Algeria achieves very low overall compliance with international standards and codes, with a score of 9.17 out of 100 in our Standards Compliance Index. Algeria's compliance is poor in all three broad categories. The highest level of compliance reached under any category is "Intent Declared." Further, there is a plethora of standards wherein it achieves a "no compliance" rating or for which independent assessments are lacking. Transparency of its fiscal and monetary policies is limited, and Algeria not only does not subscribe to the IMF's Special Data Dissemination Standard, but is deteriorating in its statistics reporting. It has nevertheless declared its intention to bring itself in conformity with international standards in certain areas. It is in the process of modernizing the budget management process and strengthen fiscal governance. With the help of the World Bank, a new real-time gross settlement system became operational in 2006, but no evaluation of it is yet available. Algeria has also enacted the "Law for the Prevention and the Fight against Money Laundering and Terrorism Financing" in order to bring itself closer to compliance with international regulations.

Macroeconomic Policy and Data Transparency

Algeria does not subscribe to either the Special Data Dissemination Standard or the less stringent General Data Dissemination Standard (GDDS). The International Monetary Fund (IMF), in its 2005 Article IV Consultation, noted that following the expiration of its extended arrangement in May 1998, the reporting of statistics to the Fund generally deteriorated, particularly with respect to the overall quality and timeliness of data reported between IMF missions. The IMF reported in its 2006 Article IV Consultation, published in 2007, that Algeria had intended to participate in the GDDS by 2006, and had begun compiling metadata toward that end. However, both the 2007 IMF report and the GDDS website disclose that, as yet, Algeria has not met GDDS subscription requirements. More »

In 2003, the IMF conducted a Financial System Stability Assessment (FSSA) on Algeria's monetary policy based on the country's 1990 Law on Money and Credit. In 2004, the IMF published the results of this assessment, in which it stated that Algeria's monetary policy transparency practices were deficient in several respects. The IMF suggested that Algeria reform its legislation to clarify the responsibilities of the central bank. It also recommended that the process by which monetary policy is formulated and announced be strengthened and that Algeria publicly disclose its internal management procedures and the codes of conduct and ethical behavior to which its staff is subject. In February 2006, Algeria announced to the IMF its intention to participate in the Fund's General Data Dissemination System (GDDS). However, neither the IMF GDDS website nor the website of the IMF's Special Data Dissemination Standard lists Algeria as a participant, as yet. More »

In 2005, the IMF published the results of its most recent Report on the Observance of Standards and Codes (ROSC) to focus specifically on issues of fiscal policy transparency. The ROSC found that Algeria remains deficient in meeting the standards of fiscal transparency, even though several recent structural reforms have yielded some improvements. The IMF ROSC specifically cited the need to expand the amount of information communicated to the parliament and the public at large, to reform the legislative framework underlying fiscal policy and the budget process, and to improve the coverage and clarity of the annual draft budget document. The IMF also called for more regular and less restricted dissemination of information on budget execution and the state of public finances. The IMF's 2006 Article IV Consultation notes that Algeria is currently preparing to undertake significant steps to modernize the budget management process and strengthen fiscal governance. It had drafted (but not yet passed) its first organic law on public finances. Modernization of its accounting procedures and standards will also help improve fiscal transparency. Algeria participates in neither the IMF Special Data Dissemination Standard nor the IMF General Dissemination System, and does not produce advance release calendars announcing the upcoming publication of any of its data. More »

Institutional and market infrastructure

A number of reports by international organizations, including the International Bank for Reconstruction and Development, the World Bank and the IMF, have examined the Algerian insolvency regime and concluded that the legislative framework for insolvency in Algeria is in need of modernization. The 2004 Financial Sector Assessment by the World Bank found Algeria's bankruptcy legislation, procedures, and enforcement deficient, adding that Algeria's failure to promulgate a modern legal framework surrounding its bankruptcy regime is among the most significant of these deficiencies. The IMF's 2004 Financial System Stability Assessment also asserts that, although Algeria has been active in legal reforms since the late 1980s, these reforms have not included the modernization of its bankruptcy regime. The lack of a modern bankruptcy framework is combined with a court system in which proceedings tend to be long, and enforcement is problematic, due to high costs. The IMF further found that in terms of its adherence to the rule of law, the quality of its regulatory practice, and its control of corruption, Algeria ranked among the bottom 40% of all countries included. More »

According to the 2004 Financial System Stability Assessment conducted by the International Monetary Fund, Algerian accounting principles are overly vague and financial statements are generally unreliable for information on company performance. Furthermore, companies are not required to prepare consolidated financial statements and there are no accounting guidelines for the treatment of a number of important transactions. Also, compliance with local standards is not enforced effectively and there is no framework for sanctions and penalties. As stated in a 2005 World Bank report, in the spring of 2003 the World Bank completed a Report on the Observance of Standards and Codes on accounting and auditing in Algeria that evaluated the weaknesses and strengths of the country's accounting and auditing requirements and compared its reporting requirements against actual practices, using the International Financial Reporting Standards and International Standards on Auditing as the benchmarks. However, this report on Algeria has not been made publicly available. More »

In 2003, the World Bank launched a Country Assistance Strategy in Algeria for Fiscal Years 2004 -2006 aimed at increasing the state's capacity to regulate the market and encourage the private sector to adopt good corporate governance practices through technical assistance. In a subsequent 2004 Financial Sector Assessment (FSA), the World Bank noted that, since the end of the 1980s, Algerian authorities have embarked upon a wide-ranging and credible modernization of laws and regulations governing financial intermediation. Significant deficiencies remain, however, with regards to laws and regulations, and Algeria lacks a modern corporate governance framework. Furthermore, although shareholders' rights seem to be well-protected, the absence of regulation on corporate governance weakens the protection of minority shareholders. Despite the information provided above, there is insufficient publicly available information regarding Algeria's compliance with the Principles on Corporate Governance developed by the Organization for Economic Cooperation and Development. The Algerian Stock Exchange, which became operational in 1999, is still at an embryonic stage, according to a 2007 U.S. Department of Commerce Doing Business report. The World Bank's 2004 FSA adds that the stock market in Algeria could play an important role by speeding up the privatization process, easing companies' reliance on bank financing, and promoting corporate governance practices. More »

In a Financial System Stability Assessment conducted by the International Monetary Fund (IMF) in 2004, the IMF observed that, in general, auditing practices in Algeria are not at par with the international standards. Furthermore, local standards are not enforced effectively. The IMF pointed out that audit partnerships are "highly fragmented" and training is limited. As stated in a 2005 World Bank report, in the spring of 2003 the Bank completed a Report on the Observance of Standards and Codes (ROSC) on accounting and auditing in Algeria, using the International Financial Reporting Standards and International Standards on Auditing as the benchmarks for assessing national standards. However, this report has not yet been made publicly available. More »

Algeria is a founding member of the Middle East and North Africa Financial Action Task Force (MENAFATF) which is an associate member of the Financial Action Task Force (FATF). Members of the MENAFATF signed a Memorandum of Understanding (MoU) in 2004 whereby they pledged to adopt and implement the FATF's recommendations on Anti-Money Laundering and Combating the Financing of Terrorism. Moreover, in its 2006 annual report the MENAFATF states that all accession countries must adopt the FATF Forty Plus Nine Recommendations and Special Recommendations. In its 2007 International Narcotics Control Strategy Report, the U.S. Department of State acknowledges the important progress achieved in Algeria's statutory regime over the past few years. On February 5, 2005, Algeria enacted a new Law on the Prevention and Fight against Money Laundering and Financing of Terrorism, replacing the 1994 Ordinance No. 95/11, to bring Algerian law into conformity with international standards and conventions. An independent Financial Intelligence Unit - the Cellule du Traitement du Renseignement Financier (CTRF), within the Ministry of Finance - was established in April 2002 under Executive Order No. 02-127. More »

A 2007 World Bank report details a $16.5 million loan approved by the World Bank in July 2001 (reduced in June 2005 to $5.2 million) to assist Algeria in embarking upon a Financial System Infrastructure Modernization Project (henceforth referred to as the Project) starting 2002. The Project, per the report, focused on improving the financial system infrastructure, with a particular emphasis on modernizing the country's payments system. The Project aimed to establish a well-functioning real time gross settlement (RTGS) system along with regulations and guidelines governing future low-value payment systems, and effective and well functioning telecommunications links connecting the country's payments systems. The Project was completed in June 2006 and a new, automated, RTGS system became operational in February 2006. The Bank of Algeria (BoA) is in charge of the new systems' oversight and supervision, and has installed and tested all back-ups and security for its smooth and efficient functioning. The system was due to be evaluated by a joint World Bank/International Monetary Fund Financial Sector Assessment Program (FSAP) mission to Algeria during the first semester of 2007. However, there is no report of that evaluation yet available. There is also little further information publicly available to assess Algeria's compliance with the Core Principles for Systemically Important Payment Systems promulgated by the Committee on Payment and Settlement Systems. More »

Financial Regulation and Supervision

The International Monetary Fund's (IMF) 2004 Financial System Stability Assessment (FSSA) reports that clear improvements have been made in the area of on-site and off-site supervision through intensive technical assistance from the IMF. The report found Algeria's banking supervisory framework to be compliant or largely compliant with 11 of the 25 Basel Core Principles (BCPs). The 2004 IMF assessment points to several major shortcomings, the most important of which is the lack of effective implementation of prudential regulations. However, the report notes that the authorities have implemented substantial reforms in this area since the IMF's last assessment in 2000, so much so that, by 2004, only one of the principles relating to prudential regulations was not being observed. Building on the IMF's 2004 FSSA recommendations for the banking sector, the authorities have conducted comprehensive on-site inspections and are considering privatizing a number of public banks, as stated in a 2004 IMF Consultation IV report. The World Bank's 2004 Financial Sector Assessment report notes that, since the end of the 1980s, Algerian authorities have embarked upon a wide-ranging and credible modernization of laws and regulations governing financial intermediation. As part of a World Bank Country Assistance Strategy for Fiscal Years 2004 -2006 in Algeria, launched in 2003, efforts are in process to improve the operational efficiency of banks in credit and financial risk management and credit monitoring and loan recovery. The strategy further seeks to strengthen corporate governance and to ensure "arm's length" relations between business groups and the government. Nevertheless, in spite of the efforts undertaken by Algerian authorities, the IMF's 2004 Consultation IV report finds that banking supervision remains weak. Ultimately, there is little information publicly available clearly identifying Algeria's compliance with the Basel Core Principles. More »

The 2004 World Bank's Financial Sector Assessment (FSA) reports that there is practically no activity on Algeria's securities markets, despite efforts to establish a regulatory framework to license and supervise market participants and build an infrastructure. This is in part caused by high transaction costs and low investor confidence in the markets. The FSA indicates that significant improvements must be made to the regulatory framework, disclosure of financial information, and settlement systems before the securities markets grow. In the government's efforts to modernize the financial system legal framework, it addressed securities markets and financial market participants. It also reformed the Commerce Code, including shareholders and creditors' rights protection. However, the laws and regulations still need significant improvement, and many provisions do not follow international standards. Nevertheless, there is insufficient publicly available information to fully assess Algeria's compliance with the International Organization of Securities Commissions' Principles of Securities Regulation. More »

There is insufficient information publicly available regarding Algeria's compliance with the revised Insurance Core Principles issued by the International Association of Insurance Supervisors in October 2003. Since the end of the 1980s, according to the World Bank's 2004 Financial Sector Assessment, Algerian authorities have embarked upon a wide-ranging and credible modernization of laws and regulations governing financial intermediation. This program applies to banks, insurance companies, securities, and financial markets. The modernization program has also led to important changes in the Commercial Code, including the reform of creditors and shareholder rights. As noted in a 2004 Financial System Stability Assessment by the International Monetary Fund, the insurance sector in Algeria was liberalized in 1995 under Insurance Ordinance No. 95-07. The Ordinance was amended in 2006 by the new Insurance Law No. 06-04 but remains insignificant. The National Insurance Council (CNA), which was established under the 1995 Insurance Ordinance, is the supervisory and regulatory authority for the insurance sector in Algeria. The Minister of Finance presides over the CNA. More »

Legend:

Credit Ratings

Moody's Not rated

Fitch Not rated

Standard & Poor's Not rated

Macroeconomic Data

2007 GDP (Current Prices): 131.568 billion USD (IMF)

2007 GDP (Per Capita): 3,825 USD (IMF)

2008 GDP (Growth Forecast): 4.8% (IMF)

2008 Inflation (CPI): 4.3% (IMF)

2007 Unemployment: 14.1% (CIA)

2006 Foreign Direct Investment

FDI (Inward): 1.795 billion USD (UNCTAD)

FDI (Outward): 0.035 billion USD (UNCTAD)

2006 Official Development Assistance

ODA (Received): 209 million USD (OECD)

ODA (Disbursed): N/A million USD (OECD)