed broadband speeds fall behind the rest of the Maghreb region (Figure 18), even though Algeria has made significant public investments in the development of fiber optic networks totaling approximately 80,000 km of backbone network, which could position the country as a regional leader in digital connectivity. But infrastructure sharing across market participants remains limited, for two main reasons. First, Algérie Télécom’s infrastructure is not sufficiently regulated to allow access by competitors at reasonable conditions. Second, the national company for Algerian telecom infrastructure (COMINTAL/CITA), in charge of commercializing the excess fiber optics infrastructure owned by State Enterprises, is only dealing with Algérie Télécom, and not with other competitors. This reduces opportunities for capital expenditure savings for connectivity service providers, digital infrastructure providers, and IT infrastructure users in the wider economy. Competition in international and data communication could lead to the emergence of new market players which could eventually reduce the cost and improve the quality of internet access, as well as promote youth employment. To support an inclusive recovery and reap full digital dividends, access to digital services also needs to be broad, while remaining accessible to lower-income groups. Algeria’s ranking on the Individuals Using Internet index and mobile penetration has significantly improved in recent years, and mobile penetration has grown significantly, especially among the youth population. Notwithstanding this improvement, (continued on next page) 18 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY BOX 2: LEVERAGING DIGITAL TOOLS FOR AN INCLUSIVE AND RESILIENT RECOVERY (continued) 3G networks provide coverage to 90 percent of the population, 4G FIGURE 19 • Internet Access at Home is Highly networks provide coverage to 67% of the population at the end Unequal of 2019, and only 4% of the population aged 15 and older holds a 4G subscription (1.2 million nationwide), placing Algeria behind 78 regional peers.c Access to digital services is unequal, thereby limiting Ménage s disposant d'un accès progress in attaining a more inclusive digital economy. Women, less- internet à domicile (%) 57.8 educated individuals, and those living in remote areas, have less access to ICT, which remains limited by the lack of affordability. 38.4 Roughly 75% of Algerian households are estimated to lack access 33.1 30.4 to Internet at home, with a significant wedge in home Internet access 20.3 between the richest and poorest households. (Figure 19). 12.1 9.5 12.1 The Government of Algeria has recently launched an ambitious 3.5 0.8 digitalization reform program which would necessitate improvements Higher Urban Rural Highest Third Lowest Secondary Primary None Fourth Second to the digital infrastructure. A new Digital Agency and a National Digital Strategy have been launched, and the 2020 Government Action Plan intends to improve the performance of the public administration, including through enhanced digital services. The Plan also addresses Education of Location Wealth quintile household head the need to optimize existing infrastructure and increase investment to improve the population’s access and the affordability of Internet Source: MICS 6 (2018–2019) services. The fulfillment of this ambitious plan would in turn support Y-axis: Share of households with internet access at home. the authorities’ objective to foster private sector-led growth and the structural transformation of the Algerian economy. a See Digitizing Infrastructure: Technologies and Models to Foster Transformation (World Bank, 2021). b The Global System for Mobile Communications Association (GSMA) Mobile Connectivity Index is a composite index comprised of 41 weighted indicators organized across four dimensions, i.e., infrastructure, affordability, consumer readiness, and content and services. c GSMA estimates. Economic Outlook and Risks 19 3 COVID-19’S EFFECTS ON INEQUALITY IN MENA AND ALGERIA Evidence from across the MENA region confirms that poorer households are more likely to report a worsening of their living standards. Although there are no data that measure the welfare impact of the COVID-19 pandemic on Algerians, several characteristics of vulnerable Algerian households suggest that these regional patterns hold for Algeria. They are more likely to be infected by COVID-19 or to become unemployed during the pandemic, less likely to benefit from adequate social protection, and more likely to be affected by ongoing macroeconomic and fiscal adjustment policies. Therefore, a sustainable and inclusive recovery will need to offer the most vulnerable the opportunity to regain what they have lost. Introduction million cases of COVID-19 have been reported, including more than 2 million deaths.38 The adverse socio-economic effects of the COVID-19 pandemic are unprecedented and are much more pronounced among lower-income 38 European Centre for Disease Prevention and Control groups. In addition to having a devastating impact on (ECDC), 2021. The ECDC uses multiple information sources per country. The information sources are physical and mental well-being and the untimely death Ministries of Health or National Public Health Institutes, of millions, the COVID-19 pandemic has thrown entire and the obtained data is systematically cross checked, economies in disarray and upended the livelihoods with data systematically cross checked with data from of many. Since the start of the outbreak, about 112 the World Health Organization. 21 As more evidence becomes available, it Also, in an economic sense, poor people becomes manifest that the negative effects of remain more vulnerable to the negative conse- COVID-19 are disproportionally borne by those quences of COVID-19 than wealthier ones, wheth- who were already disadvantaged and vulnerable er it is through income losses due to lockdowns, prior to the pandemic.39 In MENA, the COVID-19 unexpected health expenses, or because poor crisis is the fourth crisis to hit the region in the past citizens have less access to social safety nets. In decade, after the 2010–2011 Arab Spring, the low-income countries only one out of 26 jobs can be 2014–2016 decline in international oil prices, and done from home, compared to one out of five jobs the 2019 resurgence of protests in countries that had globally.44 Within countries, the ability to telework is escaped the first episode of protests in 2010–2011.40 correlated with income, as white-collar jobs are more This evidence also suggests that swift re- suited to be done from home. Poor and less-educated actions from authorities across the region could workers, by contrast tend to be engaged in sectors only partially address the pandemic’s effects on where social distancing is hard to be observed such the most vulnerable. In Algeria, authorities were as construction, labor-intensive manufacturing and quick to implement a series of measures to preserve small retail; they have a higher risk of contracting the public health and support vulnerable households, virus and of consequently losing their job. Poor work- including through a solidarity allowance, in-kind sup- ing individuals are less likely to have access to social port to vulnerable households, and the extension of security as they are predominantly engaged in the the Ramadan solidarity grant scheme.41 Evidence from informal sector, and less likely to work in the public the region suggests, however, that the effectiveness of sector which, unlike the private sector, has maintained such mitigation measures is limited by widespread in- its workforce and has continued to pay salaries (albeit formality and a poor targeting or support programs, sometimes insisting on salary cuts). illustrating the importance of generating timely and comprehensive data on household welfare. Evidence from the MENA region Why inequality increases due to Evidence from High Frequency Phone Surveys in COVID-19 MENA illustrates that the global trends that poor households are more likely to report worsening living Evidence from across the globe suggests that the standards as described above, hold for households characteristics of poor households make them within the sub-region. Since the onset of COVID-19, more susceptible to the negative consequences many statistical agencies in the region collected data of COVID-19. Poor people are more likely to live through phone interviews to assess the socio-economic in multi-generational households, increasing the impacts of the crisis on households. The case of Tunisia transmission risks to vulnerable elderly who cannot is worth mentioning having implemented five rounds be isolated from interactions with others at home. of High Frequency Phone Surveys between April and At work, poor people are more likely to engage in client facing activities and are less likely to receive 39 Hill and Narayan, 2020; Oxfam International, 2021. adequate protective equipment, increasing their risk of 40 Yahya, 2020. exposure. Poor people tend to have more underlying 41 World Bank, January 2020. chronic health conditions, as evidenced by a sharp 42 Isaacs and Choudhury (2017), for instance, find that in gradient in life expectancy by wealth.42 In addition, the USA the richest American men live 12 years longer poor people may have less access to treatment, than the poorest men, while the richest American women not in the least because the cost of consultations live 10 years longer than the poorest women. 43 In the UK, the Office for National Statistics shows that with medical doctors and expenses for treatment those living in the most deprived neighborhoods are are beyond their financial means. Even in countries more than twice as likely to die from COVID as those in where medical care is freely provided, one observes the least deprived. that COVID-19 has become a disease of the poor.43 44 Sanchez at al., 2020. 22 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY October 2020. The Tunisia data are unique in that they lower likelihood of reporting a deterioration in living allow to consider the effects of the pandemic over time, standards than the poorer ones. The results reported while controlling for different household characteristics, for Tunisia can be seen across all countries within the including the wealth status of the household prior to region. the pandemic. The results of this work, confirm that Other surveys, implemented across MENA poor and more vulnerable households are more likely in, amongst others, Morocco, Egypt, Djibouti, to report a deterioration in their welfare relative to the Iraq, Libya, Lebanon and Palestine confirm month before the interview.45 Figure 20 shows that the that poorer households are more likely to lose probability of a respondent declaring a deterioration their income due to the COVID-19 pandemic.46 in living standards is higher among those with lower These surveys also demonstrate that mitigation educational attainment, among younger respondents, among respondents who are unemployed, among respondents who are self-employed/employer or a 45 Alfani et al., 2021. A linear probability model is estimated contributing family worker as compared to someone at the household level simultaneously controlling for type of employment as well as for additional individual working as a civil servant. Employees with no or only characteristics. The dependent is a dummy variable that a partial salary also report worsening living standards. equals one if a household reports a deterioration in living Finally, looking at household welfare levels measured standards relative to the month before the interview. before the pandemic, wealthier households have a 46 Nguyen and Gansey, 2021. FIGURE 20 • Probability of Declaring a FIGURE 21 • Portion of Respondents to High Deterioration in Living Standards, Frequency Phone Surveys Receiving as Compared to the Month before Support from Public Cash Transfer the Interview, Tunisia (2020) Programs Following COVID-19 by Consumption Quintile Male household head ** 35–44 ** 30 45–64 *** 65+ *** 25 Primary education ** Secondary education ** Tertiary education *** 20 Not employed *** Respondents (%) Private sector employee ** Self-employed/employer *** 15 Partial salary *** No salary * Lower/No business income *** 10 2nd consumption quintile *** 3rd consumption quintile *** 5 4th consumption quintile *** 5th consumption quintile *** Round 4 *** 0 Total Poor Non-poor Feb Jul Aug Sep Bottom quintile 2 3 4 Top quintile Bottom quintile 2 3 4 Top quintile Bottom quintile 2 3 4 Top quintile Round 5 ** –0.4 –0.2 0.0 0.2 0.4 0.6 0.8 Welfare deterioration Source: Alfani et al., 2021. Estimations based on data from the Enquête téléphonique auprès des ménages pour étudier et suivre l’impact du COVID-19 sur le quotidien des Tunisiens, INS and WB. (March to October 2020). PSE DJI IRQ EGY MAR TUN Note: Estimation coefficients of the linear probability model. Reference categories: 15–34; no education; public sector employee; full salary, business income as usual or Source: WB and statistical institutes of Palestine, Djibouti, Iraq, Egypt, Morocco, and more than usual; Quintile 1; Round 3. Tunisia (March to October 2020). COVID-19’s Effects on Inequality in MENA and Algeria 23 measures are limited in scope and insufficient to The impact of COVID-19 on avoid significant increases in poverty. Relatively few inequality in Algeria households benefited from cash transfer programs, not in the least because many are informally There are no data that directly measure the employed and ineligible to benefit from existing social welfare impact of the COVID-19 pandemic on security schemes (Figure 21). While these programs Algerians, but if one assumes that patterns from were designed to target the poor, even the most other countries in the region apply, existing data extensive transfer systems managed to cover only can be exploited to investigate the likely impact 25 percent of them. As a consequence, the portion of COVID-19 on inequality in Algeria. of households in the MENA region reporting food Jobs that cannot be done remotely, poor insecurity has reached dramatic levels. As much as access to the Internet and lack of equipment 42 percent of households in Palestine, 26 percent of make home-based work virtually impossible for households in Djibouti and 16 percent of households the vulnerable. Whether a job can be performed in Tunisia reported lower food consumption relative from home is a key determinant of households’ to prior to the onset of the pandemic. In Iraq, almost vulnerability given the widespread shutdowns, half of households implemented at least one negative mobility restrictions, and social distancing policies. coping strategy (such as the sale of assets) to ensure The feasibility of home-based work for the vast the family had enough food to eat. The only exception majority of occupations, in turn, is likely to depend is found in Morocco where the cash transfer program on internet access,48 and is complicated by the reached 5.2 million individuals who had lost their job in the informal sector and requested some assistance 47 Lopez-Acevedo et al., 2021. from the government.47 48 World Bank, 2016. BOX 3: THE SIXTH MULTIPLE INDICATOR CLUSTERS SURVEY (MICS6) The Multiple Indicator Clusters Survey (MICS) is an international program launched in 1995 by UNICEF to support countries in the production of key indicators to monitor the condition of women and children. Algeria is amongst the 60 countries that have participated in the MICS initiative since 1995, having completed five editions: MICS1 in 1995, MICS2 in 2000, MICS3 in 2006, MICS4 in 2012–2013 and MICS6 in 2018–2019. The sixth edition is managed by the Ministry of Health, Population and Hospital Reform, and implemented in partnership with UNICEF, with the support of the United Nations Population Fund (UNFPA) and technical support from the Office National des Statistiques. The survey was held between December 2018 and April 2019, and generated close to 200 indicators, disaggregated by region (Espaces de Programmation Territoriale), place of residence (urban or rural), gender, educational attainment, age and wealth quintile. Five questionnaires were used in the MICS6, adapted for the Algerian context and the country’s needs: • A household questionnaire, collecting information on all household members, the household and the accommodation (close to 30,000 respondents) • A questionnaire for women between the ages of 15 and 49 years old (over 35,000 respondents) • A questionnaire related to children below the age of five years old (close to 15,000 respondents) • A new questionnaire related to children between the ages of 5 and 17 years old (over 17,000 respondents) • A questionnaire analyzing the quality of the household’s drinking water (over 4,000 respondents) Innovations from the sixth survey include water quality testing, access to social transfers, handicaps and the functioning of children and women. Modules specific to Algeria were also developed and integrated into the survey, including on economic activity of youth 15 years of age and over, chronic diseases and mortality, household waste, dental health, and accidents for children between the ages of 5 and 17 years old. Source: UNICEF. 24 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY FIGURE 22 • Access to Home-Based Internet FIGURE 23 • Highest Educational Attainment and PC by Welfare Quintile, % of by Quintile, % of Adult Population, Population, 2019 2019 100% 5 9 13 78 78 90% 12 18 17 31 80% 21 70% 29 26 46 60% 31 29 50% 30 32 19 28 26 40% 18 30% 17 21 13 14 14 6 20% 35 4 25 10 1 10% 19 15 9 Access to Access 0% Internet at home to a computer at home Bottom 20 Second Third Forth Top 20 Bottom 20 Second Third No education Primary Lower secondary Forth Top 20 Upper secondary Tertiary Source: Authors calculations based on MICS 6 (2019). Source: Authors calculations based on MICS 6 (2019). quality and cost of the digital infrastructure (see of households in the bottom quintile has access to tap Box 2, Chapter 2). While 26 percent of Algerians have water inside the dwelling, leading to poorer sanitary Internet at home, only one percent have access to the conditions, compared to 98 percent access among internet and six percent of individuals have access households in the top quintile. to PC equipment in the bottom welfare quintile (see Data from the ANEM demonstrates that Figure 22). The educational attainment level is also a unskilled employees disproportionately lost their strong predictor of the ability of an individual to work jobs during the pandemic. Between March 2020 from home49 and the population from the bottom and March 2021, the number of jobseekers among quintile is highly deprived in this aspect with 53 the unskilled population registered a much larger percent having primary or no formal education (see increase compared to skilled individuals, which Figure 23). On par with other upper-middle income stands in contrast to the recent trend. (Figure 26) The countries, Algeria seems to be very unequal in the number of jobseekers with no qualification increased share of potential home-based jobs by quintile, with by 35 percent between March 2020 and March 2021, nearly zero such jobs for the first two income quintiles against an increase of 31 percent for support staff and with 40–50 percent of remote jobs for the top and specialized workers, 26 percent for advanced quintile (Sanchez et al., 2020). technicians and 24 percent for managers. The excess Poor and vulnerable Algerians live in more labor supply for low-skilled occupations is expected cramped conditions, have worse toilet facilities to exert a downward pressure on wages in the short- and poorer access to tap water inside their to medium-term horizon. dwellings, making them more susceptible to infection. Poorer Algerians live in more cramped conditions with three persons per bedroom, on 49 Sanchez et al. (2020). average, versus two persons per bedroom, on 50 Due to the lack of income or consumption data in average, for the wealthier households (see Figure 24). Algeria, an asset index approach has been applied to estimate households’ welfare using MICS 6 (2019) Likewise, one out of five households in the bottom data. It is constructed by Principle Component Analysis welfare quintile50 shares toilet facilities with other (PCA) approach using information on households’ living households (see Figure 25) making them more conditions and assets’ ownership, following Filmer and exposed to infections. Furthermore, only 64 percent Pritchett (2001). COVID-19’s Effects on Inequality in MENA and Algeria 25 FIGURE 24 • Average Number of Persons per FIGURE 25 • Living Conditions of Households by Room by Welfare Quintile, 2019 Welfare Quintile, % of Households, 2019 3.0 97 98 2.6 90 94 93 96 85 87 2.4 80 2.2 2.0 64 Non-shared toilet Tap water inside the dwelling Bottom 20 Second Third Bottom 20 Second Third Forth Top 20 Forth Top 20 Source: Authors calculations based on MICS 6 (2019). Source: Authors calculations based on Multiple Indicator Cluster Surveys (MICS) 6 (2019). The concentration of self-employed and FIGURE 26 • Yearly Increase in the Number of informal workers amongst the bottom quintile Jobseekers, per Skill Level (% growth) also suggests that poorer households in Algeria are more likely to be affected by COVID-19. Y/Y increase in the number 34.9 The case of Tunisia shows that self-employed and 31.9 30.5 29.3 of jobseekers informal workers are among the most vulnerable to a 26.0 25.0 23.6 22.4 deterioration in living standards during the pandemic. In Algeria, 35 percent of the working population is 13.2 10.9 self-employed, and 34 percent is concentrated in the 10.2 6.2 informal segment. There is an uneven distribution of self-employed and informal workers across welfare No qualifications Support staff Specialized workers Advanced technicians Managers Total job seekers quintiles. Indeed, 57 percent of the population in the bottom welfare quintile is self-employed, while only 19 percent of the population in the top welfare quintile Average yearly March-to-March growth rate over 2016/2020 is self-employed (see Figure 27). Informal workers March 2020/21 represent 50 percent of the working population in the Source : ANEM. bottom quintile, compared to 24 percent in the top quintile. Algerian women engaged in the labor force unemployment rate relative to their male counterparts have also been disproportionately exposed to the prior to the onset of the pandemic (20 percent for COVID-19 pandemic. Roughly 45 percent of women women against 9 percent for men) (Figure 29). As active in the labor force are concentrated in the evidenced by past experience, women who lose their healthcare and social sector, placing them at a high jobs amid tighter labor market conditions find it much risk of being infected with COVID-1951 (Figure 28). more difficult to reintegrate the labor force compared While recent labor force data remain unavailable, tighter labor market conditions are expected to 51 The UK ONS has created an estimate of exposure to have disproportionately affected women in the labor generic disease, and physical proximity to others, for UK force who were already suffering from a higher occupations based on US analysis of these factors. 26 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY FIGURE 27 • Type of Employment by Asset Index FIGURE 28 • Employed Population Distribution Quintile, 2019 by Sector and Gender, 2019 20 12 45 32 26 12 45 9 7 7 7 10 16 9 5 11 13 19 20 12 18 17 12 9 14 11 10 10 7 8 8 7 54 4 4 45 49 21 1 2 41 31 Agriculture Manufacturing Commerce Public administration Health and social service Transport and communication Construction Extractive industry Other services Bottom 20 2 3 4 Top 20 Public employee Formal employee Formal self-employed Informal employee Informal self-employed Men Women Source: Authors calculations based on MICS 6 (2019). Source: Labor Force Survey (LFS) 2019 . Note: Informal employment is defined as not covered by social insurance. Note: Public administration does not include health services. to their male counterparts. This would inevitably FIGURE 29 • Labor Force Status by Gender, 2019 (%) have negative consequences on women’s welfare and ultimately, the household’s welfare, as Algeria 83 experiences a decline in the number of households 67 with two income earners. The protracted effects on inequality 33 In the face of important macroeconomic and 20 17 fiscal adjustment policies to come, targeted 9 and substantial compensation mechanisms will need to be introduced, to avoid dispropor- Unemployment rate Economically inactive Economically active tionally impacting the most vulnerable. The CO- Men Women VID-19 pandemic has exacerbated Algeria’s public Source: LFS 2019. financial challenges and raised the need for spend- ing consolidation (see Chapter 2) and is expected to lead to a decrease in public investment and an would fall disproportionately on the most vulnerable acceleration of the ongoing subsidy reform effort. segment of the population. In addition, the reform According to the Ministry of Finance, 44 percent of State subsidies, which started after the 2014 oil of public investment projects were indeed frozen in shock, was resumed in 2020 and could accelerate. 2020, and only 54 percent are expected to resume Taxes on petroleum products were raised again by by 2022.52 While public investment represents 36 percent of the country’s total investment, over half 52 The 2021 Amended Finance Law also projects that of investment spending takes the form of construc- public investment will decline in real terms between tion activity.53 Given the high concentration of low- 2022 and 2023. skilled and informal workers in the construction sec- 53 99 percent of construction activity is generated from tor, the effect of the public investment contraction investment spending (ONS, 2020). COVID-19’s Effects on Inequality in MENA and Algeria 27 the 2020 Amended Finance Law,54 while policies households, the most vulnerable will have the least to streamline wheat and milk subsidies were initi- capacity to absorb the shock to their real purchas- ated during the Summer of 2020 (see Chapter 1). ing power, and rising inflation will deteriorate their Although recent estimates are not available, food living conditions further than wealthier households. products typically represent a larger portion of the consumption basket of low-income households who, in the absence of adequate compensation, will be disproportionally affected.55 Finally, according to 54 Although the price of petroleum products were raised the 2021 Finance Law, the Algerian currency is pro- by the 2016, 2017 and 2018 Finance Laws, the Finance jected to depreciate substantially during 2021–2023 Law for 2019 and the initial Finance Law for 2020 did not resort to further price increases. to reduce pressures posed by large external and 55 The latest ONS estimates show that households form fiscal financing needs. This will, however, raise the the bottom quintile allocated 53.7 percent of their price of imported goods and services, raising infla- consumption to food and beverages, against 32.3 tionary pressures on the economy. Among Algerian percent for the top quintile. 28 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY 4 TOWARDS AN EQUITABLE REFORM OF ALGERIA’S HEALTH SYSTEM The impact of COVID-19 over the past year has demonstrated the need for equitable recovery and reform of Algeria’s health system. Even as official case and death numbers remained low, COVID-19 has exposed the limits of the health system. A double burden of communicable and non-communicable diseases, as well as resource constraints, demonstrate the need to strengthen the Algerian health system. While the Algerian health financing system features high public financing and relatively low out of pocket spending, and while life expectancy and control of non-communicable diseases are comparable to peer countries, health outcomes still lag behind other upper-middle income economies, particularly with regards to the equitable distribution of maternal and child health outcomes. Shortages of physical and human resources, as well as inequitable distribution of financial protection pose significant challenges. Finally, declining government financing and health system capacity pose risks in ensuring a resilient health system. Introduction According to internationally available data, since the beginning of the pandemic, Algeria has over Over the past year, Algeria has been grappling 125,000 confirmed cases of COVID-19 resulting in with the impact of COVID-19 on its health system. almost 3,500 deaths, which is significantly lower in 29 per capita terms than other countries in the MENA FIGURE 30 • Top Causes of Death in Algeria, region.56 Algeria has seen peaks in daily new 2009–2019 COVID-19 cases in April, August, and December 2020, and daily new cases are continuing to rise as Malnutrition 1 1 High blood 31% pressure of May 2021, highlighting the continued risk. Cases High blood 2 2 High body- 47% and deaths are likely underrepresented due to a pressure mass index very low testing rate: at 54 percent, Algeria has the High body- High fasting 3 3 54% highest COVID-19 test positivity rate in the region, mass index plasma glucose demonstrating the scale of the pandemic as well High fasting plasma glucose 4 4 Malnutrition –28% as the limits of testing.57 Data on the distribution % change, 2009–2019 of cases, deaths, or testing capacity is not publicly Dietary Dietary risks 5 5 risks 28% available, which makes it difficult to analyze trends. A paper examining Algeria’s initial response to the Tobacco 6 6 Tobacco 26% crisis points to the limits of an overly centralized health system, which has limited the country’s ability Air pollution 7 7 Air pollution 22% to scale up tests and respond proactively to the local High LDL 8 8 High LDL 30% epidemiological situation. The involvement of the private sector was further constrained by the fact that Kidney 9 9 Kidney 40% dysfunction dysfunction the fee schedule for private facilities was last updated in 1987, implying that private facilities had limited Occupational 10 10 Occupational 2% risks risks incentives to deliver services related to COVID-19. Due to the closure of borders, the importation of Metabolic risks medicines and raw materials for various commodities Environmental and occupational risks Behavioral risks has also been impacted and resulted in stock-outs of essential medicines, demonstrating the dependence Source: Based on data from the Institute for Health Metrics and Evaluation (IHME). of the Algerian pharmaceutical sector to imports. The assessment also pointed to difficult working conditions of medical staff, driven by both physical and human resource shortages.58 in responding to COVID-19, demonstrates the need Beyond COVID-19, a double burden of com- to strengthen the health system to improve financing municable and non-communicable diseases, as and transition towards a patient-centered system with well as financing, service delivery, and resource a particular focus on increasing equity. constraints, demonstrate the need to strengthen Algeria’s successful recovery from the the Algerian health system. The challenges in Alge- shock of COVID-19 hinges upon the rapid ria’s COVID-19 response highlighted in the paragraph deployment of COVID-19 vaccines, as well above also hinder its ability to respond to its bur- as improvements to the equity and resiliency den of disease. As Figures 30 and 31 demonstrate, of its health system. In the short run, rapid and even as the majority of Algeria’s disease burden is equitable deployment of COVID-19 vaccines is the due to non-communicable diseases, neonatal dis- main enabler for Algeria’s recovery from the crisis. orders and lower respiratory infections continue to However, if all vaccines received by mid-May were constitute a significant share of the disease burden, deployed, Algeria’s performance would be lower unlike in many other middle-income countries. This is seen with risk factors as well, as malnutrition and 56 As of May 19, 2021. Official data from the Government dietary risks continue to form a high share of overall of Algeria. risk factors, despite significant progress in this area. 57 World Bank, May 11, 2021. MENA Crisis Tracker. This double burden, as well as Algeria’s experience 58 Snoussi Z, 2020. 30 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY FIGURE 31 • Top Risk Factors for Death and with regards to the equitable distribution of maternal Disability in Algeria, 2009–2019 and child health outcomes. The rest of the section presents these results. Ischemic Heart 1 1 Ischemic Heart 37% Disease Disease Stroke 2 2 Stroke 31% Health outcomes Neonatal 3 3 Road –4% disorders injuries Compared to countries of a similar income level, Road Hypertensive injuries 4 4 heart disease 34% Algeria has comparable life expectancy, but a lower human capital index largely driven by its % change, 2009–2019 Congenital 5 5 Neonatal –30% defects disorders education and nutrition outcomes. Figure 32 Hypertensive Chronic kidney demonstrates that Algeria has a life expectancy heart disease 6 6 disease 48% at birth of 77 years, which is comparable or above Chronic kidney Lower that of countries with similar income level. However, disease 7 7 respiratory 10% infections Algeria has a human capital index of 0.53, which Lower Congenital indicates that a child born today will only be 53 respiratory 8 8 defects –22% infections percent as productive than if they were to benefit COPD 9 9 Diabetes 60% from full education and health. In particular, and despite recent progress, Algeria has one of the Diabetes 10 10 Alzheimer's 60% higher levels of stunting at 12 percent, compared to Alzheimer's 11 11 COPD 40% peer countries. While Algeria was undergoing a demo- Non-communicable diseases Communicable, maternal, neonatal diseases graphic transition with lower fertility and higher Injures life expectancy, fertility remains high and has recently increased. Algeria has the highest fertil- Source: Based on data from the IHME. ity rate amongst comparator countries, with almost 3 births per woman (Figure 34). While the rate has declined until about 2000, it has gone up since then (Figure 35). Adolescent fertility also remains high than the majority of countries in the region.59 Algeria even though it has been declining, and it is particu- is expecting to receive additional doses of Sinovac, larly high for the poorest, less educated adolescent AstraZeneca, and Sputnik V vaccines by the end girls, as well as those in rural areas, in the Haut of June, and has allocated 22 billion DZD (US$164 Plateau Centre and Sud regions, where it is above million) for the short-term procurement of vaccines. 3 births per adolescent girl. This is attributable to a However, Algeria’s strategy to reach a high vaccine relatively high rate of unmet need for modern con- coverage remains unclear, and at end-May 2021, traceptives, which is at 34 percent and highest in vaccines for less than 3 percent of the population urban areas and in the Sud region. 46 percent of have been procured.60 Further, as the rest of this women do not use any contraceptive methods, and chapter demonstrates, shortages of physical and less than 5 percent of women use long-lasting con- human resources, as well as inequitable distribution traceptive methods, which further contributes to a of financial protection pose significant challenges. high fertility rate. While a breakdown of total fertil- While the Algerian health financing system features ity by socioeconomic characteristic is not available, high public financing and relatively low out of pocket spending, and while life expectancy and control of non-communicable diseases are comparable 59 World Bank, June 13, 2021. MENA Crisis Tracker. to peer countries, health outcomes still lag behind 60 According to the Minister of Health, Population and other upper-middle income economies, particularly Hospital Reform on an interview on Radio Algérie. Towards an equitable reform of Algeria’s health system 31 FIGURE 32 • Life Expectancy Versus GDP per FIGURE 33 • Life Expectancy at Birth Versus Capita, 2018 Current Health Expenditure per Capita, 2017 84 France 84 83 Korea, Rep. France 83 Life expectancy at birth, total (years) 82 Korea, Rep. Life expectancy at birth, total (years) 82 81 81 80 80 79 79 78 Turkey Thailand 78 Turkey Tunisia Thailand Algeria 77 77 Argentina Iran Argentina 76 Morocco Malaysia 76 Algeria MENA 75 Saudi Arabia 75 Morocco Saudi Arabia MENA Malaysia 74 74 0 10,000 20,000 30,000 40,000 50,000 0 10,000 2,000 3,000 4,000 5,000 GDP per capita, USD Current health expenditure (CHE) per capita, USD Source: World Bank (WB) World Development Indicators (WDI). Source: WB-WDI. FIGURE 34 • Total Fertility Rate Versus GDP per FIGURE 35 • Evolution of Total Fertility Rate Capita, 2018 9 3.5 8 Algeria 3.0 7 MENA Taux de fertilité total Morocco 6 2.5 Argentine Saudi Arabia 5 Total fertility rate Turkey 2.0 Tunisia 4 Malaysia France 3 1.5 Thailand 2 1.0 1 0 0.5 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 0.0 Algeria Malaysia MENA Morocco 0 10,000 20,000 30,000 40,000 50,000 Thailand Tunisia Turkey GDP per capita, USD Source: WB-WDI. Source: WB-WDI. data on desired number of children show that those with higher education, demonstrating the need to in the poorest quintiles, those with lower education, scale up access to contraceptives for these groups. and those in the Haut Plateau Centre and Sud re- (Figure 36 and 37). gions have the highest number of desired children Maternal mortality continues to be the (ranging from 3.5 to 4). According to the 2019 MICS highest among comparator countries, at survey, 34 percent of married women have an un- 112/100,000 live births, remaining constant met need for contraceptives, which also remains over the past decade. Compared to other coun- high in Sud, Nord Centre, and Nord Est, and is actu- tries, Algeria sees a significantly high maternal mor- ally higher for richer income quintiles and for those tality rate, and unlike other countries, this rate has 32 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY FIGURE 36 • Adolescent Fertility Rate and GDP FIGURE 37 • Distribution of Adolescent Fertility per Capita by Socioeconomic Characteristics 70 4 Argentina 60 (births per 1,000 women aged 15–19) 3 50 Thailand Adolescent fertility rate 2 40 Morocco 30 Turkey 1 MENA 20 Malaysia 0 Algeria Saudi Total Urban Rural North Center North East North West Central Highlands Eastern Highlands Western Highlands South Poorest Q2 Q3 Q4 Richest Preschool Primary Middle Secondary Higher 10 Arabia France Tunisia South Korea 0 0 10,000 20,000 30,000 40,000 50,000 GDP per capita, USD Source: WB WDI. Source: MICS 2019. FIGURE 38 • Maternal Mortality Rate Versus GDP FIGURE 39 • Evolution of Maternal Mortality per Capita, 2018 Rate, 2018 120 200 180 Algeria 100 160 Maternal mortality rate, per 100,000 live births 140 Maternal mortality rate, per 100,000 live births 80 Morocco 120 100 60 80 MENA Tunisia 60 40 40 Argentina Thailand Malaysia 20 Iran 0 20 Korea, Rep. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Turkey Saudi France Arabia 0 Algeria Argentina Iran MENA 0 10,000 20,000 30,000 40,000 50,000 Morocco Thailand Tunisia Turkey GDP per capita, USD Source: WB WDI. Source: WB WDI. not declined significantly in recent years (Figures en who have gone for antenatal visits have not re- 38 and 39).61 An analysis of MICS data shows that ceived the three most basic procedures required: women receive an average of 5 antenatal visits, and measurement of blood pressure, taking of blood that almost every woman delivers at health facili- ties (87 percent at public, 11 percent at private facil- 61 The World Bank’s WDI data is internationally comparable, ities), highlighting that the issue is less with access but might not match national administrative data. but more with quality of services received. While the According to the Ministry of Health, maternal mortality survey does not have many specific questions on rate fell from 77/ 100,000 live births in 2010 to 49/ quality of care, it shows that about a third of wom- 100,000 live births in 2019. Towards an equitable reform of Algeria’s health system 33 FIGURE 40 • Under-5 Mortality Rate Versus GDP Evolution of under-5 Mortality FIGURE 41 •  per Capita, 2018 Rate, 2018 30 90 80 Under 5 mortlaity rate, per 1,000 Algeria 25 70 Under-5 mortality, per 1,000 Morocco 60 20 MENA 50 Tunisia 15 40 Turkey 30 Thailand Argentina 10 20 Malaysia 10 Saudi France 5 Arabia 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0 0 10,000 20,000 30,000 40,000 50,000 Algeria Iran MENA Morocco GDP per capita, USD Saudi Arabia Thailand Tunisia Turkey Source: WB WDI. Source: WB WDI. sample and taking of a urine sample. 48 percent An analysis of MICS data from 2019 demonstrates of women experienced a complication during their that under-5 mortality is 19 per 1,000 live births, and pregnancy, including 12 percent who experienced infant mortality is 17 per 1,000 live births (Figure 42). hypertension-related complications, demonstrat- Rates are highest in the Nord Est and Sud regions, ing the need for timely and high-quality care to be highlighting that past regional inequalities have also sought during these complications. persisted in this round of the survey. Rates are also Despite a downward trend, infant and higher for poorest quintiles and children born to less under-5 mortality remains high. Figures 40 and 41 educated parents. demonstrates that according to the latest international A relatively low immunization rate, as well data, Algeria continues to have high infant and under as low levels of care-seeking for sick children, 5 mortality rates relative to comparator countries. contribute to infant and under-5 mortality. Neonatal, Post-Neonatal, Infant, and Under 5 Mortality by Socioeconomic Characteristics FIGURE 42 •  30 25 20 15 10 5 0 Total Urban Rural Male Female North Center North East North West Central Highlands Eastern Highlands Western Highlands South Poorest Q2 Q3 Q4 Richest Preschool Primary Middle Secondary Higher Neonatal Post-neonatal Infant Under 5 Source: MICS 2019. 34 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY FIGURE 43 • DTP3 Coverage Versus GDP per FIGURE 44 • MCV2 Coverage Versus GDP per Capita, 2018 Capita, 2018 100Morocco 120 Malaysia Morocco Saudi 98 Korea, Rep. Malaysia Arabia Thailand 100 Saudi MENA Tunisia 96 Arabia Korea, Rep. Tunisia France MCV2 coverage rate, % Turkey DTP3 coverage rate, % 80 94 France Algeria Turkey Argentina 92 MENA 60 Thailand 90 Algeria 40 88 20 86 Argentina 0 84 0 10,000 20,000 30,000 40,000 50,000 0 10,000 20,000 30,000 40,000 50,000 GDP per capita, USD GDP per capita, USD Source: WB WDI. Source: WB WDI. Figures 43 and 44 demonstrate that Algeria has the weight-for-age ratio two standard deviations below the lowest vaccination rate among comparator countries mean (Figure 46). Obesity for children is even higher for children who have received three doses of the at 13 percent. All malnutrition indicators are higher Diphtheria-tetanus-pertussis vaccine (DTP3, 90 for females, those in rural areas, Nord Centre/Nord percent in 2018) as well as for children who have Ouest regions; while wasting and stunting are higher received two doses of the measles vaccine (MCV2, for poorest quintiles, obesity is higher for the richer 78 percent in 2018). According to 2019 MICS data, quintiles. Food insecurity continues to be a significant coverage is even lower than administrative data, problem in Algeria for both adults and children, with a 74 percent coverage rate for DTP3 and 43 especially for refugees, driven by an overreliance on percent coverage rate for MCV2. The same data costly imported food as only 17 percent of Algeria’s demonstrates that only 55 percent of children under land is suitable for agricultural farming.63 5 have received basic antigens, and only 21 percent Algeria suffers from a high chronic disease of children under five years of age have received the burden. As mentioned in the introduction section, full set of vaccines in the immunization schedule, similar to other middle-income settings, the burden highlighting significant coverage gaps.62 In addition of disease in Algeria predominantly consists of non- to immunization, curative services for children also communicable diseases (NCD). Table 3 demonstrates have a relatively low coverage rate: MICS data the relatively high levels of risk factors and NCD demonstrates that almost half the children under 5 prevalence in Algeria based on the STEPwise survey, who suffered from diarrheal disease did not seek with high levels of smoking for men, high levels of treatment at a health facility, with relatively high rates overweight and obesity for women, and elevated rates across the board (Figure 45). of diabetes, hypertension, and cholesterol. About Despite significant progress, high levels of stunting and malnutrition threaten human capital 62 Basic antigens include BCG, Polio3, DTP3, and the first accumulation. Almost 10 percent of children under dose of the measles vaccine; full vaccination includes all five years of age are stunted, with a height for age of these plus HepB3, Hib3, PCV3, rubella, and a second ratio two standard deviations below the mean, and dose of the measles vaccine. almost 3 percent of children suffer from wasting, with a 63 Reece (2020). Towards an equitable reform of Algeria’s health system 35 FIGURE 45 • Percentage of Children Under 5 Stunting, Wasting, and Obesity FIGURE 46 •  Who Did Not Seek Treatment for among Children Under-5 Diarrheal Disease 18 70 16 14 60 12 10 50 8 40 6 4 30 2 0 20 Total Male Female Urban Rural North Center North East North West Central Highlands Eastern Highlands Western Highlands South Poorest Q2 Q3 Q4 Richest Preschool Primary Middle Secondary Higher 10 0 Total Male Female Urban Rural North Center North East North West Central Highlands Eastern Highlands Western Highlands South Poorest Q2 Q3 Q4 Richest Preschool Primary Middle Secondary Higher Weight for age (2 standard deviations below mean) Height for age (2 standard deviations below mean) Obesity (2 standard deviations above mean) Source: MICS, 2019. Source: MICS 2019. TABLE 3 • NCD Indicators and Risk Factors, Algeria, 2016–17 (percent Ages 18–69 years)a Risk factors and disease Men Women Total Smokes tobacco daily 28.1 0.3 14.3 Overweight (BMI ≥ 25 kg/m2) 48.3 63.3 55.6 Obese (BMI ≥ 30 kg/m2) 14.1 30.1 21.8 Indicator of hypertension (systolic blood pressure ≥ 140 and/or diastolic ≥ 90 mmHg, or under treatment) 23.1 24.1 23.6 Indicator of diabetes (glycemia ≥ 126 mg/dl or HbA ≥ 6.5 percent, or under treatment) 14.2 14.9 14.4 Indicator of high cholesterol (≥ 190 mg/dl, or under treatment) 21.5 26.6 24.0 At least 3 NCD risk factorsb (ages 18–44 years) 22.0 23.4 22.7 At least 3 NCD risk factors (ages 45–69 years) 39.1 51.0 45.0 At least 3 NCD risk factors (ages 18–69 years) 27.2 32.1 29.6 a (n = 6,989) République Algérienne Démocratique et Populaire (2017). Enquête nationale sur la mesure du poids des facteurs de risque des maladies non transmissibles selon l’approche STEPwise de l’OMS : Principaux résultats, Algérie 2016–17. Ministère de la Santé, de la Population et de la Réforme Hospitalière et Organisation mondiale de la santé. b Risk factors: smokes tobacco daily, consumes less than 5 portions of fruit/vegetables daily, insufficient physical activity, overweight/obese, indicator of hypertension. a fifth of the population aged 18–44 suffers from have respiratory disease. According to the data, 14 at least one NCD-related risk factor, demonstrating percent of the population had one chronic disease and the potentially elevated upcoming cost of NCD 6 percent had two; over 95 percent of the population management for years to come. According to more reporting having a chronic condition also reported recent MICS 2019 data, 20 percent of the population receiving treatment for it. It should be noted that the suffers from at least one chronic disease, which is MICS survey did not undertake any measurement of higher for women (24 percent), and also for the richest risk factors and the measurements were based on quintiles (23 percent). Prevalence rates according self-reported data, and as such, the rates are likely to MICS are lower, 8 percent of the population has an underestimate, especially for poorer quintiles or hypertension, 5 percent diabetes, and 1.5 percent those in more remote areas, given the potential for 36 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY Prevalence of at Least One NCD by Socioeconomic Characteristic FIGURE 47 •  80 70 60 50 40 30 20 10 0 Total Men Women Urban Rural North Center North East North West Central Highlands Eastern Highlands Western Highlands South 15–19 20–29 30–39 40–49 50–59 60–64 65–69 70–74 75–79 80 and over Poorest Q2 Q3 Q4 Richest Preschool Primary Middle Secondary Higher Source: MICS 2019. undiagnosed chronic diseases. Data on control, or comparator countries,64 highlighting the need to adherence to treatment guidelines, was not captured improve investments particularly in primary care. in the MICS or STEPwise surveys, and should be Internationally available data (Figure 48, 49 and 50) collected to ensure actionable decision-making on show that while Algeria has a comparable amount the NCD treatment cascade. 64 Comparator countries in this chapter are selected across three categories: a) Maghreb region: Morocco Health system organization and capacity and Tunisia; b) Upper-middle income country peers and aspirational countries: Thailand, Turkey, Malaysia, Looking at the availability of key inputs per cap- Argentina, Iran; c) Aspirational high-income countries: ita, Algerian health system capacity is behind France, Saudi Arabia, South Korea. FIGURE 48 • Nurses and Midwives Per 1,000 FIGURE 49 • Physicians Per 1,000 Persons, 2018 Persons, 2018 2.5 6 2.0 Nurses and midwives per 1,000 5 Physicians per 1,000 4 1.5 3 1.0 2 0.5 1 0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Algeria Iran Malaysia MENA Algeria Iran Malaysia MENA Morocco Thailand Tunisia Turkey Morocco Thailand Tunisia Turkey Source: WB WDI. Source: WB WDI. Towards an equitable reform of Algeria’s health system 37 FIGURE 50 • Hospital Beds per 1,000 Persons, 2018 the shock of COVID-19 has demonstrated, strong health system capacity is needed to ensure effective 3.0 management of COVID-19 cases as well as continuity 2.5 of essential services. A strong primary health system Hospital beds per 1,000 2.0 plays a pivotal role in this regard. 1.5 1.0 Health financing system 0.5 Algeria spends about 6 percent of its GDP on 0.0 health, and over 10 percent of general govern- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ment expenditure is allocated to health. Since Algeria Iran Malaysia MENA 1973, all care has been provided free of charge at Morocco Thailand Tunisia Turkey Algerian public health facilities. This was also guaran- teed in the latest health law of 2018, which has further Source: WB WDI. expanded benefits and coverage for the population. Compared to other middle-income countries and to countries with a similar level of GDP per capita, Algeria spends about a similar level of its general government of physicians per capita (1.7 per 1,000), it lags be- budget on health, but has lower public health spend- hind in terms of nurses per capita (1.5 per 1,000),65 ing as a fraction of its GDP, demonstrating the need demonstrating the need to shore up key cadres de- to improve fiscal space for health (Figures 51 and 52). livering primary care to improve maternal and child health outcomes. Number of hospital beds per 1,000 65 The World Bank’s WDI data is internationally is also lower than most peer countries. Notably, the comparable, but might not match national administrative number of physicians and nurses per capita has de- data. According to the Ministry of Health, Algeria had clined recently, demonstrating the need to scale up 2.1 physicians per 1,000 and 3 paramedics per 1,000 investments in strengthening the health system. As in 2018. Domestic General Government FIGURE 51 •  Current Health Expenditure as FIGURE 52 •  Health Expenditure as a a Percentage of Gross Domestic Percentage of General Government Product, 2018 Expenditure, 2018 12 25 France Domestic Health Expenditure, % of General 10 share of Gross Domestic Product (%) Iran Argentina Iran 20 Current Health Expenditure, Government Expenditure (%) 8 Thailand France Korea, Rep. Tunisia 15 Argentina Algeria MENA Tunisia 6 Korea, Rep. Morocco Saudi Turkey Saudi Arabia 10 Algeria Arabia Turkey MENA 4 Malaysia Malaysia Thailand Morocco 5 2 0 0 0 10,000 20,000 30,000 40,000 50,000 0 10,000 20,000 30,000 40,000 50,000 GDP per capita, USD GDP per capita, USD Source: WB WDI. Source: WB WDI. 38 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY FIGURE 53 • Current Health Expenditure per FIGURE 54 • Current Health Expenditure Per Capita Over Time, 2018 Capita Disaggregated by Financing Source, 2018 1,000 900 Saudi Arabia 800 Argentina Iran Current health expenditure 700 Malaysia per capita, USD 600 Turkey Thailand 500 Algeria 400 Tunisia Morocco 300 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 200 100 Domestic general government 0 health expenditure per capita 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Domestic private health expenditure per capita External health expenditure per capita Algeria Iran Malaysia MENA Out of pocket expenditure per capita Morocco Thailand Tunisia Turkey Source: WHO Global Health Expenditure Database (GHED). Source: WB WDI. Note: Excludes South Korea and France for legibility. Both of these shares have remained constant over the spending. Current health expenditure per capita past decade in Algeria, highlighting the cyclical nature from all sources is US$260 per capita as of 2018, of health spending. and even though this has been steadily increasing Per capita health spending has been de- until 2014, when it reached US$358, it has declined clining, particularly driven by a decline in gov- since. The decline has been driven by a decline in ernment spending per capita for health, further government spending for health, which went up from demonstrating the cyclical nature of health its peak in 2014 of US$258 to US$168 in 2018. While FIGURE 55 • Distribution of per Capita Health FIGURE 56 • General Government Spending on Financing in Algeria across Health Versus Expenditures through Financing Agents Insurance Schemes 400 300 350 250 300 250 200 200 150 150 100 100 50 0 50 2010 2011 2012 2013 2014 2015 2016 2017 2018 Out of pocket expenditure (OOP) per capita 0 External health expenditure per capita 2010 2011 2012 2013 2014 2015 2016 2017 2018 Private health expenditure per capita (excl. OOP) Domestic general government health expenditure per capita Compulsory contributory health insurance schemes Current Health Expenditure (CHE) per Capita in US$ General government spending Source: WHO GHED. Source: WHO GHED. Towards an equitable reform of Algeria’s health system 39 FIGURE 57 • Out of Pocket Health Expenditure FIGURE 58 • Pooled Health Spending as a Share per Capita Versus GDP Per Capita, of Total Health Spending, 2018 2018 90 900 Thailand 80 Turkey France a share of current health expenditures, % Korea, Rep. Compulsory financial arrangements as 800 Argentina Out of pocket spending per capita, USD 70 Algeria Arabie Saoudite 700 60 Tunisia MENA 600 Korea, Rep. 50 Malaysia 500 Iran France 40 Morocco 400 Algeria 30 300 Iran MENA 200 Saudi 20 Tunisia Arabia Malaysia 10 100 Argentina Turkey 0Morocco Thailand 0 0 10,000 20,000 30,000 40,000 50,000 0 10,000 20,000 30,000 40,000 50,000 GDP per capita, USD GDP per capita, USD Source: WB WDI. Source: WB WDI. Algeria spends more than Maghreb countries, it decades, highlighting that most government health spends less than other middle-income comparators expenditure is financed by the general government (Figures 53 and 54). Compulsory financing arrange- budget (Figure 56). ments (government health expenditure and health Despite a high share of pooled health insurance contributions) as a share of current health spending, out of pocket spending in Algeria is expenditure have remained relatively constant, rang- higher than countries with comparable GDP per ing from 66 to 72 percent in the course of the past capita, and financial risk protection is inequitably two decades (currently at 66 percent). Compulsory distributed (Figures 57 and 58). While coverage health insurance as a share of current health expen- rates for financial protection schemes are relatively diture remained at 26 percent for most of the past two high, they are not equitably distributed, indicating Coverage within a Health Insurance Scheme for Population above Age 15 FIGURE 59 •  100 90 80 70 60 50 40 30 20 10 0 Total Urban Rural 15–24 25–34 35–44 45–54 55–64 65+ North Center North East North West Central Highlands Eastern Highlands Western Highlands South Poorest Q2 Q3 Q4 Richest Preschool Primary Middle Secondary Higher Source: MICS 2019. 40 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY Coverage within a Health Insurance FIGURE 60 •  potential gains from improving the targeting and Scheme for Children Under 5 equity of insurance schemes. In 2019, 74 percent of 80 the population was affiliated with a health insurance 70 scheme, a coverage rate that is higher for women 60 than for men (78 percent versus 70 percent), and for 50 those in urban areas than in rural areas (78 percent 40 versus 65 percent) (Figures 59 and 60). Those in 30 the richest quintiles were more likely to have been covered by an insurance scheme than those in the 20 poorest (88 percent versus 54 percent). Coverage 10 was lowest in the Central Highlands region, and 0 higher for the elderly. A more regressive pattern Total Urban Rural North Center North East North West Central Highlands Eastern Highlands Western Highlands South Poorest Q2 Q3 Q4 Richest Preschool Primary Middle Secondary Higher is found with health insurance for children: about half of children have health insurance, and those in the richest quintile are three times more likely to have health insurance than the poorest (74 percent Source: MICS 2019. versus 27 percent). The Western Highlands region has the lowest coverage rate. Of the children who have health insurance, almost all were covered by social security schemes (i.e., CNAS or CASNOS), as opposed to private schemes. As will be seen in the next section, this likely is a driver of low levels of care seeking for children, slowing down potential human capital accumulation: even though immunization and preventive services are free, curative services, especially medicines, are not. Towards an equitable reform of Algeria’s health system 41 BIBLIOGRAPHY Chapters 1 and 2 • “Le commerce a été le secteur le moins impacté par la crise”. March 12, 2020. Agence Nationale de l’Emploi - Statistiques https://www.aps.dz/economie/118974-covid-19- h t t p : / / w w w. a n e m . d z / re s s o u rc e s / p d f / 2 0 21 / le-commerce-a-ete-le-secteur-le-moins-impacte- mars-2021.pdf. par-la-crise. • “Djaadoub : 68 000 jeunes intégrés à des postes Algérie Presse Service permanents”. 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Bibliography 47 DATA APPENDIX 49 Estimate Projections 2017 2018 2019 2020 2021 2022 Output and prices Annual percentage change Real GDP 1,3 1,2 0,8 –5,5 3,7 2,5 Non-hydrocarbon sector 3,7 5,1 3,4 –4,3 2,9 2,2 Hydrocarbon sector –2,4 –6,4 –4,9 –8,5 5,7 3,3 Per capita –0,8 –0,8 –1,2 –6,9 2,2 1,1 Indice des prix à la consommation (moyenne sur 5,9 3,5 2,4 2,1 3,9 4,1 la période) GDP (in trillions of current DZD) 18,9 20,5 20,4 19,1 22,3 24,5 GDP (in billions of current US$) 170,1 175,4 171,2 150,3 165,8 175,4 Oil and gas sector Crude oil production (thousand barrels per day) 1,059 1,040 1,023 899 896 945 Natural gas production (billion of m3) 94,8 95,9 89,6 89,8 99,8 101,7 Algeria's oil export prices (US$ per barrel) 54,1 71,4 64,5 40,4 63,2 62,9 External sector In percent of GDP Current account –13,0 –9,5 –10,0 –14,0 –9,7 –9,0 Trade balance –13,2 –8,9 –9,3 –13,3 –9,0 –8,4 Exports of goods and services 22,2 25,3 22,4 16,0 20,1 21,0 Hydrocarbon exports 19,7 22,2 19,4 13,2 17,3 18,1 Nonhydrocarbon exports 2,5 3,1 3,0 2,8 2,8 2,9 Imports of goods and services 35,3 34,2 31,7 29,3 29,1 29,3 Gross official reserves (months of imports) a 19,2 15,4 13,6 12,8 7,3 3,0 Exchange rate (Algerian dinar per US$; period 111,0 116,6 119,4 126,8 134,7 139,8 average) Central Government Finance In percent of GDP Government revenue and grants 32,0 33,4 32,2 30,4 26,2 26,5 Hydrocarbon revenueb 11,5 14,1 13,1 10,5 10,8 10,9 Nonhydrocarbon revenue 20,5 19,3 19,1 19,9 15,4 15,6 Tax revenues 13,9 13,3 13,9 13,9 12,0 11,7 Non-tax revenues 6,6 6,0 5,2 6,0 3,4 3,9 Expendituresc 38,6 37,8 37,8 41,8 39,9 38,6 Current expenditures 24,8 26,0 23,8 28,0 26,6 25,4 Capital expenditures 13,8 11,8 13,9 13,8 13,3 13,2 Special Account Balance and Treasury 1,9 2,4 4,0 5,1 4,5 4,0 Interventions Fiscal balance –6,5 –4,4 –5,5 –11,4 –13,7 –12,1 (continued on next page) 50 ALGERIA – ECONOMIC MONITOR: ACCELERATING REFORMS TO PROTECT THE ALGERIAN ECONOMY (continued) Estimate Projections 2017 2018 2019 2020 2021 2022 Overall budget balance –8,4 –6,8 –9,6 –16,5 –18,1 –16,1 Primary overall budget balance –7,5 –6,3 –9,0 –15,8 –17,5 –15,5 Nonhydrocarbon overall budget balance –19,9 –20,9 –22,7 –27,0 –28,9 –27,0 Total central Government debt 26,5 37,8 45,1 49,8 56,6 64,1 Domestic debt 25,5 36,9 44,3 48,9 55,8 63,3 External debt 1,0 0,9 0,8 0,9 0,8 0,8 a Excluding IMF Special Drawing Rights (SDR). b Includes dividends from Sonatrach and hydrocarbon revenues transferred to the oil savings fund. c In 2018, a transfer to the national pension fund was reclassified from capital expenditures tu current expenditures. Data appendix 51 1818 H Street, NW Washington, DC 20433